180 day rule and filing TAXES

[Marky Mark Mark]

21 hours ago, MichaelHunt said:

I wonder how this would work in practice. It could not be based on the number of days you spent in the country in the CURRENT year, right? Because if that were the case, one could transfer money into Thailand tax free during the first 179 days of the year because one can't spend more than 180 days in the country in less than 180 days.

 

So it would have to be based on whether you spent 180 days in the country in the PREVIOUS year. Or am I missing something? How do other people see this?

We are BLIND.

 

 

[Mike Lister]

22 minutes ago, Marky Mark Mark said:

Think Bud Light.

 

They had a BASE which they totally Pissed off .  Instead they thought LGBTQ crowd would more than make up for them( think Indians......lol).

 

 

A base, that's too funny by far. If every foreign who resides in Thailand, upped sticks and took the contents of their bank accounts back to where ever they came from, the GBP hit would be about 3%. On the plus side, Immigration Dept could be downsized considerably because there'd be no more 90 day reporting or long term visa renewals, this of course would put many visa agents out of work which is also not a bad thing.

[Time Traveller]

On 10/10/2023 at 1:40 AM, Sheryl said:

 

Absolutely nothing in the new regulation says this, quite the opposite.

Sheryl, you should probably stop giving tax advice.   

 

Using just one example, Article 20 Pensions and Social Security Payments, US Thai Tax treaty says it very clearly , quoting

"Paragraph 1 provides that private pensions and other similar remuneration paid in consideration of past employment are generally taxable only in the residence State of the recipient."

 

It could not be more clearer. Income sourced from USA is taxable only in Thailand if you are a tax RESIDENT in Thailand.  

For Thailand that is Residence based taxation of global income.   Nothing in the code says the income must be remitted into Thailand before it is taxed.   

 

However, this ruling while it is already on the books, there is one caveat.     Now I'm guessing 99.999999% of all American expats in Thailand have never used the international Tax treaty.   Because the Tax treaty does not automatically apply. You have to declare that you are taking a treaty position with regards to taxes on your tax filing by using form 8833.   

 

The point is, Thailand almost never taxes this income now. But they want to change that by becoming a Residence based system.

 

PS..   Just to add additional info.  The above is inclusive of 401k, IRAs, and private pensions.     For Social Security it's different as it states that it is taxable only in the contracting state (as opposed to the residence state), quoting 

"The treatment of social security benefits is dealt with in paragraph 2. This paragraph provides that, notwithstanding the provision of paragraph 1 under which private pensions are taxable exclusively in the State of residence of the beneficial owner, payments made by one of the Contracting States as a social security benefit or similar public pension to a resident of the other Contracting State or to a citizen of the United States will be taxable only in the Contracting State making the payment."

 

As there is no talk about changing the US Thai tax treaty then SSI will continue to be taxable only in USA......provided that you elect to take a Tax treaty position. (Form 8833).   

Edited October 15, 2023 by Time Traveller
additional info

[Time Traveller]

On 10/13/2023 at 8:26 PM, Longwood50 said:

Ok perhaps this is a stupid question but lets say I have income in the USA of $100,000 per year and I pay taxes on that income and don't bring it into Thailand but rather have it remain in the USA. 

Is it the understanding that the new law would make that amount taxable here in Thailand if I reside over 180 days.  

Now what if the money in an account in the USA is savings already taxed in the USA and that money is brought into Thailand for living expenses.  That money is not "income" 

What is the situation with Social Security.  I read conflicting statements with some saying Thailand could tax the social security and others saying no if you pay your tax in the USA then none will be owed here in Thailand because of the tax treaty. 

 

The basic answer is that is what it seems will happen.   

 

The more complicated answer to that question is that it depends upon the type of income you have.  If your income source is covered favorably by the international tax treaty then you can elect to have that taxed only in the US.   Using your example asking about Social Security and other Government pensions, these would be taxable only in USA and so would be exempt from Thai taxes, but only if you make that tax treaty election on your tax filing. (using Form 8833).

 

Correct, savings is not income. So should not be taxable for just simple transferring it to Thailand.

   

[Dave0206]

On 10/10/2023 at 5:08 AM, retarius said:

Not time to worry. I plan to be non tax resident here. Fortunately I have other nice places to live and can, and will spend time there. My situation is simpler perhaps, insofar as I don't work at all and earn no income. My income is all from pensions and from investments, all in the US, and taxed there. But until the situation clarifies and the rules and processes are fully known I'm not risking bringing money into Thailand. I have enough here to last me until I die anyway. 

The only money I have paid directly is US SS because if I ever need to this covers the income method rule for my visa. 

We all have enough money to last until we die as long as I die by next Tuesday I'm ???? 

[ukrules]

31 minutes ago, Dave0206 said:

We all have enough money to last until we die as long as I die by next Tuesday I'm ???? 

Don't worry, you have until well inside 2025 before you actually need to pay up

[federicoP]

3 hours ago, Time Traveller said:

The point is, Thailand almost never taxes this income now. But they want to change that by becoming a Residence based system

In fact it has always been like this, but few expats were realizing it because the taxation was referred only to incomes imported into Thailand in the same year in which they were earned.

Expats were rarely bothered by this rule because it was very easy to prove that what they brought to Thailand was referred to earnings from past years.

A recent directive from the Revenue Department will oblige people to pay taxes on all incomes brought into Thailand, regardless of the year in which they were earned.
The main objective of this new law is to target rich Thais who have investments and earnings abroad, not expats, but also expats now have to check their fiscal situation.

But it is logical to expect to live in a country all year round and never be called upon to check his own tax situation ?
For sure in Europe it would not be possible to change the country of residence without taking in consideration the tax aspect, why shouldn't it be the same here ?

[Marky Mark Mark]

23 hours ago, Mike Lister said:

A base, that's too funny by far. If every foreign who resides in Thailand, upped sticks and took the contents of their bank accounts back to where ever they came from, the GBP hit would be about 3%. On the plus side, Immigration Dept could be downsized considerably because there'd be no more 90 day reporting or long term visa renewals, this of course would put many visa agents out of work which is also not a bad thing.

Can you explain why Immigration is thinking of 90 day  visa on arrivals then.

 

Kick out Cheap retirees and replace them with what? The one coke and 5 straws Crowd.....

[Mike Lister]

4 minutes ago, Marky Mark Mark said:

Can you explain why Immigration is thinking of 90 day  visa on arrivals then.

 

Kick out Cheap retirees and replace them with what? The one coke and 5 straws Crowd.....

A retiree here is a consistent spender over time but at a low level of spend, a tourist is a far higher level of spend over a shorter period. Average length of tourist stay in Thailand is about 12 days but the average spend is around Baht 5,500 per day.......long term residents spend closer to 60/70k per month, not 170k per month. 60/70k per month income will attract on average, Thai tax of under 8k per year, assuming only few deductions, for me personally it attracts no tax.

 

If you take the longer term economic view, the retiree is the better economic bet because of consistency and duration. But in truth, the economy needs blend of both, long term and short duration foreigners. I challenged your statement that a reduction of stay to under 180 days per year would crater the Thai economy and I continue to be certain it will not, for the reasons described above. You have now asked why 90 day VOA should be offered. I think the answer is that it attempts to extend the stay of the short duration, higher spending tourists which is what the tourism industry needs right now, in order to kick start the economy.

[bigt3116]

28 minutes ago, Mike Lister said:

60/70k per month income will attract on average, Thai tax of under 8k per year,

For a single person with no deductions that person will be liable for 45,500 tax per year

 

Married with no kids is still 36,500 per year

 

The above are based on 65k per month income

[Mike Lister]

1 minute ago, bigt3116 said:

For a single person with no deductions that person will be liable for 45,500 tax per year

 

Married with no kids is still 36,500 per year

 

The above are based on 65k per month income

I was referring to long term retirees, over 65 years old are granted an additional 190k deduction. And if you're a retiree from the US, the DTA means that none of your Social Security income is taxable. I'm over 65 and my income is about 65k per month and I pay no tax on that. A person from the UK who is over 65  and their income is 65k, pays around 8k.

[gamb00ler]

5 hours ago, Time Traveller said:

If your income source is covered favorably by the international tax treaty then you can elect to have that taxed only in the US.   Using your example asking about Social Security and other Government pensions, these would be taxable only in USA and so would be exempt from Thai taxes, but only if you make that tax treaty election on your tax filing. (using Form 8833).

Are you suggesting that a US citizen can change how Thailand applies tax by filing an IRS form?

 

That doesn't seem likely or reasonable.

[Mike Lister]

5 minutes ago, gamb00ler said:

Are you suggesting that a US citizen can change how Thailand applies tax by filing an IRS form?

 

That doesn't seem likely or reasonable.

It is the case that under the US/Thai DTA, Thailand is forbidden from taxing US Social Security and other types of income specified in the treaty. It is certainly not necessary to file an exemption in the US to facilitate that, as you correctly note, the US IRS does not dictate how Thailand taxes people but the DTA does.

Edited October 16, 2023 by Mike Lister

[BritTim]

3 hours ago, Mike Lister said:

A retiree here is a consistent spender over time but at a low level of spend, a tourist is a far higher level of spend over a shorter period. Average length of tourist stay in Thailand is about 12 days but the average spend is around Baht 5,500 per day.......long term residents spend closer to 60/70k per month, not 170k per month. 60/70k per month income will attract on average, Thai tax of under 8k per year, assuming only few deductions, for me personally it attracts no tax.

 

If you take the longer term economic view, the retiree is the better economic bet because of consistency and duration. But in truth, the economy needs blend of both, long term and short duration foreigners. I challenged your statement that a reduction of stay to under 180 days per year would crater the Thai economy and I continue to be certain it will not, for the reasons described above. You have now asked why 90 day VOA should be offered. I think the answer is that it attempts to extend the stay of the short duration, higher spending tourists which is what the tourism industry needs right now, in order to kick start the economy.

In general, I agree with your analysis. However, it may have some localised impacts that have a knock-on effect to the economy in general. As an example, if 25% of the retirees in some areas (where they are a substantial proportion of property owners) decided over a short period to sell up and leave, this could seriously affect the local economy, especially the property market. Those leaving would likely be those with higher than average net worth who, in addition, might be removing children from international schools.

[retiree]

8 hours ago, Time Traveller said:

Sheryl, you should probably stop giving tax advice. 

Time Traveler, you may wish to consider not ... 

 

My understanding of your disagreement -- and please let me know if I have misunderstood -- is that you believe that the Thai government can now, or intends to, tax non-remitted income of non-citizen tax residents.   I believe that Sheryl demurs, as do I.

 

Your opinion seems to be based on this phrase from the US DTA section 20(1): 

   "... taxable only in the residence State of the recipient."

From this, you infer that:

   "For Thailand that is Residence based taxation of global income.   

   Nothing in the code says the income must be remitted into Thailand before it is taxed. "

 

But remittance is exactly what the code requires.  If I understand you, you are conflating the word "taxable" in the DTA 20(1) with the word "assessable" in the Thai tax law section 40.   Below:

 -- paragraph [2] says the assessable income must be remitted before a "resident" can be taxed,

 -- paragraph [3] defines "resident" as "tax resident" in this context.

 

https://www.rd.go.th/english/37749.html   (numbers added)

Section 41 

[1] A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.

 

[2] A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

 

[3] Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand.

 

Again, my apologies, and please let me know, if I have misunderstood your premise.

 

[Sheryl]

10 hours ago, Time Traveller said:

Sheryl, you should probably stop giving tax advice.   

 

Using just one example, Article 20 Pensions and Social Security Payments, US Thai Tax treaty says it very clearly , quoting

"Paragraph 1 provides that private pensions and other similar remuneration paid in consideration of past employment are generally taxable only in the residence State of the recipient."

 

It could not be more clearer. Income sourced from USA is taxable only in Thailand if you are a tax RESIDENT in Thailand.  

For Thailand that is Residence based taxation of global income.   Nothing in the code says the income must be remitted into Thailand before it is taxed.   

 

However, this ruling while it is already on the books, there is one caveat.     Now I'm guessing 99.999999% of all American expats in Thailand have never used the international Tax treaty.   Because the Tax treaty does not automatically apply. You have to declare that you are taking a treaty position with regards to taxes on your tax filing by using form 8833.   

 

The point is, Thailand almost never taxes this income now. But they want to change that by becoming a Residence based system.

 

 

You are confusing Thai tax regulations (which is what I referred to) with the DTA.

 

DTA outlines how the respective countries' taxation policies will interact. It does not go into detail about what each country's tax code is.

 

Thailand's tax code has never taxed income earned abroad that is never remitted to Thailand and the new Thai tax regulation does not change this. What it does do, is make taxable income brought into Thailand from foreign sources taxable regardless of whether brought in the same year as earned or not. Previously, it was taxable only if brought into the country in the same year.

 

Thailand's tax code has always been residence based, that is not a change.

 

 

[Mike Lister]

2 hours ago, BritTim said:

In general, I agree with your analysis. However, it may have some localised impacts that have a knock-on effect to the economy in general. As an example, if 25% of the retirees in some areas (where they are a substantial proportion of property owners) decided over a short period to sell up and leave, this could seriously affect the local economy, especially the property market. Those leaving would likely be those with higher than average net worth who, in addition, might be removing children from international schools.

I agree the impact will be geographically uneven and that it will be felt most by local economies rather than nationally . People with higher than average net worth and who have children at international schools, where the fees can run to 250k per term, seem unlikely to be affected, I would have thought. Those people are upper middle class earners and unlikely to balk at still low effective tax rates in Thailand. I think the most likely negative impact will be felt by lower middle class  retirees whose budgets are already stretched and who see this as the final straw. Retirees on fixed incomes who are squeezed between cost inflation and fixed earnings that aren't increased by inflation, are potentially vulnerable.

[Longwood50]

On 10/16/2023 at 3:51 AM, Time Traveller said:

Correct, savings is not income. So should not be taxable for just simple transferring it to Thailand.

So if I was to say have income in the USA pay taxes in the USA and put the net amount in savings and transfer it to Thailand the following tax year, are you saying that money is not taxed or is Thailand going to run a comparison between the taxes owed to the USA and Thai taxes and charge the difference if the US taxes don't exceed the taxes that would be due if the filing was here in Thailand. 

 

[Mike Lister]

5 minutes ago, Longwood50 said:

So if I was to say have income in the USA pay taxes in the USA and put the net amount in savings and transfer it to Thailand the following tax year, are you saying that money is not taxed or is Thailand going to run a comparison between the taxes owed to the USA and Thai taxes and charge the difference if the US taxes don't exceed the taxes that would be due if the filing was here in Thailand. 

 

My understanding is that Thai tax on the income you describe above, that is put into savings and transferred the following year, would be determined by, 1) whether or not you were tax resident in Thailand whilst that money was being earned, and 2) whether you were tax resident in Thailand when the money was transfered. If you were not tax resident in TH whilst the money was being earned, the money is savings not income.

 

The Thai tax dispensation on previous years income has been done away with so waiting for one year after the money was earned, doesn't achieve anything.

[Longwood50]

10 minutes ago, Mike Lister said:

The Thai tax dispensation on previous years income has been done away with so waiting for one year after the money was earned, doesn't achieve anything.

So basically it is as I described.  If you are a tax resident in Thailand and have income earned in the USA, the USA requires you pay tax in the USA.  They will give you a credit for tax paid to another country.  Hypothetically if the amount of tax due in Thailand was $30,000 but you paid only $20,000 in USA taxes, you would owe the additional $10,000 tax here in Thailand.  

 

[Mike Lister]

22 minutes ago, Longwood50 said:

So basically it is as I described.  If you are a tax resident in Thailand and have income earned in the USA, the USA requires you pay tax in the USA.  They will give you a credit for tax paid to another country.  Hypothetically if the amount of tax due in Thailand was $30,000 but you paid only $20,000 in USA taxes, you would owe the additional $10,000 tax here in Thailand.  

 

Maybe, perhaps, dunno, I think it's sensible to wait and see when more is confirmed rather than second guess and hypothesise. What I think is clear is that Thailand has a lower effective tax rate than both the US and the UK, and doubtless many other places also so I wouldn't jump ship until more is known..

[JimGant]

4 hours ago, Longwood50 said:

So basically it is as I described.  If you are a tax resident in Thailand and have income earned in the USA, the USA requires you pay tax in the USA.  They will give you a credit for tax paid to another country.  Hypothetically if the amount of tax due in Thailand was $30,000 but you paid only $20,000 in USA taxes, you would owe the additional $10,000 tax here in Thailand.  

Yes. And in this example, this is where you're required to file a Form 8833 to take the tax credit -- because the Thai taxation is on USA income -- and the Internal Revenue Code says foreign tax credits can only be taken on foreign income. Ah, but the DTA allows credits on Thai taxes on US income, to avoid double taxation. So, the Form 8833 needs to be filed, showing how the DTA trumps the Internal Revenue Code (no Form 8833 needed to take advantage of the DTA's exclusivity on Social Security and Govt pensions, since no Thai tax return filed, nor allowed, on this "exclusivity" of taxation by the US).

[JimGant]

4 hours ago, Mike Lister said:

The Thai tax dispensation on previous years income has been done away with so waiting for one year after the money was earned, doesn't achieve anything.

.... unless you have one of three categories of an LTR visa. Then, per royal decree, or some such proclamation, nothing changes re tax exemption per remitting in a later year. Yeah, best decision I ever made -- no visits to Immigration for five more years, and no more 90 day reports (although, with online reporting, that wasn't really such a hardship). So, if you qualify, give it a good look....

[Mike Lister]

2 minutes ago, JimGant said:

.... unless you have one of three categories of an LTR visa. Then, per royal decree, or some such proclamation, nothing changes re tax exemption per remitting in a later year. Yeah, best decision I ever made -- no visits to Immigration for five more years, and no more 90 day reports (although, with online reporting, that wasn't really such a hardship). So, if you qualify, give it a good look....

What, not go to Immi for 5 years! You'll miss the convivial conversation with Immi, the playful banter with the I/O's and the relaxed helpful air of people helping people in a laid back stress free environment. I bet you go back just to visit.

[Robin]

Hypothetical case: 

I am now a UK ta resident, but I decide to sell my house in UK and bring the money to Thailand to buy a property here.

I get a big capital gain on selling my UK house, but this is not taxed in UK as it is my "sole dwelling"

If I bring this money to Thailand will I have to pay the Thai tax on it?  It is not income, but a capital gain..  original money to buy the house was partly from income and partly from savings, paying off a loan to by the house, taken out >30 yr ago

All the talk here so far seems to be about Income, but what about transferring cash to Thailand?  

The only outcome from this that I can see is that Thailand is no longer a retirement possibility.  Has this been considered?  Who is going to buy all those Condos in Phuket and Hua Hin?

Finally, hat about cash  transfer?  Say I keep my money in a bank in Singapore? and make 2- trips there every year, bringing back a wad of Sin$$ and then change gradually at various money changers in BKK.  Who will be keeping track of this?

[UKresonant]

5 hours ago, Mike Lister said:

Maybe, perhaps, dunno, I think it's sensible to wait and see when more is confirmed rather than second guess and hypothesise. What I think is clear is that Thailand has a lower effective tax rate than both the US and the UK, and doubtless many other places also so I wouldn't jump ship until more is known..

For the UK, it may be lower depending what income your considering, probably up to 1.2M baht perhaps, then it's probably a bit more in Thailand till you get to  to 2.2M baht.  At 2.2m baht (44 fx rate) 330k tax in the UK and 370k in Thailand.

I agree with your statement if your looking at 3M Baht or more, 5% cheaper perhaps.

I look it as probably not much more, rather than an assumption of less ????.  (All very approximate)

[UKresonant]

1 hour ago, Robin said:

Hypothetical case: 

I am now a UK ta resident, but I decide to sell my house in UK and bring the money to Thailand to buy a property here.

I get a big capital gain on selling my UK house, but this is not taxed in UK as it is my "sole dwelling"

If I bring this money to Thailand will I have to pay the Thai tax on it?  It is not income, but a capital gain..  original money to buy the house was partly from income and partly from savings, paying off a loan to by the house, taken out >30 yr ago

All the talk here so far seems to be about Income, but what about transferring cash to Thailand?  

The only outcome from this that I can see is that Thailand is no longer a retirement possibility.  Has this been considered?  Who is going to buy all those Condos in Phuket and Hua Hin?

Finally, hat about cash  transfer?  Say I keep my money in a bank in Singapore? and make 2- trips there every year, bringing back a wad of Sin$$ and then change gradually at various money changers in BKK.  Who will be keeping track of this?

Capital gains might be considered as income in Thailand if you were in Thailand more than 179days in the calendar year that you sell the house. If you sell it whilst resident in the UK and don't come to Thailand until mid July that year it would take a big lump of worry away. Keep the money trail from the sale, and then the money has been taxed at the appropriate rate which was zero, if tax res in Thailand the next year and have to explain.

 

Similar to when I took Retirement benefits back in 2018, made sure I was in Thailand less than 179 days!

 

Why give yourself stress of the maybe's and grey areas, if you don't have to.

[uzynkotak]

16 hours ago, Mike Lister said:

Maybe, perhaps, dunno, I think it's sensible to wait and see when more is confirmed rather than second guess and hypothesise. What I think is clear is that Thailand has a lower effective tax rate than both the US and the UK, and doubtless many other places also so I wouldn't jump ship until more is known..

The US has a much lower (or even zero) effective tax rate for most expats. If you live abroad and earn a salary, the first $110K+ per year are tax exempt unless you spend more than 30 days per year in the US. If you live on dividends or capital gains, the first $40K (plus cost basis) are taxed at 0%, or even the first $80K if you are married and filing jointly. For many retirees, social security benefits are taxed at a lower rate vs earned income. 

[Thailand J]

3 hours ago, uzynkotak said:

If you live on dividends or capital gains, the first $40K (plus cost basis) are taxed at 0%, or even the first $80K if you are married and filing jointly.

There is another $13850 standard deduction.

I have posted the spreadsheet before and still hope that I am wrong.

[Ben Zioner]

17 hours ago, Mike Lister said:

What, not go to Immi for 5 years! You'll miss the convivial conversation with Immi, the playful banter with the I/O's and the relaxed helpful air of people helping people in a laid back stress free environment. I bet you go back just to visit.

Actually I did, I had two visits to immigration for my life certificates, each signed after a friendly chat and  my modest contribution of 1000 Bahts to the office entertainment piggy bank. Good to maintain old relationships.