Thai Taxes on Sale of UK Property

[alphason]

CGT on Sale of UK Property.

If a UK property is rented out, I am looking at what if any taxes may be due in Thailand in the future.

UK Nonresidents did not have to pay CGT in the past, but that changed. There is now an option to calculate gain from purchase date or rebased to 5 April 2015 (when the rules changed). So UK CGT is only payable on the gain from April 2015 until disposal.

Assuming a Thai tax resident at disposal, it looks like there is no CGT in Thailand it is just taxed as income, is that right?

Presuming tax would be due in Thailand for the difference between whatever is taxed CGT in the UK (18%/24%) and whatever is due in Thailand (5-35%?) - (assuming the money is remitted into Thailand, or Thailand decides to tax worldwide income).

How would Thailand calculate the gain, will they accept the gain that the UK HMRC says I have made which is the gain after they rebase to April 2015, less allowable expenses and the CGT exempt amount?

 

Or would Thailand use the original purchase price and calculate the gain at disposal, are there any allowable deductions given by the Thai system?

Very confusing!

[alphason]

I found this on Sherrings Thai tax pages...

 

Taxation of Capital Gains Income.

 

Specific types of assessable (taxable) income, for a resident of Thailand* is taxed as follows: 

* A resident is a person in Thailand for 180 days or more in a year

 

For a resident of Thailand deriving capital gains income from a source outside of Thailand and bringing it into Thailand**.
Personal income tax on the amount of capital gains income (the amount of the proceeds exceeding the costs of the investment).

 

**not including capital gains from immovable property which most double tax agreements prescribe the tax rights for the country in which the immovable property is situated.

 

Is this saying the UK Thai DTA prevents Thailand charging CGT/PIT on the sale of a property in the UK ??

[topt]

53 minutes ago, alphason said:

Is this saying the UK Thai DTA prevents Thailand charging CGT/PIT on the sale of a property in the UK ??

I don't think it does as the UK/Thai version of the DTA states in Article 14 - 

Quote

(1) Capital gains from the alienation of immovable property, as defined in paragraph (2) Article 7, may be taxed in the Contracting State in which such property is situated.

Because it uses the word "may" it is potentially open to being taxed again and then requiring a credit requested against UK tax......or simply showing it has already been taxed may mean that the Thai RD leave it alone......

Has been argued about in the longer tax threads so someone else may have a more definitive view - which would still need to be tested with the relevant RD office........

[impulse]

7 minutes ago, topt said:

which would still need to be tested with the relevant RD office........

 

I think there's gonna be a lot of "testing", starting with the first tax returns under the new rules, early next year.

 

If yesterday's tax thread is true, a lot of Thai taxing policies will be blown up. Specifically, seeking taxes on earnings that never cross into Thailand.

 

https://aseannow.com/topic/1329034-thailand-to-tax-residents’-foreign-income-irrespective-of-remittance/

 

Gonna be an interesting year, 2025.

 

 

[alphason]

7 minutes ago, topt said:

I don't think it does as the UK/Thai version of the DTA states in Article 14 - 

Because it uses the word "may" it is potentially open to being taxed again and then requiring a credit requested against UK tax......or simply showing it has already been taxed may mean that the Thai RD leave it alone......

Has been argued about in the longer tax threads so someone else may have a more definitive view - which would still need to be tested with the relevant RD office........

 

Thats what I thought from reading the word "may" but, I have been in contact with Sherrings, and the International Tax Director confirmed to me this would not be subject to Thailand Tax law.

 

He said regarding Article 14, paragraph 1, of UK Thai DTA. The words "may be taxed" do not have the usual laymans meaning, instead the legal meaning of these words is that because the UK's tax law has Capital Gains Tax legislation, then the immovable property in the UK is subject to the Capital Gains Tax legislation in the UK, and not subject to Thailand's tax law.

 

[topt]

Just now, impulse said:

 

I think there's gonna be a lot of "testing", starting with the first tax returns under the new rules, early next year.

 

If yesterday's tax thread is true, a lot of Thai taxing policies will be blown up. Specifically, seeking taxes on earnings that never cross into Thailand.

 

https://aseannow.com/topic/1329034-thailand-to-tax-residents’-foreign-income-irrespective-of-remittance/

 

Gonna be an interesting year, 2025.

 

 

Yes the initial change announced last year looks like it will just move ahead but the "proposed" move to world wide taxation on tax residents is a bit of a seismic shift........Others have suggested however that the process to enshrine that will take a while so will likely not be implemented until 2025 earliest - if it goes ahead......

[topt]

Just now, alphason said:

 

Thats what I thought from reading the word "may" but, I have been in contact with Sherrings, and the International Tax Director confirmed to me this would not be subject to Thailand Tax law.

 

He said regarding Article 14, paragraph 1, of UK Thai DTA. The words "may be taxed" do not have the usual laymans meaning, instead the legal meaning of these words is that because the UK's tax law has Capital Gains Tax legislation, then the immovable property in the UK is subject to the Capital Gains Tax legislation in the UK, and not subject to Thailand's tax law.

 

I agree it is definitely subject to the UK and hopefully he knows what he is referring to in that Thailand will ignore it........

[alphason]

Just now, topt said:

I agree it is definitely subject to the UK and hopefully he knows what he is referring to in that Thailand will ignore it........

 

I would think he does, this is the only person that seemed to answer the question and explain why. I thought a big company like this wouldn't be so helpful to an individual so I was impressed with the quick response from Sherrings.

[Everyman]

15 hours ago, impulse said:

 

I think there's gonna be a lot of "testing", starting with the first tax returns under the new rules, early next year.

 

If yesterday's tax thread is true, a lot of Thai taxing policies will be blown up. Specifically, seeking taxes on earnings that never cross into Thailand.

 

https://aseannow.com/topic/1329034-thailand-to-tax-residents’-foreign-income-irrespective-of-remittance/

 

Gonna be an interesting year, 2025.

 

 

 

It won’t because nothing will happen, it’s all hot air. 

 

If you don’t believe me, consider that the revenue department has made contradictory statements that can’t both me true. Such as

 

1. Credit card spending in Thailand will be taxed.

 

2. World wide income will be taxed.

 

Taxing both would mean that the funds are taxed twice, once as they are earned and again as they are brought into Thailand. Or I suspect, neither will happen because enforcement is impossible. 

 

And those talking about CRS…assuming that countries give each other the detailed financial records of all their citizens, are they really going to be able to comb through all that data to find all your accounts? It’s ridiculous. 

Edited June 7 by Everyman