Withholding tax on interests earned in my home country

[CallumWK]

I'm registered at my embassy as permanently living in Thailand for at least 10 years, and as such haven't filed any tax returns in my home country.

 

Recently I had an inheritance, and that money is in my bank accounts in my home country.

 

In my home country there is an exemption of withholding tax on the first 1000 Euro interest per individual, above that you pay 15%.

 

Now if I earn 999 Euro of interest in 3 different banks, so 2997 Euro in total, no withholding tax is deducted, because the banks don't know each other, and I have to file the interests on my tax return.

 

Though, I legally don't file any tax returns, since I'm permanently live in Thailand.

 

Doe this mean, I now will have to file tax returns in my home country, or can I get away with it?

 

Edit : On second thought, can I decide to pay the withholding tax on those accounts in Thailand, then legally get up to 60.000 baht in withholding taxes refunded ?

Edited June 17 by CallumWK

[Klonko]

14 hours ago, CallumWK said:

I'm registered at my embassy as permanently living in Thailand for at least 10 years, and as such haven't filed any tax returns in my home country.

 

Recently I had an inheritance, and that money is in my bank accounts in my home country.

 

In my home country there is an exemption of withholding tax on the first 1000 Euro interest per individual, above that you pay 15%.

 

Now if I earn 999 Euro of interest in 3 different banks, so 2997 Euro in total, no withholding tax is deducted, because the banks don't know each other, and I have to file the interests on my tax return.

 

Though, I legally don't file any tax returns, since I'm permanently live in Thailand.

 

Doe this mean, I now will have to file tax returns in my home country, or can I get away with it?

 

Edit : On second thought, can I decide to pay the withholding tax on those accounts in Thailand, then legally get up to 60.000 baht in withholding taxes refunded ?

You have to name your home country. You do not need to file taxes for (interest) income in most countries if you are not tax resident in these countries, unless you own real estate or a business therein. In some countries, you can at least partially recover withholding tax by submitting proof that you are tax resident in Thailand. You can get respective confirmation from TRD. As regards inheritance from abroad, you may have to file a tax return in the estate country and/or in Thailand depending on relationship and amount. DTA may not prevent double taxation.

 

BTW, if you earn interest on your foreign accounts, remittances from these accounts may qualify as assessable income in Thailand.

Edited June 18 by Klonko

[Presnock]

In my opinion you just want someone to agree with your avoiding the reporting of such info; I get that  impression with your "do I have to file or  can I get away with it".

 

[khunPer]

20 hours ago, CallumWK said:

I'm registered at my embassy as permanently living in Thailand for at least 10 years, and as such haven't filed any tax returns in my home country.

 

Recently I had an inheritance, and that money is in my bank accounts in my home country.

 

In my home country there is an exemption of withholding tax on the first 1000 Euro interest per individual, above that you pay 15%.

 

Now if I earn 999 Euro of interest in 3 different banks, so 2997 Euro in total, no withholding tax is deducted, because the banks don't know each other, and I have to file the interests on my tax return.

 

Though, I legally don't file any tax returns, since I'm permanently live in Thailand.

 

Doe this mean, I now will have to file tax returns in my home country, or can I get away with it?

 

Edit : On second thought, can I decide to pay the withholding tax on those accounts in Thailand, then legally get up to 60.000 baht in withholding taxes refunded ?

You need to check your home country's income tax rules when being foreign tax resident instead of living in your home country. In my European home country interest income is free of income tax when instead being a foreign tax resident. You should also check if there is a Double Taxation Agreement between you home country and Thailand, to learn how money is taxed if transferred to Thailand.

 

With the present tax rules for Thailand, any income abroad is income not taxable, before the money is transferred into Thailand. When transferred into Thailand the money is taxable here; however, only gain of savings, if the funds originates from saving made before 2024.

[CallumWK]

18 minutes ago, khunPer said:

You need to check your home country's income tax rules when being foreign tax resident instead of living in your home country. In my European home country interest income is free of income tax when instead being a foreign tax resident. You should also check if there is a Double Taxation Agreement between you home country and Thailand, to learn how money is taxed if transferred to Thailand.

 

With the present tax rules for Thailand, any income abroad is income not taxable, before the money is transferred into Thailand. When transferred into Thailand the money is taxable here; however, only gain of savings, if the funds originates from saving made before 2024.

 

In my country also the first 1000 Euro in interest (per individual not per account or bank) is free of withholding tax. In previous years interests were negligible, and I wouldn't exceed the 1000 Euro. This year I had a significant inheritance, and interests percentages have multiplied at the same time, so my guess is that for 2024 I will have to pay 15% withholding tax on about 5000 Euro of interests

 

Banks only deduct the withholding tax automatically once you exceed that plafond of 1000 euro in that particular bank, not if you exceed it in multiple banks combined.

In the latter case I have to mention on my tax return, and I suppose I get taxed 15% withholding tax, not income tax.

My country has a DTA with Thailand, and since I moved to Thailand, the revenue office has informed me that there is no need any more to file a return.

I have no assets in my country, and until this year also had no income.

Since the 1st of January I receive a pension, which is taxable, but the yearly balance is right below the plafond that people have to pay tax.

I have no intention to remit any funds to Thailand in the near future.

 

So my point was actually, if I declare the interests in Thailand, and pay the 15% withholding tax here, on my tax return I can declare them as paid tax and get them refunded, since i have no other income in Thailand.

 

5000 Euro = is about 195.000 baht. A withholding tax of 15% on that amount = 29.500 baht.

 

I can claim back up to 60.000 baht of paid taxes in Thailand

[john donson]

23 hours ago, CallumWK said:

I'm registered at my embassy as permanently living in Thailand for at least 10 years, and as such haven't filed any tax returns in my home country.

 

Recently I had an inheritance, and that money is in my bank accounts in my home country.

 

In my home country there is an exemption of withholding tax on the first 1000 Euro interest per individual, above that you pay 15%.

 

Now if I earn 999 Euro of interest in 3 different banks, so 2997 Euro in total, no withholding tax is deducted, because the banks don't know each other, and I have to file the interests on my tax return.

 

Though, I legally don't file any tax returns, since I'm permanently live in Thailand.

 

Doe this mean, I now will have to file tax returns in my home country, or can I get away with it?

 

Edit : On second thought, can I decide to pay the withholding tax on those accounts in Thailand, then legally get up to 60.000 baht in withholding taxes refunded ?

 

belgium ? national bank will know... they always do... when tax is needed... 

Edited June 18 by john donson

[khunPer]

1 hour ago, CallumWK said:

I have no assets in my country, and until this year also had no income.

Since the 1st of January I receive a pension, which is taxable, but the yearly balance is right below the plafond that people have to pay tax.

I have no intention to remit any funds to Thailand in the near future.

 

So my point was actually, if I declare the interests in Thailand, and pay the 15% withholding tax here, on my tax return I can declare them as paid tax and get them refunded, since i have no other income in Thailand.

 

5000 Euro = is about 195.000 baht. A withholding tax of 15% on that amount = 29.500 baht.

 

I can claim back up to 60.000 baht of paid taxes in Thailand

So, why would you declare money to be taxed in Thailand, which you haven't transferred into Thailand, pay the income tax and thereafter claim the tax back?

 

You need to transfer the money into Thailand to be income taxable after the present rules. That might not stop your money to be (also) taxed in your home country, that is why you must first thing, check your home country's tax rules, and second thing, check the DTA between you home country and Thailand. The latter also count for any pension you transfer into Thailand from your home country, in some cases pension are income taxable in both countries.

[CallumWK]

3 minutes ago, khunPer said:

So, why would you declare money to be taxed in Thailand, which you haven't transferred into Thailand, pay the income tax and thereafter claim the tax back?

 

Because in my home country I have to pay an equal amount of withholding tax and can't claim it back.

 

4 minutes ago, khunPer said:

You need to transfer the money into Thailand to be income taxable after the present rules.

 

I'm a tax resident in Thailand, and my country has a DTA with Thailand. Latest rumours (on this forum) is that Thailand may tax on income NOT remitted to Thailand.

 

6 minutes ago, khunPer said:

The latter also count for any pension you transfer into Thailand from your home country, in some cases pension are income taxable in both countries.

 

I made clear already that I don't have any intention to remit any money, be it pension or interest or savings, to Thailand. Probably not in this lifetime, as I have enough savings here already

[CallumWK]

Maybe the purpose of this thread isn't clear, so let me clarify.

 

My understanding of a DTA is that you can't be double taxed on the same money, and I'm a resident for tax purposes in Thailand, but the taxpayer has the choice to decide in which country he wants to be taxed. Either the country he has citizenship, but doesn't live in, or the country he lives.

 

Correct or not?

 

[khunPer]

16 hours ago, CallumWK said:

16 hours ago, khunPer said:

You need to transfer the money into Thailand to be income taxable after the present rules.

 

I'm a tax resident in Thailand, and my country has a DTA with Thailand. Latest rumours (on this forum) is that Thailand may tax on income NOT remitted to Thailand.

 

16 hours ago, khunPer said:

The latter also count for any pension you transfer into Thailand from your home country, in some cases pension are income taxable in both countries.

 

I made clear already that I don't have any intention to remit any money, be it pension or interest or savings, to Thailand. Probably not in this lifetime, as I have enough savings here already

So far it's a suggestion and thereby rumour about taxation of foreign income, not yet transferred into Thailand. You cannot use that now, as it's not part of income taxation.

 

This leads to your next point, which is about the money you don't transfer into Thailand, but they will be taxed in Thailand anyway according to your point above.

 

Why did you ask questions about taxation in the first place, as you seems to wish to follow your own strategi?

[khunPer]

14 hours ago, CallumWK said:

Maybe the purpose of this thread isn't clear, so let me clarify.

 

My understanding of a DTA is that you can't be double taxed on the same money, and I'm a resident for tax purposes in Thailand, but the taxpayer has the choice to decide in which country he wants to be taxed. Either the country he has citizenship, but doesn't live in, or the country he lives.

 

Correct or not?

 

Not correct. You will be taxed in the country of tax residence, but can also be taxed in the country of origin of income.

 

A DTA means, that you won't be doble taxed, often it means that you only pay the highest tax. If for example a retirement pension is "taxable in both states" – as some DTAs say – you will pay the highest tax, and any tax above that you can apply to have refunded. My European home country insists on income tax for pension as "source country" – some pensions are paid by the government, private pensions has been tax deducted in the income – and as my home country tax is higher than Thai income tax, I will pay the high tax due to the purpose of the DTA. Thailand has two choices, either tax the transferred pensions and refund the tax, or the easy one: Don't care and don't tax.

 

Here comes the point of the rules from January 1st 2024, where any money transferred into Thailand is income taxable in Thailand; except proven savings from before 2024. You might already have paid income tax abroad, but will be taxed again. If you prove that you have been taxed abroad and there is a DTA, you can get refunded any part of Thai tax that is higher than the source country's income tax; however, in accordance with the regulations in the DTA.

 

The bad part for some foreigners living in Thailand is that some income might be tax free in one's home country when tax resident abroad – in my home country interest, capital gain and certain fees are free from income tax – but now these funds will be taxed in Thailand, when transferred to here. Before thsi year, you could keep the taxfree income till after December 31st and thereafter the income was magically transformed to savings, which were taxfree to import into Thailand.

 

However, you can still keep taxfree interest and gains abroad, and reinvest, as it's only what you need to transfer to here that will be income taxed. The last suggestion – and rumour – spoils this, as all foreign income shall be taxed, both if transferred and not. That's how it is in my European home country, so if a foreigner becomes tax resident – could be an expert or a CEO in a larger company – their foreign income and capital gains will be taxed in the tax resident country, which might have a top level tax as high as in my home country of 52 percent...

[CallumWK]

19 minutes ago, khunPer said:

Why did you ask questions about taxation in the first place, as you seems to wish to follow your own strategi?

 

I think something got lost in translation.

 

My question is actually, since I am a resident for tax purposes in Thailand, and my country has a DTA with Thailand, do I have the choice to select where I get taxed on interests earned on bank accounts in my home country?

 

Because if that is an option, I prefer to pay the withholding tax in Thailand, since I can get it refunded due to that I don't have any other income in Thailand

[khunPer]

3 minutes ago, CallumWK said:

 

I think something got lost in translation.

 

My question is actually, since I am a resident for tax purposes in Thailand, and my country has a DTA with Thailand, do I have the choice to select where I get taxed on interests earned on bank accounts in my home country?

 

Because if that is an option, I prefer to pay the withholding tax in Thailand, since I can get it refunded due to that I don't have any other income in Thailand

Thanks, that's more clear. Unfortunately not your choice, it's a question of law and rules, and DTAs. See my reply above, it probably explain what you ask.

[dinga]

15 hours ago, CallumWK said:

Maybe the purpose of this thread isn't clear, so let me clarify.

 

My understanding of a DTA is that you can't be double taxed on the same money, and I'm a resident for tax purposes in Thailand, but the taxpayer has the choice to decide in which country he wants to be taxed. Either the country he has citizenship, but doesn't live in, or the country he lives.

 

Correct or not?

 

Think both are INCORRECT:

 

1.  You can be double taxed - you need to refer to the applicable DTA to determine the tax treatment of the various income categories.  You may be entitled to (say) a credit of the tax paid in one country against the tax owing in the 2nd country.

 

2.  Tax residency has nothing to do with an election/preference by the  taxpayer - it is dependent upon the applicable laws in the relevant countries (I think US citizens must lodge US Tax Returns for Worldwide income simply by virtue of their Passports; and US citizens who are Tax Residents of Thailand may well be up for taxes here.  But check out the DTAs)