More details on Thai taxation of overseas income

[JAS21]

My wife is a Thai National but also has British nationality. When we lived in the UK she never worked so was never issued an NI number. Neither does she work here in Thailand but does fill a tax form in every year.

 

When I am no longer above ground she will receive a quite substantial (UK £32k) widows pension…wonder what will happen in her case. There must be many other expats living here in similar circumstances also a little concerned. 

[SABloke]

4 hours ago, MangoKorat said:

I have no idea but I'd guess they can request proof of when the money was earned.

How does one prove when the money was earned? For example, if I have an account that has held X amount of money over the years plus some income and then transfer a percentage of that money into Thailand, how do they know whether it's money from 5 years ago that the bank is transferring or money from this year? 

[Neeranam]

1 hour ago, Expat68 said:

My wife and I have property in the UK, I will just let her own all the income from it, they can't prove otherwise 

How will this avoid paying any due tax? 

[NanLaew]

1 hour ago, jacko45k said:

1 hour ago, Srikcir said:

The logic can be twisted endlessly.

What is "income?"

It would all get rather difficult if one was required to 'prove it' by Thai authorities. Prove it comes from savings, prove tax has been paid on it..  etc etc. We will tax it until you can prove it should not be taxed!

For the Thai Revenue Department, the term "income" means any funds remitted from overseas to an account in Thailand, ie, incoming funds of any sort regardless of it being remuneration for work, pension payments, market dividends, investments, etc..

 

For the Thai Revenue department, anyone living and breathing in Thailand for 180 days or more in the tax year is considered tax resident in Thailand and thus liable for tax, regardless of nationality or immigration status.

 

If a foreigner is Thailand tax resident and is paying tax in a domicile that has a dual taxation agreement with Thailand, and is remitting funds from that domicile to Thailand, they are not liable for tax in Thailand.

 

If the foreigner is Thailand tax resident and is NOT paying tax in a domicile that has a dual taxation agreement with Thailand, and is remitting funds from that domicile to Thailand, they are liable for tax in Thailand.

 

 

[Neeranam]

3 minutes ago, JAS21 said:

My wife is a Thai National but also has British nationality. When we lived in the UK she never worked so was never issued an NI number. Neither does she work here in Thailand but does fill a tax form in every year.

 

When I am no longer above ground she will receive a quite substantial (UK £32k) widows pension…wonder what will happen in her case. There must be many other expats living here in similar circumstances also a little concerned. 

Isn't that taxed in the UK? 

Most get around 500,000 baht until tax is paid, due to personal allowances. 

 

[foreverlomsak]

1 hour ago, Srikcir said:

Why can't Thai Tax Revenue simply state that funds generated by foreign pensions and/or social security and transferred in whole or in part to Thailand are exempt from Thai taxation

That could be a breach of a double taxation agreement, you seem to think the US agreement applies to everybody.

[Mike Teavee]

2 minutes ago, SABloke said:

How does one prove when the money was earned? For example, if I have an account that has held X amount of money over the years plus some income and then transfer a percentage of that money into Thailand, how do they know whether it's money from 5 years ago that the bank is transferring or money from this year? 

Generally the LIFO (Last in First Out) principle is applied so if you had £10,000 in your account, received £10 in interest & sent over £100, £90 would be savings & £10 income/taxable.

 

Will be interesting to see how the RD approaches it & I can't wait to see how they're going to understand the local Tax regulations for the other 194 countries in the world, no doubt we'll have to have any supporting documents translated to Thai ????  

 

[mfd101]

Then there's the question of whose 'tax year' we're talking - theirs or ours? In Oz the tax year is from 1July year X to 30 June year X+1 ... The complexity of the issues is never-ending.

 

As a federal superannuant living on taxed income derived from the Oz federal budget each year + taxed earnings from investments derived from my federal retirement lump sum, I intend to do nothing.  When or if asked (and I suspect I never will be), I will have photocopies ready of all the Oz tax I pay each year. After that, mmmm.

Edited October 4, 2023 by mfd101

[freeworld]

 

11 minutes ago, SABloke said:

How does one prove when the money was earned? For example, if I have an account that has held X amount of money over the years plus some income and then transfer a percentage of that money into Thailand, how do they know whether it's money from 5 years ago that the bank is transferring or money from this year? 

Ermm - documentation?

[beammeup]

So many of us are living off of savings that have been taxed previously, but don't have documents that can prove that so I guess we will be taxed again?

[freeworld]

2 hours ago, Thailand J said:

US pension and SS are covered by the tax treaty, no double tax.

For Dividends and Capital gains, savings from 15+ years ago, tax credit is not enough relief. 150,000B exemption is a joke.

If you are US citizen who live overseas, US IRS will tax your foreign income but they allow a generous $120,000 foreign income tax free. How does 150,000B compare?

Well everyone is free and has a choice.

[foreverlomsak]

6 minutes ago, Mike Teavee said:

Generally the LIFO (Last in First Out) principle is applied so if you had £10,000 in your account, received £10 in interest & sent over £100, £90 would be savings & £10 income/taxable.

 

Will be interesting to see how the RD approaches it & I can't wait to see how they're going to understand the local Tax regulations for the other 194 countries in the world, no doubt we'll have to have any supporting documents translated to Thai ????  

 

If you had a bank balance of say $15,000 on 29th December and you transferred $16,000 during the Thai Tax Year, I would assume the extra $1,000 would be all they could tax.

As far as understanding local tax regs, all they need to understand is the DTA's for 61 countries, the others they can make up as they go (as per norm for Thai Gov Depts).

[WorriedNoodle]

Has it been listed anywhere what the planned tax rates would be that they would try to take off you when sending money into Thailand?

[Mike Teavee]

2 minutes ago, foreverlomsak said:

If you had a bank balance of say $15,000 on 29th December and you transferred $16,000 during the Thai Tax Year, I would assume the extra $1,000 would be all they could tax.

As far as understanding local tax regs, all they need to understand is the DTA's for 61 countries, the others they can make up as they go (as per norm for Thai Gov Depts).

It depends on whether any part of the $15,000 was interest.

 

[Expat68]

24 minutes ago, Neeranam said:

How will this avoid paying any due tax? 

My wife will not get taxed because she will be below the threshold 

[Mike Teavee]

I have a "Current Account" Mortgage (Essentially any money in the account is offset against the mortgage owed when it comes to calculating the interest each month, e.g. I have a little bit more money in there than I owe so they pay me approx. £2 a year in Interest).

 

So could I send any of this money to Thailand & legitimately say it's Savings (The money originally came from my taxed salary in the UK) & then replenish the money from dividend/capital gains income which have been taxed appropriately in the UK (I do a Tax Return every year)?

Edited October 4, 2023 by Mike Teavee

[foreverlomsak]

4 hours ago, NanLaew said:

That is NOT the way a "double tax agreement" works.

 

If tax has already been paid in the country where the money comes from, it does not need to be deducted again on receipt in Thailand.

Have you read many DTA's, because the UK agreement is written to allow tax to be collected by Thailand, and then claimed back if allowable, as State and Private Pension are not addressed specifically in the DTA it is doubtful IMHO if any claim would be upheld by HMRC.

[Mike Teavee]

The more I think about this, the more my head spins... 

 

In 2 years & 4 months (not that I'm counting) I'll start to receive my Private pensions & am planning on taking the Tax Free Lump sum (which has obviously not been Taxed), if I were to transfer this to Thailand would I be liable to pay Tax on it?

 

If yes then I better start planning where I'm going to live for the other 186 days of 2026). 

 

[Neeranam]

7 minutes ago, Expat68 said:

My wife will not get taxed because she will be below the threshold 

I see. Taksin like, giving loads of assets to his family, gardener, maid, etc. 

[foreverlomsak]

8 minutes ago, Mike Teavee said:

It depends on whether any part of the $15,000 was interest.

 

Sorry, thinking on my position, where the only account I have in the UK is non-interest bearing

[Lamphen]

My country has a double taxation treaty with Thailand. My pension is not taxed in my home country based on this treaty. I pay tax on my pension here in Thailand as I am a tax resident here according to Thai legislation (living here for more than 180 days a year). Of course I have to send proof of paid tax in Thailand to my home country in order to avoid double taxation. Its a bit extra paperwork, but it is worth it as the tax level here is more favorable than back home.

[Andre0720]

Wish that a professional could be hired to sort this out.

Do not leave this in the hands of politicians, or in the hands of soldiers acting as politicians.

Get a professional to work on a 'decision table', ideally a lawyer, describing all possible circumstances related to the subject, and showing the outcome for each circumstance.

A 'decision table' is the perfect tool to describe a multitude of rules in a given topic, and it also highlights missing circumstances, so highlighting holes left in any redacted law or set of rules.

This law, described through a 'decision table', would show so may holes, so may missing circumstances, so many missing conditions, that nobody could even know how to call it....

Well, I used to do that kind of work....

[BenStark]

5 hours ago, webfact said:

If the income has been received in another country and later within the same tax year is being transferred to the taxpayer’s account in Thailand it must be taxed in Thailand.

This I have never understood how they can prove when you earned the money that you transfer.

 

Although if your foreign pension is deposited straight into your Thai bank account, then it isn't difficult to proof of course.

 

People who have their extension of stay based on the monthly income rule, may want to reconsider how this money arrives in their bank accounts

[foreverlomsak]

2 minutes ago, Mike Teavee said:

In 2 years & 4 months (not that I'm counting) I'll start to receive my Private pensions & am planning on taking the Tax Free Lump sum (which has obviously not been Taxed), if I were to transfer this to Thailand would I be liable to pay Tax on it?

If your from the UK and if my reading of the UK DTA and it's associated Digest is correct, I would have to say yes to that, but a lot of things could happen by then.

[Neeranam]

1 minute ago, Mike Teavee said:

The more I think about this, the more my head spins... 

 

In 2 years & 4 months (not that I'm counting) I'll start to receive my Private pensions & am planning on taking the Tax Free Lump sum (which has obviously not been Taxed), if I were to transfer this to Thailand would I be liable to pay Tax on it?

 

If yes then I better start planning where I'm going to live for the other 186 days of 2026). 

 

They're are many ways to avoid paying tax on this. 

How about sending smaller payments to different bank accounts via apps like Wise? 

How about buying USDT and using P2P on exchanges like Binance? This way, you have Thai baht going to your accounts from random Thai accounts. 

 

 

[Mike Teavee]

1 minute ago, BenStark said:

This I have never understood how they can prove when you earned the money that you transfer.

 

Although if your foreign pension is deposited straight into your Thai bank account, then it isn't difficult to proof of course.

 

People who have their extension of stay based on the monthly income rule, may want to reconsider how this money arrives in their bank accounts

The way this is normally done (e.g. for calculating Capital Gains on a Share Sale) is LIFO (Last In First Out) so if you transferred money from your account to Thailand & showed them your home country bank statements (Which you need to do as part of a Tax Return), they would go through any interest earned in that Tax Year & say that part of the Transfer was the Interest earned. 

 

Big difference now is they can go back any number of Tax Years 

 

Of course this gets more complicated as in Future Tax Years you somehow need to be able to say that some of the Interest has already been taken into consideration for Tax purposes :S

 

[newnative]

1 hour ago, bunnydrops said:

Another "what if". If you are on  (US) SS  and a pension, but don't make enough to pay taxes after your standard deduction, can Thailand tax the full amount made? To be clearer, you have to make over $27,700 if married before you are taxed on any amount above that. Can Thailand tax you on the $27700?

     My answer would be no, due to the tax treaty in place prohibiting double taxation.  Your SS and pension are under the US tax system and, as such, have gone through the taxation process in the US--the first taxation.  The fact that the amount of tax owed is zero should have no bearing.  Ditto if you owe $5 or $20 or any amount.  For Thailand to demand that the income go through a second taxation, Thailand's, with different tax schedules, should be prohibited by the treaty.   I know, 'should' being the operative word, several times.

[soalbundy]

1 hour ago, Skeptic7 said:

More unclear mumbo-jumbo BS...but zero clarity or anything which explains anything to those whom are concerned. They still haven't a clue. 

 

If it ultimately does apply to "us", then my suggestion is simply noncompliance by all of us. Then if they ever come knocking, react in typically vacuous Thai fashion...smile stupidly, claim ignorance...go 'huh huh huh mai roo' and stare with a silly blank look. 

 

Only difference...in our cases, it will be acting. 

 

Although the silly smile could disappear when you are charged 3 times the tax bill for tax avoidance. A dangerous path to go down, ignorance of the law isn't a viable defense.

[foreverlomsak]

3 minutes ago, BenStark said:

This I have never understood how they can prove when you earned the money that you transfer.

 

Although if your foreign pension is deposited straight into your Thai bank account, then it isn't difficult to proof of course.

 

People who have their extension of stay based on the monthly income rule, may want to reconsider how this money arrives in their bank accounts

They will assume current income, it will be up to you to prove otherwise, standard practice I thought in Revenue departments.

If you could prove the equivalent of 800k Baht in your foreign bank accounts at the end of Dec no need you are moving over savings not current income.

[Smokin Joe]

53 minutes ago, freeworld said:

Does it state in the tax code that savings is income?

 

For most people income is money earned:

ordinary income ie. from Investments, interest, dividends, salaries and wages.

 

Income from capital gains.

Didn't see the word savings mentioned in the section listing assessable income.

 

And what did the man mean when he said "savings".

 

Every dollar in my bank account is savings as soon as it is received. When my pension is deposited into my account anything I don't spend right away instantly becomes savings.