Thailand to tax residents’ foreign income irrespective of remittance

[Mike Lister]

6 hours ago, EVENKEEL said:

What business might that be? 

Er, providing free information and fact, as a member of AN.

[Dogmatix]

On 7/15/2024 at 11:04 PM, Klonko said:

I posted this already some time ago: in some home countries, it is possible for a foreign-Thai couple to elect fully separated property instead of conjugal property for income during the marriage, which makes gift remittances from foreign income more robust and distribution of the estate after death much easier.

 

I don't see how you can do that without trying to override the Civil and Commercial Code. You may keep property acquired before marriage but not after marriage.  Thai lawyers may charge for agreements of that type but, if you tried to enforce them in court, the judges would strike them down. 

 

I was drinking with a Thai lawyer who did a lot of work with farang clients once including pre-nuptial agreements.  Because she is female, it was her job to get the bargirls to sign on the dotted line without understanding what they were signing.  But she admitted that the pre-nups were not enforceable in Thailand because they were a device to override the Civil and Commercial Code.  They are only enforceable, if they give are more generous to the financially weaker party than the law provides, just like pre-nups under English law.  These were simple boiler plate agreements and they made good money from them from farang clients who were not informed about the lack of enforceability in Thailand.  However, they had a value in scaring ignorant Thai wives into believing they had signed away their rights and not going to court in the case of divorce.   

[Dogmatix]

On 7/14/2024 at 7:12 PM, Mike Lister said:

Somebody more familiar with the Oz Superannuation program will need to answer your questions with more certainty but a here's a few pointers to consider in the meantime.

 

You say your super is not income but the TRD doesn't see it that way, pension income is still income.

 

The fact a pension is taxed overseas, typically means the taxpayer will need to declare the income and invoke their DTA to offset any tax paid back home, against any that is due in Thailand.

 

I don't know what your DTA says about taxation rights of your super income but that may save you, have you read the DTA to understand what it says?

 

 

The Revenue Code taxes pensions on the basis that they are income from employment.  There is not a class of assessable income that covers pensions that are not income from employment.  The Australian suparannuation is now payable to citizens who have never worked in their lives.  The RD might claim that all foreign state pensions are income from employment and therefore taxable but that is not what the Revenue Code says and will therefore be contestable in the Tax Court. 

[lordgrinz]

19 minutes ago, Dogmatix said:

 

I don't see how you can do that without trying to override the Civil and Commercial Code. You may keep property acquired before marriage but not after marriage.  Thai lawyers may charge for agreements of that type but, if you tried to enforce them in court, the judges would strike them down. 

 

I was drinking with a Thai lawyer who did a lot of work with farang clients once including pre-nuptial agreements.  Because she is female, it was her job to get the bargirls to sign on the dotted line without understanding what they were signing.  But she admitted that the pre-nups were not enforceable in Thailand because they were a device to override the Civil and Commercial Code.  They are only enforceable, if they give are more generous to the financially weaker party than the law provides, just like pre-nups under English law.  These were simple boiler plate agreements and they made good money from them from farang clients who were not informed about the lack of enforceability in Thailand.  However, they had a value in scaring ignorant Thai wives into believing they had signed away their rights and not going to court in the case of divorce.   

 

I don't know how courts work here, but I and my wife keep all of our assets separate, my money is completely in the USA other than the one bank account for marriage extensions and for some of my personal spending. All property, including condos, townhouses, cars, motorcycles, etc are in my wife's name. We've been doing this from the beginning, no joint accounts or property. We both prefer it this way, it's bee working fine, so I only have a small amount of my personal assets (bank account) exposed here.

 

I do know that I have to sign on all these properties before she can buy them though, so not sure how exposed I am to that, or not.

[Klonko]

36 minutes ago, Dogmatix said:

 

I don't see how you can do that without trying to override the Civil and Commercial Code. You may keep property acquired before marriage but not after marriage.  Thai lawyers may charge for agreements of that type but, if you tried to enforce them in court, the judges would strike them down. 

 

I was drinking with a Thai lawyer who did a lot of work with farang clients once including pre-nuptial agreements.  Because she is female, it was her job to get the bargirls to sign on the dotted line without understanding what they were signing.  But she admitted that the pre-nups were not enforceable in Thailand because they were a device to override the Civil and Commercial Code.  They are only enforceable, if they give are more generous to the financially weaker party than the law provides, just like pre-nups under English law.  These were simple boiler plate agreements and they made good money from them from farang clients who were not informed about the lack of enforceability in Thailand.  However, they had a value in scaring ignorant Thai wives into believing they had signed away their rights and not going to court in the case of divorce.   

I can conclude a notarised post-marital agreement for fully separated property retrotractively tp the date of marriage in my home country under my home country law, even when the marriage was concluded in Thailand. This choice of law is valid under international private law. If TRD or a Thai court will apply international private law correctly is another question. But this set-up is more robust for gift taxes and will be enforceable for my estate, because the distribution of my foreign assets will be processed in my home country and my Thai assets will go to my wife anyway.

[Dogmatix]

On 7/15/2024 at 5:26 PM, Mike Teavee said:

Agree with everything you said apart from this part, as "Gifts" are usually Personal/Non Marital property (Sin Suan Tua) 

 

I've posted a link previously that probably covers this better but can't find it now & gotta run, so here's the 1st one I came across... 

 

https://thailand.acclime.com/guides/marital-property-assets/

What is Sin Suan Tua?

Sin Suan Tua or personal property consists of (section 1471):

• Property belonging to either spouse before marriage
• Property for personal use, dress or ornament suitable for station in life, or tools necessary for carrying on the profession of either spouse
• Property acquired by either spouse during marriage through a will or gift
• Dowry

If the Sin Suan Tua has been exchanged to other property, other property has been bought or money has been acquired from selling it, the property or money acquired is Sin Suan Tua.

 

 

However, it is possible for the gift to be marital assets (Sin Somros) IF the condition of the Gift (or Will) states that it's made to both spouses...  

What is Sin Somros?

Sin Somros or marital property consists of (section 1474):

• Property acquired during a marriage
• Property acquired by either spouse during marriage through a will or gift made in writing
• Fruits of personal property (eg income in the form of rent from personal property)

 

I think your parents giving you & your wife a Gift & stating that it's a Joint gift would be OK but I don't think you would get away with giving your wife a gift and saying "This is for both of us", at best it would be considered 1/2 the Gift was for your wife but could be ruled as an invalid specification & 100% to your wife. 

 

Good point re Section 1471 of the C&CC excluding gifts from conjugal property.  This is applied very easily to gifts of property but it is much harder to segregate gifts of cash.  Section 42.27, in fact, gives exemption up to 20 million not only for gifts to spouses but also for support and maintenance " Income derived from maintenance and support or gifts".  So what about remittances that are for support or maintenance which are not segregated from conjugal property in the C&CC?   

 

If your wife received a piece of land as a gift from her parents after you got married, it is very clear cut under the C&CC that when you get divorced, you cannot claim this as conjugal property to be divided up between you.  But, if you paid her a million a month for support or maintenance, under the C&CC the cash and anything she buys with it are conjugal property. Even, if it was clearly in the form of gifts, it is difficult to segregate, particularly, if she has cash and income of her own.  If she buys a house or a car with that money and you make use of them too, it would be difficult for the RD to go through the weeds to prove that this disqualified the tax exemption and I doubt they would attempt to. If you have children in common she uses your remittance to pay their school fees, the RD would have a hard job arguing that was the father's personal obligation only and anyway, if you paid them yourself, you would probably be paying out of conjugal assets.  Furthermore a remittance used to pay your kids' school fees could also be argued to be a gift to your descendant relatives who didn't have the ability to pay the school fees themselves. 

 

Personally I think the issue of the exemption for support, maintenance or gifts to a spouse under 42.27 is not nearly as clear cut as some have tried to maintain by citing non-existent rules.   It comes as no surprise that there are no cases to be found where the RD has challenged exemptions claimed by Thais under this section in the 9 years since the amendment.

[Dogmatix]

19 minutes ago, Klonko said:

I can conclude a notarised post-marital agreement for fully separated property retrotractively tp the date of marriage in my home country under my home country law, even when the marriage was concluded in Thailand. This choice of law is valid under international private law. If TRD or a Thai court will apply international private law correctly is another question. But this set-up is more robust for gift taxes and will be enforceable for my estate, because the distribution of my foreign assets will be processed in my home country and my Thai assets will go to my wife anyway.

 

My understanding is that the Thai civil courts would disregard any foreign agreement under foreign laws that overrode the provisions of the C&CC regarding division of Thai conjugal assets. But they only claim jurisdiction over Thai assets. Cases have only arisen in respect of divorces AFAIK.  Interestingly there is a Supreme Court case where a farang paid for purchase of landed property by his wife and, despite the piece of paper signed in the Land Office agreeing that the property would not form part of the conjugal property, the Supreme Court ruled that the property did comprise conjugal property and ordered that it should be sold with half of the proceeds paid to the farang as part of the divorce settlement.  So you can see that the Supreme Court upheld the provisions of the C&CC over the Land Code and the workaround of the prohibition on foreign ownership of land devised by the Interior Ministry to allow Thais married to foreigners to own land. So I am sure the C&CC would be upheld over any foreign laws or agreements. 

[Klonko]

2 hours ago, Dogmatix said:

 

My understanding is that the Thai civil courts would disregard any foreign agreement under foreign laws that overrode the provisions of the C&CC regarding division of Thai conjugal assets. But they only claim jurisdiction over Thai assets. Cases have only arisen in respect of divorces AFAIK.  Interestingly there is a Supreme Court case where a farang paid for purchase of landed property by his wife and, despite the piece of paper signed in the Land Office agreeing that the property would not form part of the conjugal property, the Supreme Court ruled that the property did comprise conjugal property and ordered that it should be sold with half of the proceeds paid to the farang as part of the divorce settlement.  So you can see that the Supreme Court upheld the provisions of the C&CC over the Land Code and the workaround of the prohibition on foreign ownership of land devised by the Interior Ministry to allow Thais married to foreigners to own land. So I am sure the C&CC would be upheld over any foreign laws or agreements. 

AFAIK the known cases in question relate to contractual agreements concluded in Thailand and not to the application of international private law which Thailand is supposed to adhere to based on its accession to the HCCH (Hague Conference on Private International Law) in 2021. While the courts should ultimately decide in favour of separated property with respect to civil law for my marriage - fortunately that will never be necessary in my case -, I agree it may be an interesting discussion with TRD that gifts are given from my personal property to my wife's personal property. 

[thesetat2013]

On 6/6/2024 at 6:49 AM, sandrew33 said:

The US and most other countries in the world already share this information under automatic information sharing agreements. 
 

One of the reasons you are asked which countries you are a citizen of and a tax resident of when you open bank accounts is to make that automatic sharing easier. 
 

 

If you opened those accounts a long time ago. They did not require submitting your social security number as a requirement. I remember i was asked if i had one and I said i had forgotten it. They opened the account anyway. I know in America. There are many people with the same names born on the same days. Lots of times the police have mistaken identities because of this. So I do not think any Thai Bank can use any banking information or request any information from the USA without full details about the account holder including their tax number in America. 

But I am also sure, if you are in their sites to collect money, they will make a way to collect it if you are still in Thailand

[Dogmatix]

1 hour ago, Klonko said:

AFAIK the known cases in question relate to contractual agreements concluded in Thailand and not to the application of international private law which Thailand is supposed to adhere to based on its accession to the HCCH (Hague Conference on Private International Law) in 2021. While the courts should ultimately decide in favour of separated property with respect to civil law for my marriage - fortunately that will never be necessary in my case -, I agree it may be an interesting discussion with TRD that gifts are given from my personal property to my wife's personal property. 

 

I don't know anything about the application of the HCCH in Thailand and it may not be relevant here anyway but Thailand doesn't have a uniformly good record on application of international treaties. I think the Foreign Ministry gets everyone on board to sign them for the sake of image abroad but when it comes to the implementation domestically by other ministries it may be a different story.  A case in point is the Convention for the Reduction of Statelessness to which Thailand is a ratified signatory but flagrantly ignores its obligations under the convention by deliberately leaving a few hundred thousand minorities born in Thailand stateless, or makes it very difficult for them to acquire citizenship, even though most speak perfect Thai and have Thai names. A completely pointless policy that causes harm to Thailand and wrecks the lives of the minorities, motivated only by racism.  Also in the old days of the international treaties that up until the early 1970s allowed foreigners among other things to own land in Thailand, the government was notorious for stonewalling applications to buy land in accordance with the treaties, even though they were and still are acknowledged in the Land Code. 

 

This discussion pertinent to the application of double tax treaties which Thailand accumulated since 1970s because the other states offered to negotiate them, even though Thailand has not had much use for them until now.  Up until today none of them are acknowledged in the Revenue Code which creates difficulties in producing regulations for them.  Thus there are none and probably never will be.  I am sure that the RD will abide by the letter of the treaties but, since they are only bare bones with most of the important details open to interpretation and agreement between contracting states, abiding by the letter might not be very helpful. 

[TroubleandGrumpy]

22 hours ago, Dogmatix said:

 

My understanding is that the Thai civil courts would disregard any foreign agreement under foreign laws that overrode the provisions of the C&CC regarding division of Thai conjugal assets. But they only claim jurisdiction over Thai assets. Cases have only arisen in respect of divorces AFAIK.  Interestingly there is a Supreme Court case where a farang paid for purchase of landed property by his wife and, despite the piece of paper signed in the Land Office agreeing that the property would not form part of the conjugal property, the Supreme Court ruled that the property did comprise conjugal property and ordered that it should be sold with half of the proceeds paid to the farang as part of the divorce settlement.  So you can see that the Supreme Court upheld the provisions of the C&CC over the Land Code and the workaround of the prohibition on foreign ownership of land devised by the Interior Ministry to allow Thais married to foreigners to own land. So I am sure the C&CC would be upheld over any foreign laws or agreements. 

Very true - again and again this reality of the Thai legal system is there to be seen. The Thai legal system is there to protect the Thais first and foremost and only - it is not about the application of fair and equal legal rights to Tourists/Foreigners. In a few ways Thailand is first world, but in the legal system it is third world. I recall the case where a Provincial Judge ruled that it was not breaching the Equal Rights Provision of the Thai Constitution regarding charging Foreigners extra for the same services - because they are wealthy and it is good for Thailand - that was what he said in his official Judgement. I recall a well known Expat (Tim Newton of the Thiager fame and now Youtuber) who stated that in all the years he has been in Thailand not one Expat/Foreigner has ever won a legal case against a Thai person or company in a Thai Court - not one. 

 

[redwood1]

5 hours ago, TroubleandGrumpy said:

Very true - again and again this reality of the Thai legal system is there to be seen. The Thai legal system is there to protect the Thais first and foremost and only - it is not about the application of fair and equal legal rights to Tourists/Foreigners. In a few ways Thailand is first world, but in the legal system it is third world. I recall the case where a Provincial Judge ruled that it was not breaching the Equal Rights Provision of the Thai Constitution regarding charging Foreigners extra for the same services - because they are wealthy and it is good for Thailand - that was what he said in his official Judgement. I recall a well known Expat (Tim Newton of the Thiager fame and now Youtuber) who stated that in all the years he has been in Thailand not one Expat/Foreigner has ever won a legal case against a Thai person or company in a Thai Court - not one. 

 

 

I recall Bill Heinecke won a case in Thai court against some Thais that tried to rip him off in the early days....But this is the only case I remember where a farang won....

 

Heck even if a farang wins in court that win is not necessarily a win.....Just ask Hopewell...

[Taconator3000]

So been in Thailand since June '23 on a 12 month ed visa, looking to travel on to Vietnam via Laos before my last renewal expires in August

 

Ive been living off savings which includes cash I brought and a debit/wirex card. Ive earned maybe 700 AUD in interest so under the threshold in Australia and Thailand. Will I be ok to leave Thailand or will I be asked for some sort of proof? Thought I would ask here before I go to my local TRD. Cheers

[CallumWK]

4 minutes ago, Taconator3000 said:

So been in Thailand since June '23 on a 12 month ed visa, looking to travel on to Vietnam via Laos before my last renewal expires in August

 

Ive been living off savings which includes cash I brought and a debit/wirex card. Ive earned maybe 700 AUD in interest so under the threshold in Australia and Thailand. Will I be ok to leave Thailand or will I be asked for some sort of proof? Thought I would ask here before I go to my local TRD. Cheers

 

Nice wind up Bob

[Danderman123]

It is interesting that virtually no official information on the new tax regulations has been released this year.

 

It's almost as if the authorities have forgotten about this whole thing.

[Eudaimonia]

28 minutes ago, Danderman123 said:

It is interesting that virtually no official information on the new tax regulations has been released this year.

 

It's almost as if the authorities have forgotten about this whole thing.

 

They are working on other tax issues. It was just announced yesterday that Thai nationals returning from abroad can pay a lowered 17% personal income tax for five years.

 

So, Thais pay up to 17%, and we pay up to 35%. 🙄

[sirineou]

39 minutes ago, Eudaimonia said:

 

They are working on other tax issues. It was just announced yesterday that Thai nationals returning from abroad can pay a lowered 17% personal income tax for five years.

 

So, Thais pay up to 17%, and we pay up to 35%. 🙄

It's crazy that we are seven months into this and still are not sure what we will pay.

But from experience how other countries have approached this  I am certain that it will not be up to 35% because many will simply leave and others won't come, which would defeat the revenue expansion purpose of these tax schemes.

  Greece as an example because this is something I have looked into,   

 For instance , to induce foreign retirement in Greece . those foreigners retiring there will only pay 7% tax, Digital nomads, ge a 50% tax rebate if the stay there for two years. 

 

out of curiosity I googled Portugal and retirees there pay only 10% in Cambodia and Vietnam Non-residents are taxed at a flat rate of 20%,

Malta 15% Cyprus 5% on amounts in excess of EUR 3,420 (the first EUR 3,420 is exempt).

 

 The point being that if Thailand wants to be competitive in attracting and maintaining  foreigners and retirees,  it would also have to be competitive with it's tax rates.  

 

[motdaeng]

1 hour ago, Eudaimonia said:

 

They are working on other tax issues. It was just announced yesterday that Thai nationals returning from abroad can pay a lowered 17% personal income tax for five years.

 

So, Thais pay up to 17%, and we pay up to 35%. 🙄

 

if you like to inform yourself, here we go ... 

 

 

[motdaeng]

1 hour ago, Danderman123 said:

It is interesting that virtually no official information on the new tax regulations has been released this year.

 

It's almost as if the authorities have forgotten about this whole thing.

 

it has been published in various media outlets, and some embassies have also informed their citizens ...

 

[Eudaimonia]

14 minutes ago, motdaeng said:

if you like to inform yourself, here we go ... 

 

Thank you, I guess, although I did not understand your comment. The existing laws are pretty clear. Remitted foreign-source income will be taxed using the same progressive rates as domestic income, up to a 35% marginal rate.

 

My point was just that Thais returning from abroad will now get a discount and pay up to 17%.

 

https://www.reuters.com/world/asia-pacific/thailand-approves-17-personal-income-tax-ceiling-returnees-2024-07-30/

[Gknrd]

Government bar girl fines!  Like with everything else when the government gets involved it ruins everything. Do you want to pay up or stay at home with an old cow?  Cheaper to stay at home for sure, but the old cow is pretty tough to handle once you have traveled to the many asian countries that offer alternatives... 

[Lorry]

5 hours ago, Eudaimonia said:

 

They are working on other tax issues. It was just announced yesterday that Thai nationals returning from abroad can pay a lowered 17% personal income tax for five years.

 

So, Thais pay up to 17%, and we pay up to 35%. 🙄

That's to fight the brain drain.

Only smart Thais returning get the tax break.

Fortunately,  they didn't realize that the same effect could be had by kicking out the farang.

 

 

 

[Presnock]

5 hours ago, Lorry said:

That's to fight the brain drain.

Only smart Thais returning get the tax break.

Fortunately,  they didn't realize that the same effect could be had by kicking out the farang.

 

 

 

What I wonder about is, if these potential "returnees" are so skilled, then theymust be getting a pretty good salary elsewhere - will there be any guarantees of higher salaries here?  Just wondering and smiling at all the ways the Revenue Department of the govt seems to be searching for every baht possible.  Wish they would let us know about the progress of the worldwide income taxation scheme.

[redwood1]

10 hours ago, Eudaimonia said:

 

Thank you, I guess, although I did not understand your comment. The existing laws are pretty clear. Remitted foreign-source income will be taxed using the same progressive rates as domestic income, up to a 35% marginal rate.

 

My point was just that Thais returning from abroad will now get a discount and pay up to 17%.

 

https://www.reuters.com/world/asia-pacific/thailand-approves-17-personal-income-tax-ceiling-returnees-2024-07-30/

 

Well me and my happy hour drinking buddies at our local bar should be paying 17% tax because if Thailand lost us that would be a real Brain Drain..

[bkk6060]

11 hours ago, sirineou said:

The point being that if Thailand wants to be competitive in attracting and maintaining  foreigners and retirees,  it would also have to be competitive with it's tax rates

I think they don't care about retirees.  Tourists spend probably 10 times in one day what retiree does. Retirees appear to be a nusiance to the government  here. If everyone left they would probably be happy. Bring in the no Visa tourists.

[rocketboy2]

21 minutes ago, bkk6060 said:

I think they don't care about retirees.  Tourists spend probably 10 times in one day what retiree does. Retirees appear to be a nusiance to the government  here. If everyone left they would probably be happy. Bring in the no Visa tourists.

 Nail on the head. 

[sirineou]

18 minutes ago, bkk6060 said:

I think they don't care about retirees.  Tourists spend probably 10 times in one day what retiree does. Retirees appear to be a nusiance to the government  here. If everyone left they would probably be happy. Bring in the no Visa tourists.

Though what you say might be true within the context of the financial relationship between tourism and retirees,

Obviously tourism creates a lot more revenue than retirees, and id retirees negatively  impacted the revenue from tourism, then the would chose tourism over retirees. 

,But It is not true  within the contexts of this conversation , which does not include tourism in the mix.  

 The reason given over the tax scheme, is to increase revenue from taxation , and with in that context if doing something increases revenue or decreases revenue is an important factor and unless they are stupid they care. 

[jwest10]

On 7/17/2024 at 11:47 AM, Dogmatix said:

 

The Revenue Code taxes pensions on the basis that they are income from employment.  There is not a class of assessable income that covers pensions that are not income from employment.  The Australian suparannuation is now payable to citizens who have never worked in their lives.  The RD might claim that all foreign state pensions are income from employment and therefore taxable but that is not what the Revenue Code says and will therefore be contestable in the Tax Court. 

Yes, see your point but the old forms foes say pensions as well as employment but the heading is from Employment  but no on know until 2025!!

[Eudaimonia]

In separate posts on both Instagram and Facebook yesterday, the Thailand Privilege company (the state enterprise formerly known as Thailand Elite) urged potential new members to 'relax':

 

"The introduction of new tax laws in Thailand have caused undue worry for many foreigners. What income is taxable? How much do I owe? But there’s reason to relax: all income earned and kept outside of Thailand is tax-free; and any income earned prior to 2024 is also tax-free," the Facebook post reads.

 

The advertisement credits the Revenue Department as its information source.

 

The Instagram post is worded a bit differently.

https://www.instagram.com/p/C-VFGklNjQl/

 

While this is correct as of now, it also seems to imply that the situation continues. Would it be too bold to assume that before urging everyone to relax (and join), they have actually discussed this with the Revenue Department and have been reassured that worldwide taxation is not just around the corner?

[jwest10]

On 7/6/2024 at 8:37 PM, Mike Lister said:

The threat of back audits is a power tool, something to wield if anyone gets too stroppy or uncooperative, I don't see it being used widely. But you have to ask yourself, would you want to be in that situation where, just because you didn't file a simple return, you opened yourself up to that much scrutiny. Personally, I think it's a serious deterrent.

Again, Mike and for the 5th time in July/Aug I went around to our local Revenue office and they simply do not know but must do in the fact stating forms going to be updated in Nov/Dec and told the Officer and might just go over the thresholds and allowances and stated you do not need to file a tax form and in any case, there were none around.
Also, a really good Thai friend has been looking into it and admits it is very complicated but he fills in a form as self-employed, I think.

As Mike suggested and yes many others stated we await and we might have one or two different Governments come 1st Jan 2025 and policies might change.
So I have been told 5 times by the Revenue that it appears I do not need to file.

Just in passing got a notification from the HM Inspector of  Taxes stating I have paid too much tax in the year ended 5th April 2024 but  any other suggestions, apart from we wait and see but we have calculated what might be but who knows and too many so-called experts.