Tax on Pensions

[Mike Lister]

41 minutes ago, JimGant said:

 

I just read the UK-Thai DTA, and I can finally see where The Cyclist is coming from -- State and private pensions are never addressed in this treaty, unlike gov't pensions, which are exclusively taxable only by the paying country. Thus, a trip to the RD office to get their read on State and private pensions. And I can only imagine they probably weren't aware of the details (or lack thereof) of the DTA; their take was probably, "we've never taxed foreign pensions and we have no guidance to begin now."

 

Why the UK-Thai DTA doesn't mention private and State pensions is beyond me...... They don't even have an Article, like US treaties have, entitled "Other Income," that addresses income, like gambling winnings, that aren't specifically addressed elsewhere. Here's a Technical Explanation related to that US Article "Other Income":

 

 

Well, that's not very helpful, as it doesn't define who's the primary taxing country (i.e., who gets to keep all the taxes, but has to issue a tax credit). Presumably, it's the country of residence -- but it's not specific about this.

 

Thus, as The Cyclist has found out, determining assessable income from one's DTA isn't always that helpful. But, I'm not sure I'd go to my local RD office for their opinion on what is, and isn't, assessable income. I'd just give it my best shot, with the benefit of the doubt going to me -- plus, I'd keep good notes on my thought process, should I ever be queried (which seems doubtful).

Sorry Jim, I missed one part:

 

Why would you think that UK State and Private Pensions were not automatically assessable income, they are not covered by treaty, nor by any any Thai RD exclusions so what else could they be?

 

Also, why would you think that the RD have never taxed private pensions in Thailand, I don't think that's a valid assumption at all, it's one of the reasons DTA's exist? 

[noobexpat]

An interesting side note for us (UK) youngsters 🙃 ...pension tax free lump sums (although that is not the correct term for them). Paid 'tax free' for uk tax residents, but arguably could be assessable income if thai tax resident and remitted of course.

 

I think the brit expats in spain had this issue. Not sure how it was resolved.

 

 

[JimGant]

2 hours ago, Mike Lister said:

Why would you think that UK State and Private Pensions were not automatically assessable income, they are not covered by treaty, nor by any any Thai RD exclusions so what else could they be?

 

Automatically assessable income? No, discussion of State/private pensions is just not addressed in the Thai-UK treaty. Strange? yes. Intentional? who knows. But does this make it automatically assessable by Thailand? Hmmm.

 

Maybe the Brits and Thais just couldn't reach an agreement on this. Weird, and not very helpful for tax planning. But you can't just conclude that these State/private pensions are automatically taxable by Thailand, if there's no mention of them in the DTA. Thus, why not make your own decision on whether or not these are assessable incomes for Thai tax purposes -- if not delineated by the DTA, what's to say they're assessable....... Nada, to those of us who think positive.

 

Plus, there's another consideration here that goes unanswered by the DTA's omission -- does the UK have the right to also tax these pensions? Or are Thailand's tax rights exclusive? The following is from discussion on the OECD Model tax treaty:

 

Quote

a) Provisions allowing exclusive source taxation of pension payment
Under such a provision, the Article is drafted along the following lines:
Subject to the provisions of paragraph 2 of Article 19, pensions and other
similar remuneration arising in a Contracting State and paid to a resident of
the other Contracting State in consideration of past employment shall be
taxable only in the first-mentioned State.

b) Provisions allowing non-exclusive source taxation of pension payments
Under such a provision, the State of source is given the right to tax pension
payments and the rules of Articles 23 A or 23 B results in that right being either
exclusive or merely prior to that of the State of residence. The Article is then
drafted along the following lines:
Subject to the provisions of paragraph 2 of Article 19, pensions and other
similar remuneration paid to a resident of a Contracting State in
consideration of past employment shall be taxable only in that State.
However such pensions and other similar remuneration may also be taxed in
the other Contracting State if they arise in that State.

 

 

Without this being addressed in the DTA, there's a potential problem in allowing the UK to tax these pensions should Thailand decide not to (because they weren't remitted). But probably not in reality, as you have no DTA to wave at UK tax collectors to say Thailand has exclusive taxation rights. So, you're going to be taxed by somebody, it would appear. But it sure would be nice, at least for the Brits, to have a DTA that spelled out what's what.

[JimGant]

3 hours ago, Mike Lister said:

Also, why would you think that the RD have never taxed private pensions in Thailand, I don't think that's a valid assumption at all, it's one of the reasons DTA's exist? 

 DTA's address income, not income remitted. Thus, Thai RD gives credit that foreigners have some brain power to claim remitted income is from last year. Whether it is or not, is neither here nor there, as RD doesn't have the resources to call people in for questioning. And for those with direct deposits into Thailand of their pensions? You'd think that would be easy pickings for RD. But apparently not, as they didn't waste resources hitting all the banks to see if Joe Farang's direct deposit was from Boeing (taxable) or Uncle Sam (not taxable).

[UKresonant]

Just now, JimGant said:

 DTA's address income, not income remitted. Thus, Thai RD gives credit that foreigners have some brain power to claim remitted income is from last year. Whether it is or not, is neither here nor there, as RD doesn't have the resources to call people in for questioning. And for those with direct deposits into Thailand of their pensions? You'd think that would be easy pickings for RD. But apparently not, as they didn't waste resources hitting all the banks to see if Joe Farang's direct deposit was from Boeing (taxable) or Uncle Sam (not taxable).

 

OCCUPATIONAL MANDATORY (PROVIDENT FUND)

"Tax EEE tax policy is currently adopted in Thailand, i.e. contribution, investment and payout are all tax exempted, although such tax relief is subject to limit of...." from this 2009 publication https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/documents/publication/wcms_836733.pdf  Trying to find a more recent reference....

 

 

 

Edited January 31 by UKresonant