Thai gov. to tax (remitted) income from abroad for tax residents starting 2024 - Part I

[JohnnyBD]

9 minutes ago, stat said:

Tax resident where: in TH only, or double residence?

 

My gut feeling:

 

1. No Thai CGT as you paid taxes in your home country not assesable

2.No Thai CGT not assesable

3. We will see maybe not assesable

 

This all is heavly dependant if Thai RD accepts your documents. In case they do not, you have to pay tax.

Sorry forgot to mention. Tax resident in Thailand, but I am a US citizen, so I have to file and pay taxes in the US. All my income is US sourced income.

[Mike Teavee]

1 hour ago, stat said:

CGT arises in the tax residence country of the individual! If you have sole residence in TH then TH CGT rules apply (some exceptions maybe for real estate i.e. house in the UK immovable object you could be liable for UK CGT I frankly do not know, no CGT in this case for a german house if I live in TH). For share transactions like you mentioned i.e. you sold  german shares then no German CGT tax is applied if you are not a resident of Germany! I have been buying and selling US and UK shares my whole life without ever paying CGT in the US or UK nor have I ever seen a client that paid CGT on shares without a tax residence (exception maybe US guys that live abroad as the US taxes the ww income for its citizens even if they are not linving in the US).

 

Maybe explain what made you think that you had to use the CGT rule of the asset home country?

 

NB: I work as a consultant in the international tax industry

 

I get my UK CGT knowledge from actually writing the code for the UK's largest Stockbroker that calculated it for Bed & Breakfasting & the code that was used to produce annual CTC certificates, but that was pre the 1998 changes so admit things have changed since then, however how you calculate a Gain hasn't, perhaps you could share an alternative way of calculating the gain than the one I listed. 

 

 

Would also be interested in learning about any countries that use FIFO for doing (normal) Gains calculations & anything at all about how Thailand calculates CGT, from the Tax videos that I've seen it's on you to calculate the Gain and on your return apply that percentage to what you've remitted when listing your assessable  tax - If you're not going to do it using the rules of the country that the Asset is in & the country you are resident in doesn't have any rules, what rules would you suggest should be used?

 

 

I can't find the one that went into the calculation in more details but it's briefly covered in this one...

 

  

 

 

 

Edited May 13 by Mike Teavee

[Mike Teavee]

2 hours ago, gamb00ler said:

I can definitely think of instances where this statement is not true.  I don't want to go into details but how capital gains are calculated for residential rental properties in the USA would make the heads of TRD staff spin.  I think it very likely that TRD would want to use a much simpler method to determine capital gains.

Maybe I worded it badly, but by snipping my reply you're taking me out of context a little as I actually said that you do the calculation based on the rules of the country where the asset is & report the percentage gain to TRD, not that they would use the country's rules to calculate it.

Nothing easier for TRD than you saying Here's $XX,000, YY% of it is the capital gain. 

 

 

Oh & I know exactly what you mean about the CGT regs around Non-Primary Property, they're just as bad in the UK - Something us Expats who only rent out our old homes (Not even Buy-2-Let) have to deal with when it comes time to sell them.  

 

Edited May 13 by Mike Teavee

[JohnnyBD]

33 minutes ago, Mike Teavee said:

Would also be interested in learning about any countries that use FIFO for doing (normal) Gains calculations

In the US, in my Fidelity account, the normal default is FIFO, but I can also select to use the highest cost basis method resulting in the lowest capital gains which is what my default is set for. I can also select specific shares to sell which is what I always do, that way I can better manage my gains. I'm not sure if there is an option to select LIFO, but it probably does. The IRS doesn't dictate which cost basis method to use, I make that decision.

Edited May 13 by JohnnyBD

[Mike Teavee]

1 hour ago, stat said:

Tax resident where: in TH only, or double residence?

 

My gut feeling:

 

1. No Thai CGT as you paid taxes in your home country not assesable

2.No Thai CGT not assesable

3. We will see maybe not assesable

 

This all is heavly dependant if Thai RD accepts your documents. In case they do not, you have to pay tax.

 

My 2 cents for a UK Expat only resident in Thailand would be

1. Thai CGT is applicable as there is no provision in the UK-TH DTA that would prevent you having to pay tax on a Gain even if you've already been taxed on it.

2.  There wasn't a Gain so no CGT anyway. 

3. Assuming the interest was "Co-Mingled" with the original savings then we're yet to get a conclusive answer on this but my opinion would be that as you cannot pick & choose which part of the monies you're spending, it would be a percentage of the overall remitted amount.  

 

E.g. I have have £100,000 in a bank account that pays 4% Interest and at the end of the year I have £104,000 

If I were to remit all of that money into Thailand then the £4,000 would be Tax assessable, however if I spent £4,000 in the UK & remitted £100,000 then I believe the assessable income would be approx. 3.85% of the £4,000 interest earned i.e. approx. £154

 

Edited May 13 by Mike Teavee

[UKresonant]

I wonder how TH RD would cope with a UK  purchased annuity, as depending on age say 70% is a return of capital, and only the 30% is assessable.

Perhaps a way of defining the principle before becoming TH Tax resident.

So of 65000THB per month 40.5k savings and say 19.5k of pre-determined savings interest. ( under allowance + 150k almost )

 

Just a though....don't know an actual proportion and not the most efficient, but simple maybe.

 

 

[stat]

3 hours ago, Mike Teavee said:

 

I get my UK CGT knowledge from actually writing the code for the UK's largest Stockbroker that calculated it for Bed & Breakfasting & the code that was used to produce annual CTC certificates, but that was pre the 1998 changes so admit things have changed since then, however how you calculate a Gain hasn't, perhaps you could share an alternative way of calculating the gain than the one I listed. 

 

 

Would also be interested in learning about any countries that use FIFO for doing (normal) Gains calculations & anything at all about how Thailand calculates CGT, from the Tax videos that I've seen it's on you to calculate the Gain and on your return apply that percentage to what you've remitted when listing your assessable  tax - If you're not going to do it using the rules of the country that the Asset is in & the country you are resident in doesn't have any rules, what rules would you suggest should be used?

 

 

I can't find the one that went into the calculation in more details but it's briefly covered in this one...

 

  

 

 

 

Immovable objects like real estate is a different beast as it is situated fixed in a country and some countries can charge whatever tax they want. CGT of shares are usually only taxed in the residence country, however dividends are taxed in the country of tax residence of the company. We simply do not have to care about share CGT calculation of other countries as it can only be an indication. As long as we do not know what accounting method TRD will use, we cannot calculate any thai CGT. If you are only tax resident in TH it is of no help to us what other countries calculate as we are not paying those taxes anyway and TRD maybe has another method. The easy solution is to have a completly segregated account that was filled with cash beginning of the year before 2024 or before one becomes Thai tax resident.

[stat]

2 hours ago, Mike Teavee said:

 

My 2 cents for a UK Expat only resident in Thailand would be

1. Thai CGT is applicable as there is no provision in the UK-TH DTA that would prevent you having to pay tax on a Gain even if you've already been taxed on it.

2.  There wasn't a Gain so no CGT anyway. 

3. Assuming the interest was "Co-Mingled" with the original savings then we're yet to get a conclusive answer on this but my opinion would be that as you cannot pick & choose which part of the monies you're spending, it would be a percentage of the overall remitted amount.  

 

E.g. I have have £100,000 in a bank account that pays 4% Interest and at the end of the year I have £104,000 

If I were to remit all of that money into Thailand then the £4,000 would be Tax assessable, however if I spent £4,000 in the UK & remitted £100,000 then I believe the assessable income would be approx. 3.85% of the £4,000 interest earned i.e. approx. £154

 

Answer 1: it was my humble understanding that Thailand only wants to tax those remittances that were not taxed somewhere else. If they would accept the documentation no one knows. I agree not so clear cut in case 1 but still my gut feeling tells me no CGT. Can someone confirm that already taxed money will not be taxed again. I remember that somewhere I read if taxed already no additional tax in TH.

[Mike Teavee]

4 hours ago, stat said:

Immovable objects like real estate is a different beast as it is situated fixed in a country and some countries can charge whatever tax they want. CGT of shares are usually only taxed in the residence country, however dividends are taxed in the country of tax residence of the company. We simply do not have to care about share CGT calculation of other countries as it can only be an indication. As long as we do not know what accounting method TRD will use, we cannot calculate any thai CGT. If you are only tax resident in TH it is of no help to us what other countries calculate as we are not paying those taxes anyway and TRD maybe has another method. The easy solution is to have a completly segregated account that was filled with cash beginning of the year before 2024 or before one becomes Thai tax resident.

I agree with you on the Property side & as already been mentioned, this can be a nightmare to calculate for UK/US guys who are selling property that isn't considered their primary property - in the UK we have to file a separate tax return within 60 days of completing the sale!

 

For CGT, I think we're agreed on how to do the core calculation but what we don't know/agree on is what to use as the basis of the costs for the original assets (FIFO, LIFO, Average etc....) the videos I've seen seem to be saying that it's on you to calculate the gain & use the calculated percentage to work out what you're assessable income is & as Thailand doesn't seem to have a way of calculating it the only way I can see of doing it would be to apply the rules of the country in which the Asset is. 

 

 

 

As we don't know what Thailand uses, perhaps we could look to a similar scenario where Gains are remitted to the UK (Only other country I'm aware of that taxes Non Doms based on remittance) & where the rules are hopefully a bit clearer.

 

So lets say we use an example of a German (or any other nationality apart from US/UK) Living & a Tax Resident in the UK remitting gains from shares in the US (Where they're Non-Citizen & Non-Tax Resident) on $12,000 of shares made up of 1,000 units bought as:-

1. 300 @ $100 = $3,000 
2. 250 @ $110 = $2,750 
3. 250 @ $130 = $3,250
4. 200 @ $150 = $3,000 

 

... The gain was made up by selling 200 units at $2 to give proceeds of $4,000... What would the reported "Income" be for their UK Return??? 

 

I'll leave it as a question in case there's anybody here who can provide the answer from experience rather than me trying to trawl through HMRC documents at 4:50am!!!

 

Edited May 13 by Mike Teavee

[Mike Teavee]

Although this does not meet the criteria of the example above, I came across this example of remitting interest to the UK which shows how the UK treats "Income" that has already been taxed in the Foreign Country ((again I'm using the UK as it's the only country I know that taxes foreign income on a remittance basis)... 

 

Jenny is taxable on the remittance basis and is liable to UK tax at the rate of 40%. Interest of £9,000 is paid into her foreign bank account after deduction of tax in the ‘other’ country at the rate of 10% which is available as a credit against UK tax on that income. Jenny decides to remit £4,500 of this interest to the UK.

As Jenny has remitted half of the net amount of the interest she was paid, she’s able to claim half of the admissible foreign tax as a credit against UK tax on the income. Jenny must pay UK tax as follows:

	Amount
Gross income	£10,000
Foreign tax	£1,000
Net amount	£9,000

	Amount
Remitted amount	£4,500
Available FTCR	£500

Half the income has been remitted and so half the foreign tax is available as a credit against UK tax.

	Amount
Taxable amount	£5,000
UK tax (40%)	£2,000
minus FTCR	£500
Amount to pay	£1,500

If Jenny does not claim FTCR but instead claims a deduction for the foreign tax paid, she is liable to UK tax on the amount remitted of £4,500 × 40% = £1,800

 

https://www.gov.uk/government/publications/remittance-basis-hs264-self-assessment-helpsheet/remittance-basis-2021-hs264

 

[MistyBlue]

10 minutes ago, Mike Teavee said:

... The gain was made up by selling 200 units at $2 to give proceeds of $4,000... What would the reported "Income" be for their UK Return??? 

 

I'll leave it as a question in case there's anybody here who can provide the answer from experience rather than me trying to trawl through HMRC documents at 4:50am!!!

 

This becomes a "Section 104 holding".  An example of how to work out the gain is given in HMRC helpsheet HS 284.  Need to use the PDF example 3 shown in this link:  https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet 

[Mike Teavee]

5 minutes ago, MistyBlue said:

 

This becomes a "Section 104 holding".  An example of how to work out the gain is given in HMRC helpsheet HS 284.  Need to use the PDF example 3 shown in this link:  https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet 

 

I know that's the case for normal UK CGT calculations, but in the scenario where it's a Non-Dom remitting Gains into the UK from the US is it still the same calculation or could they avail themselves of the flexibility in the US rules to minimise the gain? 

 

 

[MistyBlue]

20 minutes ago, Mike Teavee said:

 

I know that's the case for normal UK CGT calculations, but in the scenario where it's a Non-Dom remitting Gains into the UK from the US is it still the same calculation or could they avail themselves of the flexibility in the US rules to minimise the gain? 

 

That's a good question and I'm afraid I don't know the answer.  HMRC guidance RDR1 seems to set out the rules, but... it's complicated.  Nom-Dom status is a pretty rare beast though with annual fees of either £30000 or £60000.  I would wager that there are very few (if any) non doms reading this forum for tax info.  I would say a very high proportion of people reading here would fall under the guidance given in HS284 to work out the example you set out earlier .

Edited May 13 by MistyBlue
Added missing words

[KhunHeineken]

17 hours ago, Mike Lister said:

You do not need to submit evidence of anything until asked, same as in your home country.

They may start asking before issuing the annual extension. 

[KhunHeineken]

15 hours ago, Fat is a type of crazy said:

income such as rental income  or superannuation paid from a normal non  government employer related superannuation fund  is not taxable as long as I don't transfer those funds to Thailand

As a non resident of Australia for tax purposes, the rental income will be taxed at 32.5% from $0.  Thailand will give you a tax credit on the 32.5% tax that you paid in Australia if you remit that money to Thailand.  

[JohnnyBD]

51 minutes ago, KhunHeineken said:

They may start asking before issuing the annual extension. 

Then again, probably not.

Not everyone on an annual extension is a tax resident. 

Edited May 14 by JohnnyBD

[KhunHeineken]

33 minutes ago, JohnnyBD said:

Then again, probably not.

Not everyone on an annual extension is a tax resident. 

True, but when immigration enter your passport number into the computer and it shows you have been inside Thailand for more than 180 days, thus a Thai resident for taxation purposes, the immigration guy may say, "Sir, where are your tax documents?  No tax documents, no extension." 

 

Makes sense, doesn't?  Why chase people when the Thai government knows foreigners have to eventually come to them?  Easy way to enforce compliance. 

 

Of course, if you are not inside Thailand for more than 180 days in a calendar year you are not a resident of Thailand for taxation purposes and will not have to produce any tax documents.  

[Fat is a type of crazy]

1 hour ago, KhunHeineken said:

As a non resident of Australia for tax purposes, the rental income will be taxed at 32.5% from $0.  Thailand will give you a tax credit on the 32.5% tax that you paid in Australia if you remit that money to Thailand.  

In this post I was looking at Thai tax. I think for the time being I will be able to remain an Australian resident even if I spend a bit more than 180 days in Thailand based on other factors e.g. maintaining a base in Australia. If I go to Thailand full time over a longer period which is not likely at this point in time you are correct. 

[KhunHeineken]

2 minutes ago, Fat is a type of crazy said:

In this post I was looking at Thai tax. I think for the time being I will be able to remain an Australian resident even if I spend a bit more than 180 days in Thailand based on other factors e.g. maintaining a base in Australia. If I go to Thailand full time over a longer period which is not likely at this point in time you are correct. 

The Thai law seems pretty clear.  Spend more than 180 days inside Thailand in a calendar year and you are deemed to be a resident of Thailand for taxation purposes and will have to pay tax. 

 

It appears to me your best solution is to spend more than 183 days inside Australia in an Australian financial year to remain an Australian resident for taxation purposes and get the benefit of the tax free threshold in Australia for your income, and spend less than 180 days in Thailand in a calendar year so you are deemed a non resident of Thailand for taxation purposes, so no tax to pay in Thailand. 

 

Note:  as discussed in the thread in the Home Country Forum the 183 days legislation is yet to be passed, but in my opinion, soon will be.  Currently, the laws revolve around where one is "domiciled." 

 

 

[JohnnyBD]

29 minutes ago, KhunHeineken said:

True, but when immigration enter your passport number into the computer and it shows you have been inside Thailand for more than 180 days, thus a Thai resident for taxation purposes, the immigration guy may say, "Sir, where are your tax documents?  No tax documents, no extension." 

Then again, not all tax residents are required to file a tax return if they do not remit any assessable income. I am a tax resident in 2024, but I do not have to file a tax return because I will not remit any assessable income this year.

Edited May 14 by JohnnyBD

[JohnnyBD]

21 minutes ago, KhunHeineken said:

The Thai law seems pretty clear.  Spend more than 180 days inside Thailand in a calendar year and you are deemed to be a resident of Thailand for taxation purposes and will have to pay tax. 

This is true only if you remit enough assessable income above the threshold. I am a tax resident in 2024, and will not be required to file a tax return next year because I will not remit any assessable income this year.

[JimGant]

12 hours ago, stat said:

it was my humble understanding that Thailand only wants to tax those remittances that were not taxed somewhere else.

Yeah, at day one of this goat rope we were presented with a: "Show a DTA from your home country, and also a tax return, and you won't have to file a tax return with Thailand." Pretty simple -- and they could have Imm add this as on more item to check, along with TM47 and TM30. Imm wouldn't have to understand that your home country tax return maybe was just filed to get a return of overwithholding -- and no taxes were actually owed or paid. But, by also asking for a DTA, it assumes your home country tax return is kosher, relative to Thai tax filing requirements. Or, no home country tax return (Germany), then you have to file a Thai tax return, and maybe, now in your stay in Thailand, you have to pay somebody some taxes. Or maybe not. If assessable income in less than taxable income, it's just a required filing of a nil tax return, to flash at Immigration.

 

Haven't heard anything more about the home country DTA and tax return as a get-out-of-jail free avenue. But such an approach to this new ruling wouldn't cost many new hires, if any. And, it just might flush out a few new tax crumbs, like from Germans. If you recall from some other discussion, DTAs aren't just to preclude double taxation -- they're also there to preclude no no taxation. The OECD Model tax treaty writers are in the process of emphasizing this, with either new treaties (not likely), but with added protocols. And Thailand, anxious to earn some OECD bonafides as they apply for membership, may just get on board with not allowing no no taxation.

 

Anyway, pure conjecture. But you know they're not going to train a gaggle of RD clerks, with the added cost, to be familiar with 60 some odd DTAs. No, they'll just ask for a tax return from Thai tax residents, either a  home country return,  or Thai return. That a home country return may have to be translated into Thai or English -- hey, not their bother or cost. Something is going to happen -- and simplicity and no/low cost will be a factor. Which means: Don't expect a tax audit anywhere in your future -- unless, maybe, you wire a sh** load of money to Thailand. But even there, I wouldn't be too worried (and, of course, this pile of money was savings, a loan, an inhertitance, whatever -- easily explained away at an audit).

[Fat is a type of crazy]

1 hour ago, KhunHeineken said:

The Thai law seems pretty clear.  Spend more than 180 days inside Thailand in a calendar year and you are deemed to be a resident of Thailand for taxation purposes and will have to pay tax. 

 

It appears to me your best solution is to spend more than 183 days inside Australia in an Australian financial year to remain an Australian resident for taxation purposes and get the benefit of the tax free threshold in Australia for your income, and spend less than 180 days in Thailand in a calendar year so you are deemed a non resident of Thailand for taxation purposes, so no tax to pay in Thailand. 

 

Note:  as discussed in the thread in the Home Country Forum the 183 days legislation is yet to be passed, but in my opinion, soon will be.  Currently, the laws revolve around where one is "domiciled." 

 

 

Thanks. But I won't have to pay tax in Thailand if I follow my original post and remit the work pension and saved funds only. The issue of Australian tax and residency is open to debate at this stage as discussed elsewhere depending on how long you spend in the country. The rules as they stand are not simply 183 days as discussed. 

[Lorry]

4 hours ago, KhunHeineken said:

True, but when immigration enter your passport number into the computer and it shows you have been inside Thailand for more than 180 days, thus a Thai resident for taxation purposes, the immigration guy may say, "Sir, where are your tax documents?  No tax documents, no extension." 

 

Makes sense, doesn't?  Why chase people when the Thai government knows foreigners have to eventually come to them?  Easy way to enforce compliance. 

 

Of course, if you are not inside Thailand for more than 180 days in a calendar year you are not a resident of Thailand for taxation purposes and will not have to produce any tax documents.  

The calculation of these 180 days is done by the RD (manually, takes several days). Immigration is not going to do the job of the RD if not forced to.

[Mike Lister]

4 hours ago, KhunHeineken said:

True, but when immigration enter your passport number into the computer and it shows you have been inside Thailand for more than 180 days, thus a Thai resident for taxation purposes, the immigration guy may say, "Sir, where are your tax documents?  No tax documents, no extension." 

 

Makes sense, doesn't?  Why chase people when the Thai government knows foreigners have to eventually come to them?  Easy way to enforce compliance. 

 

Of course, if you are not inside Thailand for more than 180 days in a calendar year you are not a resident of Thailand for taxation purposes and will not have to produce any tax documents.  

There has been no indication given that visa extension or issuance will be linked to Thai tax returns. It is a logical conclusion to think they may be linked in the future but that is not a simple matter. Some professions are already required to obtain tax clearance certificates before they can leave the country, musicians being one. But since many foreign residents in Thailand, here on long stay visa's, will not be required to file a tax return, mostly because they don't have assessible income, the process of subjecting all foreigners to the tax clearance certificate regime is fraught with difficulties.

[Raindancer]

4 hours ago, KhunHeineken said:

True, but when immigration enter your passport number into the computer and it shows you have been inside Thailand for more than 180 days, thus a Thai resident for taxation purposes, the immigration guy may say, "Sir, where are your tax documents?  No tax documents, no extension." 

 

 

 

4 hours ago, KhunHeineken said:

 

 

 

Edited May 14 by Raindancer
Pointless

[Mike Lister]

8 minutes ago, Lorry said:

The calculation of these 180 days is done by the RD (manually, takes several days). Immigration is not going to do the job of the RD if not forced to.

The calculation is done based on entry and exit stamps in the passport, it only takes five minutes to do..

[KhunHeineken]

4 hours ago, JohnnyBD said:

Then again, not all tax residents are required to file a tax return if they do not remit any assessable income. I am a tax resident in 2024, but I do not have to file a tax return because I will not remit any assessable income this year.

Yes, I put forward one simple, but possibly costly solution some time ago, and that is, expats simply pull their money out of ATM's using their home country Visa / Master Card.  I can't see how the Thai government can tax such transactions, especially due to the millions of tourists that do the same.  

 

If the ATM fees and exchange rates are cheaper than Thai tax, there's the solution, but usually these fees are high and exchange rates are poor. 

 

Of course, I was speaking in general.  Most transfer money from their home country into a Thai bank account, which is remitted funds.  Some Fly In Fly Out workers can get around the 180 days buy staying one rotation outside of Thailand, for example.  Everyone has different circumstances, but your typical expat retiree may have limited options and may have to pay some tax.  

 

The Thai government can't have expat retirees plodding along doing nothing about it, so I suggest either the banks have to be involved, or immigration require tax documents every year for the extension. 

 

I have no link to show this.  It's just an idea about they may go about compliance.   

Edited May 14 by KhunHeineken

[EVENKEEL]

4 hours ago, KhunHeineken said:

True, but when immigration enter your passport number into the computer and it shows you have been inside Thailand for more than 180 days, thus a Thai resident for taxation purposes, the immigration guy may say, "Sir, where are your tax documents?  No tax documents, no extension." 

 

Makes sense, doesn't?  Why chase people when the Thai government knows foreigners have to eventually come to them?  Easy way to enforce compliance. 

 

Of course, if you are not inside Thailand for more than 180 days in a calendar year you are not a resident of Thailand for taxation purposes and will not have to produce any tax documents.  

Just did my 12 month extension today. I'm very sorry to report not a word of taxes was mentioned.

[Mike Lister]

8 minutes ago, KhunHeineken said:

Yes, I put forward one simple, but possibly costly solution some time ago, and that is, expats simply pull their money out of ATM's using their home country Visa / Master Card.  I can't see how the Thai government can tax such transactions, especially due to the millions of tourists that do the same.  

 

If the ATM fees and exchange rates are cheaper than Thai tax, there's the solution, but usually these fees are high and exchange rates are poor. 

As you say, exchange rates are poor and ATM fees are high so there is no incentive to go down that path. That said, when a tourist withdraws money from their overseas account, via an ATM, in most cases they wont remain here long enough to become tax resident hence there is no tax liability. But a tax resident who does the same, leaves themselves liable to Thai tax on that withdrawal, subject to the TRD ever finding out. For most people, using this method is low risk, high cost.