Thai gov. to tax (remitted) income from abroad for tax residents starting 2024 - Part II

[Mike Teavee]

1 hour ago, chiang mai said:

No. Dividends has its own with holding rate, as I believe property rental does. 

Thanks, I suspected as much so kept my remittances below 235K but thought it wise to ask on the off chance I was missing out on being able to bring another 100K over.

[stat]

20 hours ago, oldcpu said:

 

My pension situation is complex. 

 

I worked in Canada for 27 years paying tax to Canada then (qualifying me for a partial Canadian pension and Old Age Security), worked for a company in Germany for a bit less than 5 years paying tax to Germany then (but paid extra to Germany to get 5 year credit to qualify for a very small German pension which I now receive) and worked for a European Government organisation for 13.5 years (my tax money went to Ireland then before I retired - although I never worked in Ireland - this is a complex European organisation thing) and I now receive a pension from that European organisation.  I won't go into all its tax aspects here.

 

On the 'private' side, next year I will start receiving money from a Canadian Registered Retirement Income Fund (RRIF) (sort of like a US 401k) which will be taxed in Canada (per DTA), ...  and also some money from a private German Health insurance/pension scheme that my wife had my buy many years back (which I forgot about - and I assume taxed in Germany).

 

 

The Canadian pension and Canadian RRIF money will be taxed in Canada (per my understanding of the Thailand/Canada DTA). The German pension will be taxed (or not taxed) in accordance with the Thailand/German DTA (and in accordance with the Thailand LTR exemption on assesable income).  The private German Health Insurance pension scheme pension I assume will be taxed in Germany < not sure > Its small and I even forgot about it, until I received a letter a week ago from them reminding me ...  The European government organisation pension will be taxed or not taxed in accordance with my Thailand LTR visa.  I have always planned to have it taxed, so not being taxed by my having a Thailand LTR visa would be a nice financial perk/extra.

 

So regardless as to how this plays out, it won't affect my future plans for Thailand.   My wife is 13 years younger than myself, so my main long range financial future plan is to ensure she is looked after when I pass away (hopefully I don't pass away too soon).

Just try to make sure you do not remit the German gov. pension to TH. Best keep the pension aside in a different account if possible. So as long as they do not change to ww taxation you should be tax free. I do not know anything about the other pensions you mentioned, sorry.

[stat]

19 hours ago, JimGant said:

Why do you say that? The DTA says German govt pensions are exempt from Thai taxation.

 

I am not allowed to post sources in German here that confirm my statement, sorry.

[chiang mai]

21 minutes ago, Mike Teavee said:

Thanks, I suspected as much so kept my remittances below 235K but thought it wise to ask on the off chance I was missing out on being able to bring another 100K over.

Rental income has a 30% standard deduction but if income is received in first half year, two returns are due, June and January.

[JimGant]

5 minutes ago, stat said:

I am not allowed to post sources in German here that confirm my statement, sorry.

Someone already explained that your "government pension" was actually a social service payment of some kind, not a pension for services rendered to German government. This would be akin to the UK, where their State Pension is not for services rendered to the govt -- and is taxable by Thailand. But a UK pension paid for service to the govt is solely taxable in the UK -- same for a German pension paid for your work for the govt.

[Mike Teavee]

Just now, chiang mai said:

Rental income has a 30% standard deduction but if income is received in first half year, two returns are due, June and January.

Is that rental income from Thailand or does it apply to rental income from overseas?
 

Doesn’t matter to me as I can show that the 235K I sent over came from UK dividends (though commingled with rental income the dividends I received just before remitting the money far exceeded 235K) but would be good to know for future reference. 

[chiang mai]

1 minute ago, Mike Teavee said:

Is that rental income from Thailand or does it apply to rental income from overseas?
 

Doesn’t matter to me as I can show that the 235K I sent over came from UK dividends (though commingled with rental income the dividends I received just before remitting the money far exceeded 235K) but would be good to know for future reference. 

Both, either/or

[JimGant]

2 hours ago, chiang mai said:

According to some members, filing a null return is not wanted and makes you a stupid person. But if you want to get back the tax with held on your interest, I would certainly recommend filing anyway.

Actually, if you're a Yank, you can still not be stupid by filing a Thai tax return to get back your withheld tax on interest -- and just take a tax credit on your US tax return for those Thai withheld taxes. No proof of Thai taxes withheld is needed with your US filing -- and if those taxes are below 20,000baht ($600), filing jointly ($300, single) -- only a single line item entry is required. For higher amounts, a Form 1116 is required -- but it's an easy fill. All this plugs easily into your TurboTax actions.

 

The only requirement is that you're unable to get a refund from the Thai govt. But to get a refund, you need a TIN. And as we know from this forum, there are plenty of examples of folks being denied TINs for not having a work permit, etc. Good enough excuse for an IRS audit. Thus, one more reason not to get a TIN -- and to avoid all contact with the TRD.

[stat]

2 hours ago, chiang mai said:

No. Dividends has its own with holding rate, as I believe property rental does. 

Uk dividends come without a withholding tax, one of the few countries without WHT like Singapore, Ireland and some Aussie shares.

Edited Monday at 01:44 PM by stat

[anrcaccount]

54 minutes ago, chiang mai said:

55 minutes ago, Mike Teavee said:

Is that rental income from Thailand or does it apply to rental income from overseas?
 

Doesn’t matter to me as I can show that the 235K I sent over came from UK dividends (though commingled with rental income the dividends I received just before remitting the money far exceeded 235K) but would be good to know for future reference. 

Both, either/or

 

So, are you advising that a foreigner (Thai tax resident) who remits rental income from a property located overseas, to Thailand, can claim a standard 30% deduction on the gross income? 

 

 

[Mike Teavee]

Another video from ExpatTax...

 

Not a lot new in there but I did spot that for co-mingled accounts they use the FIFO (First In First Out) method.

 

Edit: Also covers use of ATMs/Credit cards at 44:08 

 

Edit2: And LTR holders requirements at 49:08 (Interesting that LTR holders follow the previous rules so are still liable for Tax if they bring the income into Thailand in the same year that it was earned). 

Edited yesterday at 01:19 AM by Mike Teavee

[chiang mai]

12 hours ago, anrcaccount said:

 

So, are you advising that a foreigner (Thai tax resident) who remits rental income from a property located overseas, to Thailand, can claim a standard 30% deduction on the gross income? 

 

 

I don't give tax advice, I suggest you go see a Thai tax consultant. 

 

But I can confirm the TRD Code allows a 30% standard deduction against rental income.

 

https://sherrings.com/personal-tax-deductions-allowances-thailand.html

 

 

[anrcaccount]

2 hours ago, chiang mai said:

I don't give tax advice, I suggest you go see a Thai tax consultant. 

 

But I can confirm the TRD Code allows a 30% standard deduction against rental income.

 

https://sherrings.com/personal-tax-deductions-allowances-thailand.html

 

 

 

Right, but you just advised the poster that this standard deduction applies to both Thai rental income and foreign rental income, remitted to Thailand.

 

If anyone has this advice from a Thai tax consultant, I'd be interested to hear it. 

 

Almost any foreign rental income is net of deductions and tax already paid overseas. To apply a standard deduction on gross rental income remitted, does not seem to make any logical sense. 

 

In addition, whether the standard deductions can apply to different income categories 1-8 as listed in your link, if these types of income were earned in a foreign country and remitted. This, again, appears to make no logical sense, as the regulations appear to be written, for only Thai sourced income. 

 

 

[chiang mai]

Just now, anrcaccount said:

 

Right, but you just advised the poster that this standard deduction applies to both Thai rental income and foreign rental income, remitted to Thailand.

 

If anyone has this advice from a Thai tax consultant, I'd be interested to hear it. 

 

Almost any foreign rental income is net of deductions and tax already paid overseas. To apply a standard deduction on gross rental income remitted, does not seem to make any logical sense. 

 

In addition, whether the standard deductions can apply to different income categories 1-8 as listed in your link, if these types of income were earned in a foreign country and remitted. This, again, appears to make no logical sense, as the regulations appear to be written, for only Thai sourced income. 

 

 

 

Your use of the word "advise" is a poorly disguised attempt at an argument or trap, informed would be a much more appropriate term.

 

The TRD Code does not say that Category 5 Rental Income is restricted to Thai properties only and as I recall, an EXPATTAX seminar mentioned that overseas property rentals are to be treated the same way.....that is what I semi-quoted/have referenced. Similarly, the TRD Code does not state that income categories 1-8 are solely for Thai sourced income. Since many Thai's have overseas investments in various forms, I can only presume the Code applies to that income or that lurking in the shadows is another part of the Code that we have yet to see.....I'm going with the former.

 

It was discussed a long time ago that any rental income that is remitted to Thailand would be considered gross of all home country deductions which would be replaced by the 30% Thai standard deduction, or, if actual expenses were greater and all receipts were available, the greater amount.

 

That these things don't make sense to you is of no interest to anyone apart from you. Perhaps you can gain more clarity and sense by fielding your questions to a tax consultant. In the meantime, you'll be doing me a favor if you would add me to your ignore list and I will do the same with you since you have now consumed any remaining goodwill that existed.

[anrcaccount]

41 minutes ago, chiang mai said:

 

Your use of the word "advise" is a poorly disguised attempt at an argument or trap, informed would be a much more appropriate term.

 

The TRD Code does not say that Category 5 Rental Income is restricted to Thai properties only and as I recall, an EXPATTAX seminar mentioned that overseas property rentals are to be treated the same way.....that is what I semi-quoted/have referenced. Similarly, the TRD Code does not state that income categories 1-8 are solely for Thai sourced income. Since many Thai's have overseas investments in various forms, I can only presume the Code applies to that income or that lurking in the shadows is another part of the Code that we have yet to see.....I'm going with the former.

 

It was discussed a long time ago that any rental income that is remitted to Thailand would be considered gross of all home country deductions which would be replaced by the 30% Thai standard deduction, or, if actual expenses were greater and all receipts were available, the greater amount.

 

That these things don't make sense to you is of no interest to anyone apart from you. Perhaps you can gain more clarity and sense by fielding your questions to a tax consultant. In the meantime, you'll be doing me a favor if you would add me to your ignore list and I will do the same with you since you have now consumed any remaining goodwill that existed.

 

 

You are certainly over thinking my response!

 

You also seem unable to engage with posters who do not agree with your "informing", or challenge your assertions. 

 

I'd be very careful with taking guidance from an agency that was created in October 2023, that would logically have limited practical experience filing Thai  tax returns and dealing with the TRD. 

 

If one of the established accountancy practices has any published advice re standard deductions on foreign rental remittances,  it would be great to see it.

 

As you say-  many Thais do have investments that include rental property overseas.

 

What I suspect (and happy to be shown as wrong) , is that in practice they have never paid thai tax on remittances of this income, regardless of year received. 

 

If it was common practice for Thai tax to be paid on this, there would be more published information available.

 

This scenario, which is one of many similar, highlights the difficulties inherent in the application of new POR interpretation.

 

Without significant further guidance from the TRD, consistent and practical application of thai taxation of foreign sourced income is going to be next to impossible.

 

Several major accounting firms and related associations have been highlighted this and have been actively engaging with the TRD. 

 

 

 

[chiang mai]

1 hour ago, anrcaccount said:

 

 

You are certainly over thinking my response!

 

You also seem unable to engage with posters who do not agree with your "informing", or challenge your assertions. 

 

I'd be very careful with taking guidance from an agency that was created in October 2023, that would logically have limited practical experience filing Thai  tax returns and dealing with the TRD. 

 

If one of the established accountancy practices has any published advice re standard deductions on foreign rental remittances,  it would be great to see it.

 

As you say-  many Thais do have investments that include rental property overseas.

 

What I suspect (and happy to be shown as wrong) , is that in practice they have never paid thai tax on remittances of this income, regardless of year received. 

 

If it was common practice for Thai tax to be paid on this, there would be more published information available.

 

This scenario, which is one of many similar, highlights the difficulties inherent in the application of new POR interpretation.

 

Without significant further guidance from the TRD, consistent and practical application of thai taxation of foreign sourced income is going to be next to impossible.

 

Several major accounting firms and related associations have been highlighted this and have been actively engaging with the TRD. 

 

 

 

Given your track record, it should come as no surprise that my response is what it was.

 

You have known for many many months that there are several aspects of Thai tax, affecting foreigners,  that some people want to see clarified. You also know that more information is supposed to become available at the end of the year, when the new forms and guidance notes are issued. If you think the large tax firms don't know the answers and you don't trust the smaller firms, it seems pointless trying to get answers here from anyone, especially when you are only ever going to challenge whatever you read, as you constantly have done. My conclusions therefore are that you are doing nothing more than trying to make your usual mischief, for which I have no time or interest. Goodbye.

[Lorry]

7 hours ago, Mike Teavee said:

Not a lot new in there but I did spot that for co-mingled accounts they use the FIFO (First In First Out) method.

IIRC @ballpoint once posted that in his case they used LIFO

[ballpoint]

24 minutes ago, Lorry said:

IIRC @ballpoint once posted that in his case they used LIFO

 

That's what they told me during the audit. They were even looking at interest paid into the offshore account I use to season the money - even though it was well below my taxable threshold it would have been classed as assessable income and therefore requiring a tax return, until I pointed out that tax had already been withheld on it.

[stat]

23 hours ago, ballpoint said:

 

That's what they told me during the audit. They were even looking at interest paid into the offshore account I use to season the money - even though it was well below my taxable threshold it would have been classed as assessable income and therefore requiring a tax return, until I pointed out that tax had already been withheld on it.

This is very interesting and thanks for posting it! Could you elaborate if the accounting method they used was mandatory or up to debate? Usually there is no withholding tax on interest on an offshore account or for that matter not even Germany has a witholding tax on interest, so how come you paid wht? Again much obliged because the whole thing will be about the accounting method at least for the majority of people. Why was there an audit in the first please if you do not mind me asking.

Edited 6 hours ago by stat

[Presnock]

On 9/30/2024 at 7:50 PM, JimGant said:

Someone already explained that your "government pension" was actually a social service payment of some kind, not a pension for services rendered to German government. This would be akin to the UK, where their State Pension is not for services rendered to the govt -- and is taxable by Thailand. But a UK pension paid for service to the govt is solely taxable in the UK -- same for a German pension paid for your work for the govt.

FYI  expattaxthailand.com does webinar on DTA's - if already, they have it on video.  Besides that not only do they help do taxes for a cost of course - they also advertise a FREE 15 minute consultation with expats who have a simple question to ask.   I am an American so the wording of my pension or the US social security is spelled out very clearly who has the right to tax such accounts.  In reading DTA of say Australia or now maybe the UK or Germany, pension could be a different entity entirely and the same with the old age pensions which sounds like social security to me but to the Thai revenue department when they read the Thai version of the DTA it might mean that Thailand could in fact tax those funds if remitted nowadays or in any future changes to the Thai tax situation.  I think one should check out the expattaxthailand website for whereever ones's DTA is as and the take advantage of the free consultation to ask specific questions.  If something is more complicated then it might warrant a visit with those folks.  Just saying, I listened to their pension income and remember that it was pretty complete but like I said before my DTA spells out everything for me very clearly - I learned all the ins and outs of finding the information from this forum back many months ago.  I really appreciate the help some people has spent a considerable amount of time chasing down various local offices to help alleviate many negative feelings.  Hopefully we will soon have a much better idea of where this is headed or when or not ever.  Good luck.

[JimGant]

On 10/1/2024 at 11:44 AM, chiang mai said:

It was discussed a long time ago that any rental income that is remitted to Thailand would be considered gross of all home country deductions which would be replaced by the 30% Thai standard deduction, or, if actual expenses were greater and all receipts were available, the greater amount.

 

That these things don't make sense to you is of no interest to anyone apart from you

 

Oh, ****, why do you go off on these stupid tangents. You've already said that you don't give tax advice, which is good, since you're not qualified. anr's observations are right on the money, at least as they apply to Yanks -- so it IS of interest to the American expat community in Thailand.

 

First and foremost, Thailand is interested in remitted income, after it's been thrashed through the wringer, and comes out on a home country tax return as "gross income." For US rental income, it first goes through Schedule E wringing, where expenses are deducted from rental proceeds, and the resulting figure is put on line 5, "additional income," on Schedule 1. This figure is included in the final Schedule 1 figure, that is put on the front of Form 1040, and shows up in line 11 as "adjusted gross income." Thus, the net figure on your Schedule E, becomes a finalized gross figure on your Form 1040 -- and this is the amount you self-assess on your Thai tax return.

 

Why declare your US rental income on a Thai tax return? Well, the DTA gives primary taxation rights for this income to the US. But it also gives secondary taxation rights to Thailand. So, to be correct, you're supposed to declare this rental income on a Thai tax return. However, Thailand has to give you a credit for the taxes paid to the US for this income. Thus, on the back of an envelope, you could determine whether or not this rental income, after subtracting the tax credit, even brings you into being a Thai taxable income situation. If not, and there are no other taxable income scenarios -- don't file -- if you have something more important to do, like a tee time.

 

 

[chiang mai]

6 minutes ago, JimGant said:

 

Oh, ****, why do you go off on these stupid tangents. You've already said that you don't give tax advice, which is good, since you're not qualified. anr's observations are right on the money, at least as they apply to Yanks -- so it IS of interest to the American expat community in Thailand.

 

First and foremost, Thailand is interested in remitted income, after it's been thrashed through the wringer, and comes out on a home country tax return as "gross income." For US rental income, it first goes through Schedule E wringing, where expenses are deducted from rental proceeds, and the resulting figure is put on line 5, "additional income," on Schedule 1. This figure is included in the final Schedule 1 figure, that is put on the front of Form 1040, and shows up in line 11 as "adjusted gross income." Thus, the net figure on your Schedule E, becomes a finalized gross figure on your Form 1040 -- and this is the amount you self-assess on your Thai tax return.

 

Why declare your US rental income on a Thai tax return? Well, the DTA gives primary taxation rights for this income to the US. But it also gives secondary taxation rights to Thailand. So, to be correct, you're supposed to declare this rental income on a Thai tax return. However, Thailand has to give you a credit for the taxes paid to the US for this income. Thus, on the back of an envelope, you could determine whether or not this rental income, after subtracting the tax credit, even brings you into being a Thai taxable income situation. If not, and there are no other taxable income scenarios -- don't file -- if you have something more important to do, like a tee time.

 

 

Only you are interested in the US DTA, the poster I responded to is a Brit. 

 

Goodbye.

[ballpoint]

5 hours ago, stat said:

This is very interesting and thanks for posting it! Could you elaborate if the accounting method they used was mandatory or up to debate? Usually there is no withholding tax on interest on an offshore account or for that matter not even Germany has a witholding tax on interest, so how come you paid wht? Again much obliged because the whole thing will be about the accounting method at least for the majority of people. Why was there an audit in the first please if you do not mind me asking.

 

Bad choice of words, I should have said overseas account.  The audit occurred in my second year of retirement, after working here for a number of years.  I was aware of the "tax free if remitted in a different year" rule, and had sold some assets in Australia the previous year and remitted some of that money the year of the audit.  Interest was paid, and 10% tax withheld on it, as is compulsory for non tax resident accounts there, prior to my final remittance that year.  Now that money has dried up, I do use an offshore account for the seasoning, with enough pre 2024 savings to keep me going for a few years.

 

They gave me the chance to answer their questions in an informal meeting with a tax officer in a room in the Bangkok Area 3 Revenue office and we went over my situation.  I was pretty sure of my position, and prepared to engage a tax accountant if an appeal was needed, and had also taken advice from PWC, my old employer's tax agents prior to it, but she accepted my position.  I suspect that, had I been unable to satisfactorily answer her questions, things would have got tougher and the thumbscrews brought out for a more formal one. 

 

Printed statements from pdf's sent from the Australian source bank and Thai receiving bank were all that were needed as supporting documents, I was also prepared to show them the online transactions if required.  She also questioned every deposit made into my Thai account - luckily there were only a few others, apart from the remittances.  After her claim that the interest payments made prior to remittance were assessable income that year, I pointed out that tax had been withheld, as documented on the statement.  She accepted that, and said, since Australia has a DTA with Thailand, it was indeed non-assessable.  To be honest, I was quite surprised at how simple that stage of the process was, when the rest was such a pain in the posterior.  (As I've reported in other threads, their method of informing me about the audit requirement - by flagging my passport in the immigration system, and then leaving it to me to get the flag removed following the audit left a lot to be desired). 

 

 

As to the reason why I was audited?  Basically, I went from paying a lot of income tax here annually to paying none at all, while remaining in the country.  They were obviously able to get this information from the Immigration Bureau, along with my new passport number, as my old one expired shortly after I retired.  The audit was called for by the Bangkok Area 3 Revenue Office, where my income tax returns were filed while working, despite my changing my TIN details at the local provincial office where I moved to immediately after retirement, and being told by them I had no need to file a return.  When I heard about the audit requirement from immigration, I went to my provincial Revenue Office and they knew nothing about it.  I then made a trip to the Bangkok Area 3 Office in Chidlom, and they knew nothing about it.  Then I discovered another Bangkok Area 3 Revenue Office near the National Stadium and went there, to be told "yes, we've been expecting you, Mr Ballpoint".  It would seem that the different offices don't communicate, but when one gets its teeth into you, it doesn't let go.

 

 

As I said the first time I told this tale in another thread, this was a special case, and I suspect the vast majority of retirees here won't be audited by the TRD - though my local friendly immigration officer said there were a few other expats in the province with flagged passports awaiting audits.  The reasons I reported it were to counter some claims made in various threads:

 

The TRD will seek and receive information from the Immigration Bureau - they knew I hadn't left the country after retirement and was still a tax resident, and got my new passport details from them.

The TRD will make it impossible for you to leave the country by flagging your passport until they are satisfied.  (And even then, in my case, I had to make a trip to the Soi Suan Phlu immigration detention centre in Bangkok to get the flag removed after the TRD were satisfied).

The TRD do audit foreign tax residents - again, my case was a special one, but none-the-less, they still did it.

The TRD aren't only interested in overseas remittances, they are interested in any deposits made into your local bank account(s).  Using a backdoor method to bring in money so it looks like a local transaction may well be fine, if you're not caught, but don't deposit it into your bank account here.

 

With the new directive, I can well see each TRD office being given a target to look at a certain number of tax residents in their districts/areas.  Just a simple chat like mine was.  If you openly show them supporting documentation then I suspect, as in my case, they will be satisfied.  If you're not so open - gaps in your statements, not disclosing a local bank account etc, then they might think you have something to hide.

 

 

 

 

 

 

Edited 1 hour ago by ballpoint

[anrcaccount]

1 hour ago, JimGant said:

 

Oh, ****, why do you go off on these stupid tangents. You've already said that you don't give tax advice, which is good, since you're not qualified. anr's observations are right on the money, at least as they apply to Yanks -- so it IS of interest to the American expat community in Thailand.

 

First and foremost, Thailand is interested in remitted income, after it's been thrashed through the wringer, and comes out on a home country tax return as "gross income." For US rental income, it first goes through Schedule E wringing, where expenses are deducted from rental proceeds, and the resulting figure is put on line 5, "additional income," on Schedule 1. This figure is included in the final Schedule 1 figure, that is put on the front of Form 1040, and shows up in line 11 as "adjusted gross income." Thus, the net figure on your Schedule E, becomes a finalized gross figure on your Form 1040 -- and this is the amount you self-assess on your Thai tax return.

 

Why declare your US rental income on a Thai tax return? Well, the DTA gives primary taxation rights for this income to the US. But it also gives secondary taxation rights to Thailand. So, to be correct, you're supposed to declare this rental income on a Thai tax return. However, Thailand has to give you a credit for the taxes paid to the US for this income. Thus, on the back of an envelope, you could determine whether or not this rental income, after subtracting the tax credit, even brings you into being a Thai taxable income situation. If not, and there are no other taxable income scenarios -- don't file -- if you have something more important to do, like a tee time.

 

 

Only you are interested in the US DTA, the poster I responded to is a Brit. 

 

Goodbye.

 

 

 

Yet, Britain has a very similar set of deductions for rental property taxation as the US, which makes the advice/observations given that Thai deductions of 30% (gross) apply on foreign remitted rental incomes,  equally invalid and assumptive.

 

These type of statements, including ones like the below, are simply opinion, and not based on any established facts or professional accountancy advice:

 

It was discussed a long time ago that any rental income that is remitted to Thailand would be considered gross of all home country deductions which would be replaced by the 30% Thai standard deduction, or, if actual expenses were greater and all receipts were available, the greater amount