Thailand as home, roaming the world tax free - the pipe dream

[Everyman]

22 minutes ago, ronnie50 said:

I'm not American, but that is indeed news to me. So you're saying Americans working abroad are exempt from taxation up to USD 99,000 per year? (provided they do some extra paperwork?). Wouldn't that be kind of common knowledge?

 

It basically is common knowledge in the sense that the information is easy to find. The American tax system is big and complicated though and not everyone has personal finance as a hobby. 

 

Here is the IRS page about it https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

It can be a bit confusing with the “tax home,” thing, but the important part is the “physical presence test.” 

 

And the amount for the 2023 tax year is $126,500. I was just being approximate with the “six figures.” 

 

As I mentioned however, if you are self employed and your income comes from the US you’re on the hook for at least about 15% and there’s nothing you can legally do about that. 

[ronnie50]

6 minutes ago, Everyman said:

Here is the IRS page about it https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

[...]

 

As I mentioned however, if you are self employed and your income comes from the US you’re on the hook for at least about 15% and there’s nothing you can legally do about that. 

Interesting, didn't know that. Thanks. So then it's not so bad for most, provided their overseas employer is not paying the individual's salary from funds sourced in the US. Dual nationals would probably gain quite nicely from this if they prove they live and work in a 3rd country (other than Canada, which I think has some treaty with US making it harder to avoid US tax abroad).

[Letseng]

On 12/24/2024 at 7:48 AM, newbee2022 said:

As far as I know EU members have to pay taxes to their home countries wherever they live.

Only if you have an income from the country like pension.

From any income from investment they take 35% tax at source.

[newbee2022]

25 minutes ago, Letseng said:

Only if you have an income from the country like pension.

From any income from investment they take 35% tax at source.

I said this. Thank you to confirm my post👍

[topt]

34 minutes ago, Letseng said:

Only if you have an income from the country like pension.

From any income from investment they take 35% tax at source.

Which specific country is that or are you suggesting that is Euro wide?

 

UK for example does not have that - and didn"t even when it was in the bloc.

And @newbee2022 there is no capital gains tax payable (other than property) if non resident for tax. So you could trade shares to your hearts content and any gains would not be taxable.

[newbee2022]

1 minute ago, topt said:

Which specific country is that or are you suggesting that is Euro wide?

 

UK for example does not have that - and didn"t even when it was in the bloc.

And @newbee2022 there is no capital gains tax payable (other than property) if non resident for tax. So you could trade shares to your hearts content and any gains would not be taxable.

UK is not EU. And of course you have to pay taxes if the source of your income is a state pension eg.

[Thingamabob]

I'm not going anywhere. 

[KhunHeineken]

6 hours ago, Thingamabob said:

I'm not going anywhere. 

No one has said, including the Thai government, that you have to leave. 

 

However, you MAY have to be prepared to pay more to continue to reside in Thailand. 

[KhunHeineken]

I am giving Thailand one year of this.  Early next year we will all get to see how this unfolds. 

 

If I feel the tax bill is to a point where I think it's a rip off, it's 179 days in Thailand, and the rest in Vietnam.  Simple.

[gamb00ler]

11 hours ago, ronnie50 said:

I'm not American, but that is indeed news to me. So you're saying Americans working abroad are exempt from taxation up to USD 99,000 per year? (provided they do some extra paperwork?). Wouldn't that be kind of common knowledge?

The income that is excluded from taxation by US is only wage/salary income.  Business income, investment income and other non-wage earnings are not included in the foreign earned income exemption.

 

In another post you indicated that this US exemption would be of benefit to dual nationality tax payers.  I don't think that's true as it only exempts the earner from US taxes not all taxation.

[MartinBangkok]

12 hours ago, ronnie50 said:

Maybe it's the word 'tax resident' - I know what you mean though, you must pay taxes at source if it was earned in your country of nationality.  However, I'm not considered a tax resident of my country(ies) for example.. but if I earned money there, regardless of where I am resident, they'd tax it at source.

You are both wrong regarding salaries. Pension is a grey area. 

[KhunHeineken]

13 minutes ago, MartinBangkok said:

Pension is a grey area. 

Can you quote some legislation, even a DTA, that states pensions are exempt? 

[Thingamabob]

19 hours ago, KhunHeineken said:

No one has said, including the Thai government, that you have to leave. 

 

However, you MAY have to be prepared to pay more to continue to reside in Thailand. 

Of course.

[KhunHeineken]

11 minutes ago, Thingamabob said:

Of course.

Yes, but for some high net worth individuals, they may not see living in Thailand as value for money anymore, due to having to pay this tax. 

 

Some may consider leaving Thailand for 6 months of the year, as it's financially beneficial for them to do so. 

[oldcpu]

On 12/28/2024 at 9:50 AM, ronnie50 said:

Maybe it's the word 'tax resident' - I know what you mean though, you must pay taxes at source if it was earned in your country of nationality.  However, I'm not considered a tax resident of my country(ies) for example.. but if I earned money there, regardless of where I am resident, they'd tax it at source.

 

There are EU countries (Germany for example) where pension is NOT taxed in the source country (Germany) for non-residents of Germany who are residents of Thailand. Read the German-Thailand DTA if you don't believe me.

 

The German Taxation authorities even sent me a letter stating such, and asked that if my tax situation did not change, that i should stop filing a German tax return for my German pension income.

 

I don't know about other EU countries,  but the DTA of different EU countries with Thailand is VERY relevant here and blanket statements (that taxes MUST be paid at source for EU) are typically inaccurate - as there are exceptions.

[oldcpu]

On 12/28/2024 at 10:22 PM, KhunHeineken said:

Can you quote some legislation, even a DTA, that states pensions are exempt? 

 

In the case of German pensions (only) :  German - Thai DTA.  It passes taxation rights for German pensions to Thailand, the country of residency (assuming one is a resident of Thailand).

[oldcpu]

8 hours ago, KhunHeineken said:

Yes, but for some high net worth individuals, they may not see living in Thailand as value for money anymore, due to having to pay this tax. 

 

Some may consider leaving Thailand for 6 months of the year, as it's financially beneficial for them to do so. 

 

I agree. 

 

Everyone needs to look at their own financial situation in regards to source income (location/amounts) and also the time they wish to spend in Thailand , and the Thai visa that they have. For some it makes financial sense not to be a Thai resident.  For others it does make financial sense to stay in Thailand and be considered a Thai resident.

[Thingamabob]

13 hours ago, KhunHeineken said:

Yes, but for some high net worth individuals, they may not see living in Thailand as value for money anymore, due to having to pay this tax. 

 

Some may consider leaving Thailand for 6 months of the year, as it's financially beneficial for them to do so. 

Yes indeed. I have considered doing so, but have decided against, whatever the cost 

[Letseng]

On 12/28/2024 at 1:59 PM, topt said:

Which specific country is that or are you suggesting that is Euro wide?

 

UK for example does not have that - and didn"t even when it was in the bloc.

And @newbee2022 there is no capital gains tax payable (other than property) if non resident for tax. So you could trade shares to your hearts content and any gains would not be taxable.

I'm not talking about Europe but about EU. But tax @ source is an OECD rule. And no, you cannot trade to yr hearts content. Unless you live in UK you haven't got an account there. Just selling what I had and getting the money was a nightmare without UK base & account.

[topt]

21 minutes ago, Letseng said:

I'm not talking about Europe but about EU. But tax @ source is an OECD rule. And no, you cannot trade to yr hearts content. Unless you live in UK you haven't got an account there. Just selling what I had and getting the money was a nightmare without UK base & account.

You are making too many assumptions.

I accept you were not originally referring to the UK but I specifically mentioned it for my example.

 

It is a fact that I could trade in and out all day long and not pay any tax in the UK on any of those gains being officially non-resident for tax. You want me to provide HMRC links?

The fact you suggest you had a lot of issues is specific to your circumstances and not the UK tax law.

[NoDisplayName]

On 12/22/2024 at 3:00 PM, ronnie50 said:

I think the math is right. Again – just for fun – and yes, for the majority of expats that don’t have existing homes in these other places, the costs of spending half a year away wouldn’t make any economic sense.

 

If you're lifetime property of the US government, and utilize the IRS regulations to your benefit, you can earn about $60K(*) with no taxes due, $120K married filing jointly.

 

Global income tax by Thailand would result in a minimum $10K tax bill annually, as your offsetting capital losses are not recognized by Thailand and would increase that tax bite even bigly'er.

 

(*) increased to ~$63.5K for 2025 by COLA increases for standard deduction and tax brackets.

 

My plan would be to buy a modest condo in Cambodia using 2 years of Thai tax savings.  5 months Thailand, 5 months Cambodia, 2 months China.  Then would purchase a 10-year China multiple-entry tourist visa (US citizens $140, Canuckians C$110, UK £85), valid for 60-day entries.  Or could avoid the visa using 30-day visa waiver to Hainan island and a few other large metro areas.

[KhunHeineken]

On 12/29/2024 at 6:07 PM, oldcpu said:

 

In the case of German pensions (only) :  German - Thai DTA.  It passes taxation rights for German pensions to Thailand, the country of residency (assuming one is a resident of Thailand).

Passing taxation rights to another country doesn't mean the funds are tax exempt though, does it? 

[KhunHeineken]

On 12/29/2024 at 6:13 PM, oldcpu said:

 

I agree. 

 

Everyone needs to look at their own financial situation in regards to source income (location/amounts) and also the time they wish to spend in Thailand , and the Thai visa that they have. For some it makes financial sense not to be a Thai resident.  For others it does make financial sense to stay in Thailand and be considered a Thai resident.

I agree, but the funny thing is, this policy would seem to make an incentive for the wealthy to leave Thailand for 6 months of the year, whilst retaining those with less funds at their disposable, thus, those not inputting much into the Thai economy by way of spend. 

 

Interesting times ahead. 

[KhunHeineken]

On 12/29/2024 at 11:44 PM, Thingamabob said:

Yes indeed. I have considered doing so, but have decided against, whatever the cost 

The "cost" will be different for everyone. 

 

I have said in the past, if Thailand taxes me to the point I feel it's a rip off, it's 6 months Thailand and 6 months Vietnam.  No problem for me.  Thailand hasn't got me on the hook. 

 

It's not like that tax is giving me any rights here, going towards permanent residency, or anymore use of infrastructure etc.  Eg. medical.  Basically, is money going out for nothing. 

[KhunHeineken]

4 hours ago, NoDisplayName said:

 

If you're lifetime property of the US government, and utilize the IRS regulations to your benefit, you can earn about $60K(*) with no taxes due, $120K married filing jointly.

 

Global income tax by Thailand would result in a minimum $10K tax bill annually, as your offsetting capital losses are not recognized by Thailand and would increase that tax bite even bigly'er.

 

(*) increased to ~$63.5K for 2025 by COLA increases for standard deduction and tax brackets.

 

My plan would be to buy a modest condo in Cambodia using 2 years of Thai tax savings.  5 months Thailand, 5 months Cambodia, 2 months China.  Then would purchase a 10-year China multiple-entry tourist visa (US citizens $140, Canuckians C$110, UK £85), valid for 60-day entries.  Or could avoid the visa using 30-day visa waiver to Hainan island and a few other large metro areas.

I'm not American, but if this tax policy does end up having some "bite" then it's 179 days Thailand, and 6 months in Vietnam. 

 

There are only 3 month tourist visas in Vietnam, so I would time it that the 3 month visa run would be the Singapore Formula 1 race. Back to Vietnam for 3 more months, then to Thailand for another 179 days.  Rinse and repeat.  No problem for me.  

 

My friends in Vietnam have told me Vietnam has no problem with back to back visa runs.     

 

 

[Thingamabob]

14 hours ago, KhunHeineken said:

The "cost" will be different for everyone. 

 

I have said in the past, if Thailand taxes me to the point I feel it's a rip off, it's 6 months Thailand and 6 months Vietnam.  No problem for me.  Thailand hasn't got me on the hook. 

 

It's not like that tax is giving me any rights here, going towards permanent residency, or anymore use of infrastructure etc.  Eg. medical.  Basically, is money going out for nothing. 

As you say, the cost will be different for everyone. In my case I'm not bothered about the cost issue. I do not intend to leave Thailand, and my family here, for 6 months of every year. 

[ronnie50]

33 minutes ago, Thingamabob said:

As you say, the cost will be different for everyone. In my case I'm not bothered about the cost issue. I do not intend to leave Thailand, and my family here, for 6 months of every year. 

I think this is one of the main points, isn't it? For single guys, retired or receiving considerable earning on investments, pensions or whatever, it's a much simpler case. They can go wherever and whenever they want, provided they have the funds. But for those of us married and supporting a family here, the math doesn't work out (e.g. moving your whole family elsewhere for 6 months). Also many of us, like you, would not want the alternative of leaving them behind for 6 months every year - nor could most even afford to do that.

[oldcpu]

18 hours ago, KhunHeineken said:

Passing taxation rights to another country doesn't mean the funds are tax exempt though, does it? 

 

Indeed.  It does not mean funds are tax exempt.

 

This is where paw.161 (for income prior to 1-Jan-2024) comes in handy, and where currently the LTR visa comes in handy for myself (as I reside in Thailand >180 days/calendar(tax) year).

.

[KhunHeineken]

7 hours ago, Thingamabob said:

As you say, the cost will be different for everyone. In my case I'm not bothered about the cost issue. I do not intend to leave Thailand, and my family here, for 6 months of every year. 

As I have said in the past, when I say one should not confuse the words "more expensive" with "unaffordable" I mean one may still be able to afford to live in Thailand, and cover any tax liability, but surely there is a line in the sand where one would feel they are being ripped off. 

 

I understand staying due to emotional attachment.  I guess the Thai government is banking on that also. 

[KhunHeineken]

4 hours ago, oldcpu said:

 

Indeed.  It does not mean funds are tax exempt.

 

This is where paw.161 (for income prior to 1-Jan-2024) comes in handy, and where currently the LTR visa comes in handy for myself (as I reside in Thailand >180 days/calendar(tax) year).

.

Sure, but I was speaking in general, and not to your specific circumstances. 

 

Many seem to think their country's DTA with Thailand means there is no tax to pay in Thailand. 

 

I posted this clip in another forum a while ago.  I'll post it here also.  He explains it quite well. 

 

He calls it "The double taxation treaty myth."