More details on Thai taxation of overseas income

[Haskell954]

1 minute ago, Guavaman said:

 

Article 21 (Government Service)

 2. a) Any pension paid by, or out of funds created by, a Contracting State or political
subdivision or a local authority thereof to an individual in respect of services rendered to that
State or subdivision or authority shall be taxable only in that State.
b) However, such pension shall be taxable only in the other Contracting State if the
individual is a resident of, and a national of, that other State.

 

Ah, thank you.  Somehow I missed that, caught up in the panic with everyone else I guess!

[Guavaman]

16 minutes ago, Haskell954 said:

So does this mean if our income is tax-exempt according to law in our home countries, it will remain tax exempt here?  Or does this mean mean it will be taxed.

If you bring the income into Thailand, it depends upon the specific type of income as stated in the DTA and/or Thai tax law.

Edited October 4, 2023 by Guavaman
make it clearer

[AP2019]

Posted 21 hours ago

  21 hours ago, AP2019 said:

My fear is that when I transfer money into Thailand the bank will automatically withhold the maximum tax amount and then tell me I need to file a tax return (with some kind of US tax documentation) for a refund.

 

Where is the thread for alternatives to Thailand? I heard that in Malaysia many people speak English, so no language issues. Also, Vietnam seems to be a good possibility...

 

Expand  

Irrational fear. 

Learn Thai.

 

=======================

 

You're naïve if you don't think this is possible....

 

 

 

•  

[zzzzz]

back in the 80's,if you stayed over 180 days/year regardless of what visa you were on, you HAD to show a tax clearance certificate when you left>
It costs 1,000 baht/

[Expat68]

If you were to send most of your money for the year in one hit, then surely you could argue that it is savings because you have not received the money yet

[Mike Teavee]

1 hour ago, Expat68 said:

If you were to send most of your money for the year in one hit, then surely you could argue that it is savings because you have not received the money yet

That would be the case if the "Not Sent in The Same Tax Year as Earned" rule was still in place but from 1/1/2024 they're saying income earned in previous tax years is taxable. 

 

So if the money your sending was from income in previous years then it is (DTAs aside) taxable.

 

E.g. let's say in 2024  you get $15,000 in dividends, $15,000 in rent & $5,000 in interest, if you sent this $35,000 in 2025/2026/2027 etc... it would be taxable.  

 

 

Edited October 5, 2023 by Mike Teavee

[Iamloki]

18 hours ago, Dogmatix said:

Thailand does have itemized deductions in addition to the standard deduction. There are a lot: for elderly parents, kids, childbirth expenses, charitable donations, life and health insurance premiums, investing in retirement funds, sometimes a special promotion for buying consumer goods. There is also big 190k deduction for over 65s.

Thanks D. Very helpful.

[Srikcir]

9 hours ago, Puccini said:

In the context of income taxation,

• there is income,
• there is assessable income,
• and there is taxable income.

Not all income is necessarily assessable income, and not all assessable income is necessarily taxable income.

Precisely. Which is why the proposed new tax law needs to be precise, self explanatory and predictable. Which thus far it is NOT.

[Haskell954]

21 hours ago, grubman said:

So how will this effect me, I work out of Thailand for 4 month at a time and then spend 2 months in Thailand and have my salary send to my Thai account, I enter on a one year visa based on marriage, i am not a resident of Thailand so with this new tax effect me ??

Yes, if you spend 180 days a year in Thailand you are a tax resident.  If you're spending 6 months total here, just spend a week or two less to ensure you don't cross that 180 day threshold.

[Neeranam]

8 hours ago, NanLaew said:

The UK state pension will be taxed at source and, if the DWP are totally compliant with the rules (and I think they will be), will not attract additional taxation if remitted to Thailand.

 

If you are already paying Thai income tax on the online work, I would think you can continue to do so.

Thanks. 

[StayinThailand2much]

3 hours ago, zzzzz said:

back in the 80's,if you stayed over 180 days/year regardless of what visa you were on, you HAD to show a tax clearance certificate when you left>
It costs 1,000 baht/

This procedure may be how it could be again, considering Thai's affinity with old laws and regulations.

[StayinThailand2much]

9 minutes ago, Srikcir said:

Precisely. Which is why the proposed new tax law needs to be precise, self explanatory and predictable. Which thus far it is NOT.

Maybe they kept it vague on purpose to allow state officials to set their own rules, similar to police and immigration officials...

[StayinThailand2much]

15 hours ago, MeePeeMai said:

Yes and it also leaves the door wide open for "selective enforcement" . 

Yes, this is the Thai way...

[gearbox]

The truth is every gubement in the world would like to grab as much money as possible, and Thailand is no different. Especially after the COVID money splashing there is need now to collect more.

 

For those threatening to leave the number of greener pastures is constantly shrinking. A few days ago Portugal announced similar measures.

 

https://www.theguardian.com/world/2023/oct/03/portugal-to-scrap-unjust-tax-breaks-for-foreign-residents

 

Taxes can be avoided in countries like Democratic Republic of Congo, but there are other issues to deal with...

[Neeranam]

2 minutes ago, gearbox said:

For those threatening to leave the number of greener pastures is constantly shrinking. A few days ago Portugal announced similar measures.

 

https://www.theguardian.com/world/2023/oct/03/portugal-to-scrap-unjust-tax-breaks-for-foreign-residents

 

Taxes can be avoided in countries like Democratic Republic of Congo, but there are other issues to deal with...

Interesting, thanks. A couple of crypto millionaires I know are talking about mixing their time between Thailand, Lichtenstein and Dubai. 

[garygooner]

So much info, so many comments, everything is so unclear. I'm just assuming that money brought/sent into Thailand before Jan 1st 2024 will be okay, 3/5/10 years ago etc?  

[Sheryl]

4 minutes ago, garygooner said:

So much info, so many comments, everything is so unclear. I'm just assuming that money brought/sent into Thailand before Jan 1st 2024 will be okay, 3/5/10 years ago etc?  

That much is crystal clear, yes.

[Straight8]

On 10/4/2023 at 4:30 AM, 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.

 

I am sure that in their mangling of their language means to say that the amount of tax paid in the source country can be deducted from the amount of any tax owed in Thailand.

So do i get a "Tax Refund" if I paid too much tax in my foreign country... yeah, thought so.!!

 

 

[Straight8]

Let's re-visit this crap in a few months time

[Xonax]

So nothing new here but just a storm in a teacup!

[freeworld]

23 minutes ago, Straight8 said:

So do i get a "Tax Refund" if I paid too much tax in my foreign country... yeah, thought so.!!

 

 

You claim a rebate in your home country for Thai taxes paid.

Edited October 5, 2023 by freeworld

[freeworld]

1 hour ago, Srikcir said:

Precisely. Which is why the proposed new tax law needs to be precise, self explanatory and predictable. Which thus far it is NOT.

Refer to the DTA and the Thai revenue code.

[Marco51]

On 10/4/2023 at 3:01 AM, webfact said:

 

The Thai Revenue Department has in a press release explained more about the taxation of income overseas which will affect both some foreigners and some Thai people.

 

The basic idea is, that when money is transferred into Thailand it should be taxed in Thailand if it is income. 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. If Thailand has a double tax agreement with the country where the money comes from, the tax paid in that foreign country can be deducted in Thailand according to the rules in the double tax agreement.

 

According to Mr. Winit Wisetsuvarnabhumi  Deputy Director General and Spokesperson of the Revenue Department, the new rule basically follows the many international tax treaties, which Thailands is a signatory to. 

 

by Gregers Møller 

 

Full story: ScandAsia 2023-10-04

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

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It's as vague as before and addresses nothing. The main questions remain :

- what is considered income ? As the word says in coming money even when in possession long ago or money earned? What about inheritance or monetary gifts ? Example Germany does not tax anything below 40000 Euros = appr. 1.5 Million THB as gift or 400k Euro = 15 Million inheritance.

- is receiving money from a savings account abroad considered income ? After all in almost all cases this has been saved from already taxed income. And interest on savings accounts abroad has already also been taxed with anything from 10 % up to countries like Germany even 26.5%.

- are pensions for people retiring here taxed ? Again after all in most countries abroad these are monies that have been both taxed and saved in some government scheme many years or decades earlier. If so , starting from what amount? Again after all this includes in most EU countries free healthcare.

So as this does not include healthcare here and , example myself, pay 100.000 THB for health insurance p.a. what do I expect?

- if I hold savings from my working here in Thailand in a Thai account that pays a fantastic interest of around 0.75% and I am not so happy about that and take said savings to , example, New Zealand, where I receive 4.5% interest which is taxed in New Zealand with 10% already.....do I have to tax this again in Thailand if I bring it back and do I have to tax my own savings  from said account if I bring it back to Thailand where it started out from?

- if I inherit money in a country that has either no tax on  it or it has been taxed already, is this then considered taxable income again in Thailand?

- How and where is all this implemented : at the bank on receiving the funds or via the yearly tax declaration?

- Who works these tax declarations and for foreigners will there be an at least English language explanation and form sheet or do we have to employ tax lawyers and accountants as retirees and translation services at high extra costs?

- does in future every retiree have to file a tax declaration, no matter what?

- will for people with year visas their compulsory amounts of400k resp. 800k THB in a local bank account be considered taxable ?

- will deductibles take into account that foreigners are expected to a more expensive lifestyle so their compulsory retirement reserve is 800thousand, and then the foreign style cost of living should be appropriate amounts . Or will suddenly be expected 800thousand to be a kind of license to exist here and foreigners expected to live off 25000 Baht p.m. which are then deductible?

It would be very much appreciated if these questions could be addressed , preferably in a language a non tax lawyer understands. And no, I am not holding my breath, I had put up these questions before and received no reply.

[moogradod]

12 hours ago, Guavaman said:

..................

First of all Thank You for your effort.  It has as well motivated me to make my wife translate the whole thing again so far possible.

 

But you state one extremely interesting point if my interpretation is true:

 

The best tax advantage for married people or people with parents or children in Thailand, is the loophole in the Thai tax code for the ultra-rich:

 

One can provide gifts to spouses, children, parents up to 20m Baht each annually with absolutely no tax implications.

 

For example: Under DTAs foreign social security benefits are not taxable in the state of residence (Thailand). So you can bring in your social security benefits (by direct deposit to provide an audit trail), and then transfer gifts to your wife and or children up to 20m Baht each annually (adding notation to the transfers as gifts from Mr. X to Mrs. Y to provide an audit trail).  One could gift 20m each to wife and children annually, then ask them to pay for all of your needs -- if they are still hanging around after you have spoiled them. Warning!

Do you mean if I receive a monthly state pension (social security) directly from Switzerland remitted to my Thai bank account and then transfer the money to my wife as gift (maybe in one go at the end of the year) I do not have to pay Thai tax ? It is less than 20m Baht ????

I do not pay tax for that in Switzerland because I do not have a Swiss passport (so no DTA involved, I do not need to look what in such a DTA were written) nor in my "homeland" where I was born since I do not have an adress there, either.

[freeworld]

9 minutes ago, moogradod said:

Do you mean if I receive a monthly state pension (social security) directly from Switzerland remitted to my Thai bank account and then transfer the money to my wife as gift (maybe in one go at the end of the year) I do not have to pay Thai tax ? It is less than 20m Baht ????

I do not pay tax for that in Switzerland because I do not have a Swiss passport (so no DTA involved, I do not need to look what in such a DTA were written) nor in my "homeland" where I was born since I do not have an adress there, either.

But is it the 20 million baht is the recipient does not pay tax on it. But when it is in the hands of donor and part of that constitutes earned income, should it not be partially taxable?

Edited October 5, 2023 by freeworld

[retiree]

16 minutes ago, moogradod said:

if I receive a monthly state pension (social security) directly from Switzerland remitted to my Thai bank account and then transfer the money to my wife as gift ...  I do not have to pay Thai tax ?

You do (subject to any DTA).  It is taxable Thai income as soon as it enters your Thai account.  A gift is exempt for the recipient -- it is not a tax deduction for the giver.

[Yumthai]

29 minutes ago, moogradod said:

Do you mean if I receive a monthly state pension (social security) directly from Switzerland remitted to my Thai bank account and then transfer the money to my wife as gift (maybe in one go at the end of the year) I do not have to pay Thai tax ? It is less than 20m Baht ????

You will pay tax if you remit the money directly to your Thai bank account.

However, if you transfer money directly to your wife Thai bank account from your Swiss account as a gift, she won't pay tax up to 20M THB remitted in the same calendar year. 

 

[moogradod]

9 minutes ago, retiree said:

You do (subject to any DTA).  It is taxable Thai income as soon as it enters your Thai account.  A gift is exempt for the recipient -- it is not a tax deduction for the giver.

Thank you for answering. Makes sense. But am I correct assuming that this was so far not enforced ? And will be from 2024 on ? At least this is what I have heard from multiple angles as well as here on AN. So it means that I will absolutely need to make my first tax declaration until March 2025 covering the total of social security - state pension - of 2024 ?

[moogradod]

2 minutes ago, Yumthai said:

You will pay tax if you remit the money directly to your Thai bank account.

However, if you transfer money directly to your wife Thai bank account from your Swiss account as a gift, she won't pay tax up to 20M THB remitted in the same calendar year. 

 

It is up to the Swiss how they do it (it is not from any account I would have there) and I think they would only transfer to a Thai account with my name.

[Lorry]

9 hours ago, andux said:

 

Interesting. In that case, suppose that in 2024 a person stays in Thailand only 179 days. That person can bring as much as they want to Thailand and it won't be taxed.

 

Now, suppose that same person, in 2025, spends in Thailand the whole year. Would they be able to freely bring money earned in 2024, since the foreign income from 2024 was earned while they were not in Thailand?

This would be the logical conclusion of Q8 and Q9.

I think it would work the way you describe it, 2024 and 2025 only.

 

But another poster has warned already that if you repeat this forever they probably won't accept it.