Legal Strategies to Reduce Thai Tax

[Mike Teavee]

3 hours ago, soi3eddie said:

 

Spending on a credit card is not your money. It is the bank's money. A grey area but not a remittance by you  into Thailand. 

I agree as spending on a Credit Card is a actually short term loan between you & your bank, and money remitted from a Loan isn't assessable income however it's still a grey area - Personally I won't be declaring anything I spend on my UK CCs.

 

A Debit Card would (Technically) be remitting assessable income if the service you're purchasing is in Thailand (e.g. a Flight from Bangkok) but I don't believe it would be if the service isn't in Thailand (e.g. a Hotel in Vietnam).  

Edited May 19 by Mike Teavee

[Lacessit]

3 hours ago, soi3eddie said:

 

For this reason, I always give to my GF and she uses her ID when changing money. Trouble is, she then knows what cash I have 🙂 

 

Good point, thanks.

My GF knows what cash I have - in Thailand.

She also knows the longer I live, the better off she will be when I eventually cark it.

[Mike Teavee]

9 hours ago, proton said:

 

20 million baht to the wife, obviously this is the answer as there are no rules about what she does with the gift. !0 mil to gf, the whole topic is ridiculous.

There is an implicit rule that a Gift is only a Gift if you receive no direct benefit from it, so you gifting the wife 20Million & letting her pay all of the bills/give you pocket money wouldn't (technically) meet the criteria of being a Gift & if you/your wife were audited, it would be easy for them to show that you did receive direct benefits from it, so it wasn't a legitimate Gift & is taxable. 

 

The 10Million to a GF also comes with some strings as it needs to be for an occasion where in your country you would normally give a gift (E.g. I'm "Gifting" my GF 100K for her Birthday) & again shouldn't be receiving any direct benefit from it (I actually owe her 60K for some investment she made through me in the UK so that will make us straight, but am receiving that "Benefit" in the UK🙂).

 

 

Edit: Link to Thai law re Gifts: https://www.thailandlawonline.com/civil-and-commercial-code/521-536-gift-is-a-contract

 

NB Section 521. A gift is a contract whereby a person, called the donor, transfers gratuitously a property of his own to another person, called the donee, and the donee accepts such property.

Edited May 19 by Mike Teavee
Add Link to Thai Gift Laws

[Mike Lister]

20 minutes ago, Mike Teavee said:

I agree as spending on a Credit Card is a actually short term loan between you & your bank, and money remitted from a Loan isn't assessable income however it's still a grey area - Personally I won't be declaring anything I spend on my UK CCs.

 

A Debit Card would (Technically) be remitting assessable income if the service you're purchasing is in Thailand (e.g. a Flight from Bangkok) but I don't believe it would be if the service isn't in Thailand (e.g. a Hotel in Vietnam).  

We disagree on this point but that's OK.

 

The key point however is to understand whether such spending is considered to be assessable income, NOT whether it will be actively monitored or whether it should be reported on a return.

[Yumthai]

1 hour ago, Mike Teavee said:

so you gifting the wife 20Million & letting her pay all of the bills/give you pocket money wouldn't (technically) meet the criteria of being a Gift & if you/your wife were audited, it would be easy for them to show that you did receive direct benefits from it

In the real world, if someone gives you cash and you don't put it in the bank it's impossible to track it. Fiat money is fungible.

You may not buy a condo with it but it's ok for living expenses.

 

If donor ever been questioned, he can legally brings up to USD15K in Thailand undeclared that he could have accumulated over the years prior 2024.

[Mike Lister]

9 minutes ago, Yumthai said:

In the real world, if someone gives you cash and you don't put it in the bank it's impossible to track it. Fiat money is fungible.

You may not buy a condo with it but it's ok for living expenses.

 

If donor ever been questioned, he can legally brings up to USD15K in Thailand undeclared that he could have accumulated over the years prior 2024.

In the real world, the TRD or whoever would look at the income and spending pattern of the person who supposedly gifted the funds to his wife (but really received back under the table) and note that they had insufficient income or bank account transactions, to maintain the lifestyle they had. If somebody is spending cash, that can be seen because it means they are not spending via the traditional methods of bank account and card spending.

[JBChiangRai]

If you have children you are putting through school or university (as I do), then it is more tax efficient to gift & send them taxed funds from your home country (UK in my case) and then let them pay their own expenses, clothes, education fees, cars, rent, property purchase etc than it is to give them the money here in Thailand.

Edited May 20 by JBChiangRai
Spellong

[Yumthai]

32 minutes ago, Mike Lister said:

In the real world, the TRD or whoever would look at the income and spending pattern of the person who supposedly gifted the funds to his wife (but really received back under the table) and note that they had insufficient income or bank account transactions, to maintain the lifestyle they had. If somebody is spending cash, that can be seen because it means they are not spending via the traditional methods of bank account and card spending.

As I said it's not illegal to bring cash in Thailand at each trip.

I know many (older) people still living mostly on cash. They pay for their rent, food, services and even buy car/motorbike in cash.

Their few yearly bank transactions do certainly not match their lifestyle.

[Mike Lister]

2 minutes ago, Yumthai said:

As I said it's not illegal to bring cash in Thailand at each trip.

I know many (older) people still living mostly on cash. They pay for their rent, food, services and even buy car/motorbike in cash.

Their few yearly bank transactions do certainly not match their lifestyle.

I'm sure that's the case. But we're talking in this example of a married couple who maintain a certain spending pattern and lifestyle, then suddenly, he gifts her 1 mill and his bank account spending pattern changes to almost zilch, even worse is that change takes place just as new tax regs are introduced. That can be seen.

[Yumthai]

7 minutes ago, Mike Lister said:

I'm sure that's the case. But we're talking in this example of a married couple who maintain a certain spending pattern and lifestyle, then suddenly, he gifts her 1 mill and his bank account spending pattern changes to almost zilch, even worse is that change takes place just as new tax regs are introduced. That can be seen.

We disagree on gifting in Thailand. IMO once gift is acted I believe that giftee can do whatever he/she wants with it.

[Mike Lister]

6 minutes ago, Yumthai said:

We disagree on gifting in Thailand. IMO once gift is acted I believe that giftee can do whatever he/she wants with it.

Jolly good.

 

"For tax planning purposes, it’s crucial to understand that you must not derive any benefit when gifting assets. For example, if an expat sends money from overseas to their Thai spouse and it covers their living expenses, it is not considered a gift. Attempting to bypass the tax regulations in this way is likely to be considered tax evasion, potentially resulting in severe penalties".

 

https://www.expattaxthailand.com/gift-tax-2024/

[Ben Zioner]

6 hours ago, soi3eddie said:

 

For this reason, I always give to my GF and she uses her ID when changing money. Trouble is, she then knows what cash I have 🙂 

 

Yet another well thought, bullet proof, plan. 

 

And I envy the relationship you have with your GF.

[JimGant]

5 hours ago, soi3eddie said:

Spending on a credit card is not your money. It is the bank's money. A grey area but not a remittance by you  into Thailand. 

Indeed. If I buy a BigMac, and charge it to my credit card, this is the bank's money paying for my lunch. Same as if I borrowed money from my bank to buy a condo in Thailand. The money actually being remitted into Thailand is certainly not income -- it's a loan, with how it's to be paid back stipulated in the contract -- whether we're talking hamburgers or condos. For my credit card, once a month my bank debits my checking account to pay off the credit card bill. Money moves from one side of my bank to the other. It's not a cash flow with any income aspects to the IRS -- and certainly no income aspect to Thailand. I don't see any grey area the somehow could make credit card charges some kind of remitted income...

[Yumthai]

17 minutes ago, Mike Lister said:

"For tax planning purposes, it’s crucial to understand that you must not derive any benefit when gifting assets. For example, if an expat sends money from overseas to their Thai spouse and it covers their living expenses, it is not considered a gift. Attempting to bypass the tax regulations in this way is likely to be considered tax evasion, potentially resulting in severe penalties".

 

https://www.expattaxthailand.com/gift-tax-2024/

Their interpretation, not backed by any official Thai source.

 

For bulletproof gifting, parents/children/spouse living abroad not being Thai tax residents themselves can gift the parent/child/spouse Thai tax resident up to THB20M a year tax-free.

 

[JimGant]

5 hours ago, Mike Lister said:

It is irrelevant that the spending is done on credit, the taxable event occurs in Thailand when the buyer receives the goods or services they purchased and the seller is remunerated.

Does that go for condo purchases also? -- can't quite see any taxable event going on here.

 

5 hours ago, Mike Lister said:

The core issue is likely to be the source of the funds used in the home country to settle the credit card bill and whether those funds are exempt or assessable.

Of course they're not assessable, since they're not remitted to Thailand. And don't say a loan is actually a surrogate income remittance -- 'cause that's too much of a stretch. That certainly wouldn't fly for a loan to buy a condo -- and also a hamburger.

 

5 hours ago, Mike Lister said:

 Revenue authorities in several countries, including the UK, regard Credit Card spending as assessable income.

Obviously you didn't make that up. Could you give us a source, please?

 

5 hours ago, Mike Lister said:

Debt forgiveness may well  be construed as receiving assessable income.

When's the last time your credit card bank forgave your debt? But irrelevant, as the cash flow into Thailand is what we're concerned with -- and whether or not it's a loan, or a gift, doesn't make it remitted income.

Edited May 20 by JimGant

[Mike Teavee]

8 minutes ago, Yumthai said:

Their interpretation, not backed by any official Thai source.

 

For bulletproof gifting, parents/children/spouse living abroad not being Thai tax residents themselves can gift the parent/child/spouse Thai tax resident up to THB20M a year tax-free.

 

Gifts: https://www.thailandlawonline.com/civil-and-commercial-code/521-536-gift-is-a-contract

 

NB Section 521. A gift is a contract whereby a person, called the donor, transfers gratuitously a property of his own to another person, called the donee, and the donee accepts such property
 

If somebody were to Guft their wife 20Million THB & have no income coming in to support themselves then clearly there is an expectation she would be supporting him & so the Gift wasn’t give gratuitously.

 

 

[proton]

3 hours ago, Mike Teavee said:

There is an implicit rule that a Gift is only a Gift if you receive no direct benefit from it, so you gifting the wife 20Million & letting her pay all of the bills/give you pocket money wouldn't (technically) meet the criteria of being a Gift & if you/your wife were audited, it would be easy for them to show that you did receive direct benefits from it, so it wasn't a legitimate Gift & is taxable. 

 

The 10Million to a GF also comes with some strings as it needs to be for an occasion where in your country you would normally give a gift (E.g. I'm "Gifting" my GF 100K for her Birthday) & again shouldn't be receiving any direct benefit from it (I actually owe her 60K for some investment she made through me in the UK so that will make us straight, but am receiving that "Benefit" in the UK🙂).

 

 

Edit: Link to Thai law re Gifts: https://www.thailandlawonline.com/civil-and-commercial-code/521-536-gift-is-a-contract

 

NB Section 521. A gift is a contract whereby a person, called the donor, transfers gratuitously a property of his own to another person, called the donee, and the donee accepts such property.

 

Nobody is going to ask how these gifts are spent

[Banana7]

On 5/18/2024 at 7:33 AM, connda said:

The first option doesn't require too much thinking.  But if you really want to know your exemptions then sit down and calculate your exemptions and determine you exemption threshold.  You may find that your getting excited over nothing.  Then you'll also need to look at your home country's DTA to understand what forms of income are off-limits to the Thai government, for example, the US Social Security payment is only taxable by the US government per the US-Thai Dual Tax Agreement, so then you only have to worry about other earned income like your pension or capital gains. 

Use this form, and crank out a "test scenario" and then you'll know.  In my own case I don't remit anything close to my exemption threshold of 560K THB, so I don't worry about it. 

Thai_Tax_Form.pdf

That form is very confusing. At the top it says Personal Income Tax Return for taxpayer with only income from employment
under Section 40 (1) of the Revenue Code Only

 

But in section A it wants you to enter "Salaries, wages, pensions etc. (Plus exempted income from 5.)"

Pensions are not income from employment.

 

Are there multiple versions of the Thai Personal Income Tax Return forms? I am retired , not employed.

[Ben Zioner]

Switch all your holidays to overseas, thats half a million I wouldn't have to remit to Thailand.

 

And gives the satisfaction of hurting the most cherished industry in Thailand.

 

 

[Mike Lister]

15 minutes ago, JimGant said:

Does that go for condo purchases also? -- can't quite see any taxable event going on here.

 

Of course they're not assessable, since they're not remitted to Thailand. And don't say a loan is actually a surrogate income remittance -- 'cause that's too much of a stretch. That certainly wouldn't fly for a loan to buy a condo -- and also a hamburger.

 

Obviously you didn't make that up. Could you give us a source, please?

 

When's the last time your credit card bank forgave your debt? But irrelevant, as the cash flow into Thailand is what we're concerned with -- and whether or not it's a loan, or a gift, doesn't make it remitted income.

We've been through all this weeks if not months ago, is the way life is going to be every few weeks/months.......oh, I didn't remember that, can you provide a linkl!!

 

What was pretty much agreed previously on this was that when the CC holder acquired the goods or services abroad, that contract for payment represented the taxable event. It doesn't matter that it was done on credit, once the buyer agreed to buy and the seller agreed to sell, at the agreed price, the contract was formed. UK HMRC credit card debt in the UK using overseas cards, equals remitted funds...google it.

 

 

[Mike Lister]

31 minutes ago, Yumthai said:

Their interpretation, not backed by any official Thai source.

 

For bulletproof gifting, parents/children/spouse living abroad not being Thai tax residents themselves can gift the parent/child/spouse Thai tax resident up to THB20M a year tax-free.

 

Up to you what you believe, gift away with impunity I say, if you don't care! 

 

For everyone else, it's tax evasion.

[Yumthai]

1 minute ago, Mike Teavee said:

NB Section 521. A gift is a contract whereby a person, called the donor, transfers gratuitously a property of his own to another person, called the donee, and the donee accepts such property
 

If somebody were to Guft their wife 20Million THB & have no income coming in to support themselves then clearly there is an expectation she would be supporting him & so the Gift wasn’t give gratuitously.

I read "gratuitously" as: donee does not give something predetermined in the gift contract back in return to the gift.

That does not mean donee cannot do what he/she wants in the future after gift is acted.

 

Besides you can read further:

 

Section 535. The following gifts are not revocable for ingratitude:

1. Gifts purely remuneratory
2. Gifts encumbered with a charge
3. Gifts made in compliance with a moral duty
4. Gifts made in consideration of marriage

 

If a gift can be remuneratory then by definition there is something in return to the gift so not gratis.

 

Again, Thai rules inconsistency or mistranslations ...

[Mike Lister]

18 minutes ago, proton said:

 

Nobody is going to ask how these gifts are spent

Will you put that in writing, sign it and indemnify us all?

[Yumthai]

2 minutes ago, Mike Lister said:

Up to you what you believe, gift away with impunity I say, if you don't care!

Yes it's my opinion.

3 minutes ago, Mike Lister said:

For everyone else, it's tax evasion.

And this is your opinion too.

[Mike Lister]

1 minute ago, Yumthai said:

Yes it's my opinion.

And this is your opinion too.

I suppose that there's always a chance that Thailand doesn't regard that as Tax Evasion, unlike every other country in the world so yes, I suppose you are right, it's merely my opinion. Perhaps they say, go ahead and Gift whatever you want to somebody else and later, when we 're not watching, they can give it back to you. That way you want have to pay us tax and we wont say anything....cool.

[Yumthai]

3 minutes ago, Mike Lister said:

I suppose that there's always a chance that Thailand doesn't regard that as Tax Evasion, unlike every other country in the world so yes, I suppose you are right, it's merely my opinion. Perhaps they say, go ahead and Gift whatever you want to somebody else and later, when we 're not watching, they can give it back to you. That way you want have to pay us tax and we wont say anything....cool.

Well I stop believing long time ago that Thailand is and behaves like every other country in the world.

Reading some posters here, I often wonder if we live in the same country.

[Mike Teavee]

33 minutes ago, proton said:

 

Nobody is going to ask how these gifts are spent

No, but they might ask you where you're getting the money to live on.

 

Pure speculation but my guess is when it comes to auditing people who have filed no/low tax returns they'll focus mainly on:-

1. People who have remitted large sums of money
2. People who have remitted low/no sums of money

You remitting 20Million to your Wife & nothing to yourself would put you at risk of being caught up in an Audit in both those categories. 

 

 

[Mike Lister]

54 minutes ago, JimGant said:

Does that go for condo purchases also? -- can't quite see any taxable event going on here.

 

Of course they're not assessable, since they're not remitted to Thailand. And don't say a loan is actually a surrogate income remittance -- 'cause that's too much of a stretch. That certainly wouldn't fly for a loan to buy a condo -- and also a hamburger.

 

Obviously you didn't make that up. Could you give us a source, please?

 

When's the last time your credit card bank forgave your debt? But irrelevant, as the cash flow into Thailand is what we're concerned with -- and whether or not it's a loan, or a gift, doesn't make it remitted income.

UK non-doms overseas credit card usage in UK, HMRC

 

https://community.hmrc.gov.uk/customerforums/sa/86d51480-349f-ee11-a81c-000d3a0d1e21

 

Condo's??? If somebody remits funs to Thailand to pay for a condo, the money is either assessible or it's not. If it is, the remittance itself is the taxable event...or are you saying/asking something completely different?

[Mike Teavee]

23 minutes ago, Yumthai said:

I read "gratuitously" as: donee does not give something predetermined in the gift contract back in return to the gift.

That does not mean donee cannot do what he/she wants in the future after gift is acted.

 

Besides you can read further:

 

Section 535. The following gifts are not revocable for ingratitude:

1. Gifts purely remuneratory
2. Gifts encumbered with a charge
3. Gifts made in compliance with a moral duty
4. Gifts made in consideration of marriage

 

If a gift can be remuneratory then by definition there is something in return to the gift so not gratis.

 

Again, Thai rules inconsistency or mistranslations ...

Section 535 is referring to gifts that cannot be revoked, remuneration for a gift is not mentioned anywhere else in the "Laws".

 

There is mention of receiving a Service in consideration for a Gift, but I wouldn't classify the Wife paying all the rent, groceries, utilities etc... and giving you "Pocket Money" as a Service. 

 

But my main point is as posted above, you put yourself at higher risk of being audited if you were to only remit money as a gift to your wife and not remit anything to yourself to live on. 

 

[Mike Teavee]

8 minutes ago, Mike Lister said:

UK non-doms overseas credit card usage in UK, HMRC

 

https://community.hmrc.gov.uk/customerforums/sa/86d51480-349f-ee11-a81c-000d3a0d1e21

 

https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm33520

Credit card issued by an overseas bank or other financial institution

Where an overseas credit card is used in the UK, the cardholder is effectively authorising the credit card company to pay the bill for the goods or service in just the same way as if they had instructed the bank to make a payment directly to the person supplying the goods or services.

 

 

Which to me says Credit Card use is remittance, so I change my previous opinion on it being a loan but still won't be reporting it 🙂 (NB I only use my CC for Airfares & overseas Hotels, Airfares arguably remittance, overseas hotels not).  

 

Edited May 20 by Mike Teavee