Legal Strategies to Reduce Thai Tax

[Ben Zioner]

On 5/22/2024 at 9:56 AM, JimGant said:

If she called it income for some kind of services provided, then she'd be subject to having to file a Thai tax return.

Wouldn't that be great? If Nookie ended up paying IT on 2 Million and Hubbie on another 2 Million that would be still a lot less than Hubbie paying IT on 4 Million. I've had that in the back of my mind for a while now.

 

[Klonko]

57 minutes ago, Mike Teavee said:

I think you might be mixing things up a little, you can't gift something to somebody that they already own so in the case of overseas conjugal property you can only gift your half. 

 

E.g. I have £100K in a jointly owned bank account with my Wife, I can't gift her £100K as £50K is already hers so I would Gift her £50K which she could then remit into Thailand tax free.

 

If she chooses to remit £100K then she is remitting the £50K Gift that I gave her (Tax Free) & £50K which has nothing to do with Gifts so would be subject to normal assessable income rules, but again, that is nothing to do with Gifts as that £50K wasn't a gift.

 

I am not mixing up anything and I am consistent with your post because, if read thoroughly my statement implies that it is 50% tax assessable income because it it not a gift for 50% though declared as gift.

[Mike Teavee]

51 minutes ago, Klonko said:

I am not mixing up anything and I am consistent with your post because, if read thoroughly my statement implies that it is 50% tax assessable income because it it not a gift for 50% though declared as gift.

But it wouldn’t be declared as a Gift as it’s not yours to Gift, you would only declare half of it as a gift. 
 

In my Example of £100K in a joint bank account, the gift is £50K which if remitted is 100% a gift. 
 

if she remits her £50K on top of this, then that has absolutely nothing to do with Gifts. 

[Mike Lister]

10 hours ago, Mike Teavee said:

But it wouldn’t be declared as a Gift as it’s not yours to Gift, you would only declare half of it as a gift. 
 

In my Example of £100K in a joint bank account, the gift is £50K which if remitted is 100% a gift. 
 

if she remits her £50K on top of this, then that has absolutely nothing to do with Gifts. 

This answer would get my vote.

[KhunHeineken]

On 5/25/2024 at 7:33 AM, Mike Teavee said:

I hear the argument about it being a big loophole that people can exploit but that's why limits were included & if anything I expect TRD will reduce these over time rather than abolish them all together.

I'm one of these members. 

 

If it's so easy to "gift" money in order to avoid tax, they will either lower the limits significantly, or tax all "gifting" in the future.   

 

Wealthy individuals like Thaksin will need more complex corporate structures to avoid the tax, which I am sure his team of tax lawyers can create for him, but for everyone else, I can't see them allowing "gifting" to remain in place the way it is now. which pretty much negates the taxing of remitted funds, so I can see changes to "gifting" in the future.  

 

Time will tell. 

Edited May 27 by KhunHeineken

[ThiAmo]

Sorry if the following or something similar has already been discussed.

I am currently in the process of buying a house for my Thai wife here in Thailand with resources from abroad. The land title (chanote) will be entirely in her name. 

In your estimated opinion will this transaction (with fund transfer to her Thai bank account) be regarded and accepted by the TRD as a Gift for the spouse and thus be non taxable income-wise? Or does my co-inhabitation as husband infringe the requirement that the giver of the gift can't benefit in any way of the donation him/herself.

If accepted as a gift, would wife have to pay tax on the gift anyway?

Do I need a tax consultant?

Thanks a lot.

 

[Mike Teavee]

2 hours ago, ThiAmo said:

Sorry if the following or something similar has already been discussed.

I am currently in the process of buying a house for my Thai wife here in Thailand with resources from abroad. The land title (chanote) will be entirely in her name. 

In your estimated opinion will this transaction (with fund transfer to her Thai bank account) be regarded and accepted by the TRD as a Gift for the spouse and thus be non taxable income-wise? Or does my co-inhabitation as husband infringe the requirement that the giver of the gift can't benefit in any way of the donation him/herself.

If accepted as a gift, would wife have to pay tax on the gift anyway?

Do I need a tax consultant?

Thanks a lot.

 

If your wife has an account in your home country then it would be safer to make a Gift to her there (drawing up a document that details the Gift) and have her remit the money over. 

 

If she doesn't then I believe a Gift is a Gift & your wife would not have to pay tax on it if you sent her the money directly to her account in Thailand, however others have made an argument for it being assessable income for you even if you send it directly to your Wife so advisable to seek some help from a qualified tax accountant.

 

As to whether you living in the house that she is buying with the "Gift" means you're receiving a benefit, I personally don't think it is as you could argue that you pay for all the groceries, utilities etc... but if needs be you could draw up an agreement whereby you pay your wife "Rent" each month (though this might mean she needs to pay tax on the Income) - Again, a decent Tax consultant should be able to advise how best to approach it. 

 

If the Gift is > 20Million, your wife would need to pay 5% Gift Tax on it unless you split it over different tax/calendar years

 

 

[JimGant]

14 hours ago, ThiAmo said:

I am currently in the process of buying a house for my Thai wife here in Thailand with resources from abroad.

What's the source of those resources? If last year's savings or from income exempt from Thai taxes via DTA -- the taxability of the gift is irrelevant. But, if done with income assessable by Thailand, the jury is still out on whether or not, as a gift, this income is tax exempt.

 

Unless things have changed since I did it, you'll have to go to the land office and both you and the wife will have to certify that the land is being bought with her money. The land office won't care that she obtained the money as a gift. But the TRD someday may want further assurance that it was a gift -- thus, that certification done at the land office should provide such assurance. And, yes, she'll be responsible for a 5% gift tax on the amount over 20M baht that you gave her -- assuming she received the gift in Thailand, and not overseas.

[redwood1]

Here is another monkey wrench to add to many others for the half baked zero thought out mess of a almost unenforceable tax on income ...

 

 

 

https://www.pattayamail.com/latestnews/news/thailands-new-visa-rules-from-june-1-break-fresh-ground-461766

 

 

Thailand’s new visa rules from June 1 break fresh ground

 

 

There are also implications for Thai Revenue’s policy “clarification” to tax the overseas income of tax residents – namely anyone staying in the country more than 180 days in a calendar year. Using a combination of the new 60 days rule, plus a couple of border runs, it would easily be possible for individuals to clock up more than six month residence without having any visa at all. Thus the idea that Thai Revenue can identify potential tax residents by the type of visa they have is faulty. Enforcement of the new Revenue regulations is still unclear to say the least.

[JimGant]

18 hours ago, ThiAmo said:

In your estimated opinion will this transaction (with fund transfer to her Thai bank account) be regarded and accepted by the TRD as a Gift for the spouse and thus be non taxable income-wise?

 

Are you a Yank? If so, this cannot be a non-taxable event -- because of the peculiar nature that all our DTAs have a savings clause, whereby the US always has at least secondary taxation rights on income -- meaning that you'll always pay taxes to someone (which the OECD is trying to make standard for all its community).

 

So, the argument about whether or not gifts remitted to Thailand are exempt from Thai taxation -- is a non player for Yanks. Why? Because, if you pay no taxes to Thailand on this gift -- because you believe all the gossip about it being tax exempt -- then you'll have no Thai taxes to offer as a credit against that other tax obligation, the one to the US. So, you pay full bill to Uncle Sam. Yeah, if you sent a pile of gift money to Thailand, the Thai taxes you avoided may exceed the full bill you pay Uncle Sam; but we're talking a lot of remittance. Anyway, bottom line: Yanks, don't get too excited about maybe getting a tax break by remitting gift money to Thailand.

[Presnock]

On 5/23/2024 at 1:55 PM, CygnusX1 said:

Then it’s one of the most bizarre things I’ve ever heard of. Is it only illegal immigrants who have the right to borrow someone’s house for a long while, or does it apply to locally born criminals as well? If a criminal in NY steals your car, are they allowed to use it for a month until you can succeed in obtaining a court order to recover the car? A house is by far the most expensive thing almost all of us will ever own, and it’s beyond all reason that the law in NY at least doesn’t adequately protect you from someone stealing it.

google squatters and New York for details

[Presnock]

On 5/24/2024 at 11:50 AM, ballpoint said:

Seems to me that this thread has more discussion on "I think this and that are okay, but I'm not sure, and if I go ahead and do this or that, what are the chances it will be investigated?" rather than "this will definitely work, so I'm doing it".  From what I've read, the ones who plan on limiting their time in Thailand to under 180 days per year periodically, and remitting money during that year, seem to be the only ones actually following the title, though I may have missed something.

 

I am retired, under 60, have no pension, and never will.  My regular income is from various managed funds, with a few other eggs in other baskets for a rainy day.  I pay no capital gains tax on sale of the funds, so can't show any evidence of taxes paid to the Thai RD.  I have some (slight) hope from section 42 of the Thai Tax Code:

 

"Section 42 The assessable income of the following categories shall be exempt for the purpose of income tax calculation:

...

(23) Income from sale of investment units in a mutual fund.

(24) Income of a mutual fund.

..."

 

Section 38_64 | The Revenue Department (English Site) (rd.go.th)

 

My funds are classed as "mutual" in the "Western" definition, but the Thai RD has this to say (from the same source):

 

"Section 39 In this Chapter, unless the context otherwise requires:

...

Mutual fund means a body of persons who participate in a fund that is established and operated by an investment management company for a project under the law governing the control of trading activities that affect public safety and welfare.

..."

 

In any event, I'll be consulting a reputable tax advisor before selling and remitting any more.  Last year I remitted enough non-assessable income (under the old rules) to live on this year, and have enough in an otherwise untouched offshore account for two more, so it won't be till late 2026 that this bridge will need to be crossed.  I'm also planning on remitting around THB500,000 of assessable income per year - which is right at my taxable threshold, over the next few years, and file a return each year declaring that amount in order to form a pattern of small annual remits in case they're needed in future.

 

If, as I expect, the Thai RD pooh pooh the idea of my managed funds falling under their definition of "mutual", and until they present a definite position on gifts and use of overseas credit cards, my options are:

 

- Spend less than 180 days in country every two or three years, and sell and remit enough funds during that year to last until my next semi exile.  People are talking about spending six months away at a time, but I would do it more on a rotation basis.  A month here, a month travelling in Vietnam, a month here, a month travelling in Cambodia, a month here, a month in my home country, and so on, making sure the days spent here numbered less than 180.

 

- Cut my spending here.  Not likely.

 

- Just go ahead and pay the tax.  I currently remit around THB 2M per year.  My tax calculator shows THB 328,750 to pay on that, which is affordable, but I'd instead bring in THB 2.46M, pay THB 459,500 tax and have THB 2.0005 in the hand. 

 

To be honest, I'll probably give the monthly holidays method a go, but if that becomes a drag, then I'll just go ahead and pay the tax rather than downgrade my living conditions or put myself out.  Nothing will be done until I consult a reputable tax advisor though.

 

 

 

 

Well, not to beat a dead horse so to speak, but even "reputable" tax agents do not have the ENTIRE story yet as the Thai RD still has not gotten all the approvals that they must need so there is no one unless someone believes in an omnicient diety that can provide definitive what will or will not occur once the RD does put out "official" guidance.  From this forum we see regularly that even the local RD officials do not have any clues nor have all of them been schooled on what will be the final package.  I for one will not be affected by whatever they do as far as taxes are concerned but everyone needs to relax unless something does come out that affectsl everyone or just 1 or 2 or none of us.  take care all and good luck

[ThiAmo]

12 hours ago, JimGant said:

What's the source of those resources? If last year's savings or from income exempt from Thai taxes via DTA -- the taxability of the gift is irrelevant.

Yes, it does not really make sense to prefer the gift approach to the accrued savings option (as of 31.12.2023), as it seems that the latter is now guaranteed by TRD.

Your explanations of the procedure at the land registry will help people who want to declare the purchase as a gift.

Thank you for your practical advise.

[ThiAmo]

8 hours ago, JimGant said:

Are you a Yank?

No, so your comments don't concern me. But thank you anyway, interesting material for your fellow countrymen. 

[ThiAmo]

On 5/28/2024 at 8:30 PM, Mike Teavee said:

If your wife has an account in your home country then it would be safer to make a Gift to her there (drawing up a document that details the Gift) and have her remit the money over. 

 

If she doesn't then I believe a Gift is a Gift & your wife would not have to pay tax on it if you sent her the money directly to her account in Thailand, however others have made an argument for it being assessable income for you even if you send it directly to your Wife so advisable to seek some help from a qualified tax accountant.

 

As to whether you living in the house that she is buying with the "Gift" means you're receiving a benefit, I personally don't think it is as you could argue that you pay for all the groceries, utilities etc... but if needs be you could draw up an agreement whereby you pay your wife "Rent" each month (though this might mean she needs to pay tax on the Income) - Again, a decent Tax consultant should be able to advise how best to approach it. 

 

If the Gift is > 20Million, your wife would need to pay 5% Gift Tax on it unless you split it over different tax/calendar years

 

Thank you for your comment.
Instead of getting lost in the gift "approach", I will submit TRD documentation to prove that this Foreign Income for the house purchase was earned and assessable PRIOR TO 1.1.2024. This is probably and what I hope the more  hassle free approach. 

 

Edited May 30 by ThiAmo

[KhunHeineken]

11 hours ago, Lorry said:

In September, the requirements for retirement visas will be "adjusted", see the thread in the visa section.

You may be forced to bring about 800,000 more to Thailand, taxable.

In that case,  the strategy of just bringing less than TEDA every year (let's say 400,000) won't work.

 

Nice timing by the government. 

I have said in other threads it can't stay at 800k baht forever.  It's been 800k baht for decades, and living expenses have increased significantly in this time, including medical.

 

If they raise the 800k baht significantly, it would be a way to raise the standard of expat living here, as it may force many to Cambodia, but raising it in step with a new tax policy, cha-ching, and not surprising at all. 

[phetphet]

On 5/19/2024 at 5:01 AM, Mike Lister said:

Sensible and practical things many will not even think about

Some good suggestions. I like the one about buying flight tickets in home country. But the difference in VAT between Thailand and the UK may lessen some of those differences such as smartphones..

Also Thailand will charge 7% VAT on all imported items over THB1,500.

[Lorry]

1 hour ago, phetphet said:

Some good suggestions. I like the one about buying flight tickets in home country. But the difference in VAT between Thailand and the UK may lessen some of those differences such as smartphones..

Also Thailand will charge 7% VAT on all imported items over THB1,500.

Actually,  personally I am not only concerned about prices (even if 35% of a ticket or a medium quality phone are real money).

The less taxable remittances I have,  the less bureaucracy with TRD. And that's the real problem about these taxes. 

There are people who really enjoy contact with Thai bureaucrats,  for WP or PR or DL or visa extension or pink card or yellow book,  whatever. 

I am not one of them.

 

Just today the government promised us more fun with the condo tax. Thank you! (A friend who lives himself  in his condo just paid his tax bill - of course,  he could apply for an exemption, every year)

Edited May 30 by Lorry

[Yellowtail]

Does anyone know with any level of certainty:

 

1. If my wife transfers cash from our joint account in the US, to her personal account in Thailand, would the money be taxable? 

 

2. If my wife transfers cash from her personal account in the US, to our joint account in the US, and then to her personal account in Thailand, would the money be taxable? 

 

3. If my wife transfers cash from her personal account in the US, to her personal account in Thailand, would the money be taxable? 

 

 

[Mike Lister]

10 minutes ago, Lorry said:

The Thai goverment says that.

Yeah, I know, what do they know,  who cares...

Ah, yes, you are right,  they don't say they will raise the price.

They will "adjust" it.

Nuff said.

 

It's a giant leap from the government saying they will adjust visa costs to you saying we may have to bring in an extra 800k Bhat per year. That is scaremongering, please don't repeat it.

[Mike Lister]

I've removed series of posts that were speculative but portrayed as fact, regarding increased retirement visa costs.

[Mike Teavee]

29 minutes ago, Yellowtail said:

Does anyone know with any level of certainty:

 

1. If my wife transfers cash from our joint account in the US, to her personal account in Thailand, would the money be taxable? 

 

2. If my wife transfers cash from her personal account in the US, to our joint account in the US, and then to her personal account in Thailand, would the money be taxable? 

 

3. If my wife transfers cash from her personal account in the US, to her personal account in Thailand, would the money be taxable? 

 

 

It depends on whether the cash is assessable income or not, not where she sends it from 

 

E.g. If the cash in question was savings from before 2024 then No Tax, If the cash in question was from US Social Security no Tax (DTA), if the Cash was from some other source then it's possible that there may be some tax due but highly unlikely as she's probably already paid more Tax in the US than would be due in Thailand (Again, covered by DTA). 

 

Edited May 30 by Mike Teavee

[TPDH]

If I transfer in savings and income that I earned before 2024, is it still taxed in Thailand? 

[Lorry]

2 hours ago, TPDH said:

If I transfer in savings and income that I earned before 2024, is it still taxed in Thailand? 

No. 

But better make sure you can prove it was from before 2024

( remember covid health insurance: have the proof signed by 2 directors of your bank)

[KhunHeineken]

On 5/29/2024 at 3:28 AM, redwood1 said:

Here is another monkey wrench to add to many others for the half baked zero thought out mess of a almost unenforceable tax on income ...

 

 

 

https://www.pattayamail.com/latestnews/news/thailands-new-visa-rules-from-june-1-break-fresh-ground-461766

 

 

Thailand’s new visa rules from June 1 break fresh ground

 

 

There are also implications for Thai Revenue’s policy “clarification” to tax the overseas income of tax residents – namely anyone staying in the country more than 180 days in a calendar year. Using a combination of the new 60 days rule, plus a couple of border runs, it would easily be possible for individuals to clock up more than six month residence without having any visa at all. Thus the idea that Thai Revenue can identify potential tax residents by the type of visa they have is faulty. Enforcement of the new Revenue regulations is still unclear to say the least.

It's possible there may be a tax table / office in Thai airports / boarders in the future, in the same way they have them for overstayers to pay a fine before being allowed to exit Thailand. 

 

This tax policy is based on physical presence and time, which is easily tallied and proven from immigration records.  This information appears on the screens at boarders, so it will not matter which visa/s you have been in Thailand on, just whether you have been in Thailand over 180 days in the calendar year. 

 

What MAY happen in these tax offices at boarders is anyone's guess.  Like overstaying, there might be a chart based on a flat remittance of say 65k baht a month, equaling "X" amount of tax due after 180 days.

 

They will have to do something with those living here on various other visas, not just retirement visas / extensions.    

 

Just some crystal ball stuff, not scaremongering.

Edited May 31 by KhunHeineken

[TPDH]

If you're 40 and married with a Thai, how much foreign income can you remit into Thailand and still pay 0 taxes? Is it 150,000 THB (tax exemption) + 60,000 THB (deduction) so a total of 210,000 THB? 

Wondering if I'm missing any deductions or exemptions that I can make use of so I can plan how much foreign income I can safely remit to Thailand and still pay no tax on it. 

[Mike Lister]

4 hours ago, TPDH said:

If you're 40 and married with a Thai, how much foreign income can you remit into Thailand and still pay 0 taxes? Is it 150,000 THB (tax exemption) + 60,000 THB (deduction) so a total of 210,000 THB? 

Wondering if I'm missing any deductions or exemptions that I can make use of so I can plan how much foreign income I can safely remit to Thailand and still pay no tax on it. 

Tax Exemptions Deductions and Allowances are known as TEDA, they vary from person to person based on their profile and circumstances. I've linked a copy of the tax guide below, you should read it.

 

You are entitled to a 60k Personal Allowance and also a 60k Personal Allowance for your wife, assuming she doesn't work and you file jointly. Further TEDA exist for children, health insurance, life insurance premiums, investments etc etc.

 

The first 150k of assessable income is zero rated for tax so at a minimum, you are entitled to 210k but it may be more, only you will know.

 

 

[TPDH]

On 6/1/2024 at 7:50 PM, Mike Lister said:

Tax Exemptions Deductions and Allowances are known as TEDA, they vary from person to person based on their profile and circumstances. I've linked a copy of the tax guide below, you should read it.

 

You are entitled to a 60k Personal Allowance and also a 60k Personal Allowance for your wife, assuming she doesn't work and you file jointly. Further TEDA exist for children, health insurance, life insurance premiums, investments etc etc.

 

The first 150k of assessable income is zero rated for tax so at a minimum, you are entitled to 210k but it may be more, only you will know.

 

 

 

 

Thank you. I checked the links provided in that post and they mention:

"Income from employment, such as salaries, wages, bonuses, allowances, etc., can deduct expenses by 50%, not exceeding 100,000 Baht."

 

I also noticed that some Thai tax calculators includes this but what is it and how can someone use it? 

[Mike Lister]

2 minutes ago, TPDH said:

 

 

Thank you. I checked the links provided in that post and they mention:

"Income from employment, such as salaries, wages, bonuses, allowances, etc., can deduct expenses by 50%, not exceeding 100,000 Baht."

 

I also noticed that some Thai tax calculators includes this but what is it and how can someone use it? 

 

Sorry but I have now left the forum I just popped in to pick my mail, I'm sure somebody else will help you.

[CharlesHolzhauer]

New overseas income rules
https://www.bangkokpost.com/business/general/2805305/new-overseas-income-rules.

 

This certainly will throw a spanner in the works.