Thai tax tangle: Expats warned of new rules on overseas income

[Jingthing]

7 hours ago, RupertIII said:

Am I correct in assuming that an offshore investment, equities, sold in 23, transferred to Wise in the UK and then remitted to Thailand in 24 is not assessable?

If the sold investment was sold into cash in a bank account before 2024, then yes that is exempt in any future year you might remit it.

If it was in a cash bucket portion in a brokerage account, I am not sure about that though. 

[Jingthing]

4 minutes ago, potless said:

Thanks for the reply, however as a Brit, I have no knowledge of these U.S. products. I think a review of all DTAs is needed on the international stage and standardisation where possible. Not going to happen though is it.

Yes of course IRA accounts are not your concern.

They are weird though as there are two types, one is tax payed later and one is tax payed earlier, but to Thailand same same NOT different.

In the UK there are pension types there that would presumably be accessable in Thailand and others exempt.

[ukrules]

2 hours ago, Yumthai said:

If not been tax resident in 2024 then all offshore cash balances on 31/12/2024 became (tax exempted if later remitted) savings.

 

Exactly this.

 

[Jingthing]

9 hours ago, anrcaccount said:

 

Hang on. Think. 

 

Have you asked Expat Tax if they've ever filed a Thai tax return that includes declaring remitted Roth IRA withdrawals as foreign income?

 

People have been remitting Roth IRA withdrawals to Thailand for many years now, if their position is accurate, they should have always been considered same year income and taxed, right? ( Newsflash, this hasn't been happening)

 

What they're relying on here, is the IRA wrapper characterization being considered pension income. This is indeed the case in some countries where they consider a Roth IRA withdrawal simply as pension income. 

 

Do Expat Tax have a ruling from the TRD, that defines any ROTH IRA withdrawal as pension income? Or a ruling that defines the difference between remitting original capital and income? 

 

Let's be clear, a Roth IRA consists of contributions (income earned pre 2024, often over many, many years) , plus earnings on those contributions. Taxing the entire remittance would be taxing income earned prior to 2024. I cannot see this holding up in a legal challenge, given POR 161/2. 

 

In any case, there are multiple other simple ways to handle this, if it does become the TRD's position: 

 

A- Sell the IRA, buy a non pension asset with the IRA proceeds overseas, sell that asset immediately at cost, remit the proceeds. Not liable for Thai tax, no gains remitted. 
B- Remit the IRA proceeds as a gift
C- Remit the IRA proceeds in a year you are non resident ( not ideal , not really a good 'structuring' work around but worth mentioning) 

 

Any tax advisor worth their salt would bring options like this to the table. 

 

Again, the information I have is that TRD sees both Roth and Traditional as accessable pension income.  I understand why people with Roths will balk at that. Don't shoot the messenger.

 

[NoDisplayName]

18 minutes ago, ukrules said:

 

Exactly this.

 

 

Depending on how this turns out, it might be a good option for retired folks to take a 185-day break from Thailand.  Become tax UN-resident for a year, during which you can sell a suitable portion of your portfolio and repurchase, resetting the cost basis if remitted in a later tax-resident year.  Maybe put it in funds that provide an income stream of 6-7%, while maintaining a nearly constant NAV.  Income never remitted, fund sale results in minimal capital gain.

 

Downside to that is you're setting yourself up for capital gains tax in your home country.  It looks like if you're 60 or over and have held your ROTH for at least 5 years, you can withdraw the entire balance tax-free without penalty.  Not taxed as income so won't affect the tax bracket on social security.  You'd lose the future tax-free earnings, but if planning to remit soon anyway...........

[potless]

18 minutes ago, NoDisplayName said:

 

Some things to remember when watching these infotainment commercials:

 

The translations are not always correct.

 

AI-generated subtitles do not always match the English spoken, due to fast talkin' or poor pronunciation.

 

The translator middleman between the TRD official and the foreign tax expert does not translate everything.   Often the TRD official will speak for a minute or more, yet the translated answer is one short sentence.

 

In addition, the translator may mistranslate, he may misunderstand, he may say what he thinks the interviewer wants to hear.

I noticed those points on the video with the TRD official. And as to that last paragraph, he may also say what he thinks the interviewee wants to hear. A question that should have been asked to the TRD official is "are all your tax officials  up to date with the latest information on a nationwide basis"? No chance of that though.

[JimGant]

53 minutes ago, Jingthing said:

Both are accessable pension income if remitted to Thailand. 

Roth IRAs came about in 1998. The Thai-US DTA was signed in Nov 1996. There is no mention of Roth IRAs in the DTA, of course, and no subsequent protocols to address them. How, then, you decide to treat them, especially in light of Por 162, might not be too difficult to do.

[potless]

28 minutes ago, Jingthing said:

Yes of course IRA accounts are not your concern.

They are weird though as there are two types, one is tax payed later and one is tax payed earlier, but to Thailand same same NOT different.

In the UK there are pension types there that would presumably be accessable in Thailand and others exempt.

Maybe not my concern as such, but of interest as to how the income of people in general is treated differently for different nationalities for essentially the same product. I think the UK/Thailand DTA was written over 40 years back. People with a pension from government employment have that pension taxed exclusively in the UK. Company pensions, the state old age payment, personal pensions etc are assessable. 

[Jingthing]

2 minutes ago, JimGant said:

Roth IRAs came about in 1998. The Thai-US DTA was signed in Nov 1996. There is no mention of Roth IRAs in the DTA, of course, and no subsequent protocols to address them. How, then, you decide to treat them, especially in light of Por 162, might not be too difficult to do.

Good luck. 

[Jingthing]

2 minutes ago, potless said:

Maybe not my concern as such, but of interest as to how the income of people in general is treated differently for different nationalities for essentially the same product. I think the UK/Thailand DTA was written over 40 years back. People with a pension from government employment have that pension taxed exclusively in the UK. Company pensions, the state old age payment, personal pensions etc are assessable. 

IRAs -- personal pensions. 

[potless]

6 minutes ago, Jingthing said:

IRAs -- personal pensions.

Got it. Whats a Roth ?

[Jingthing]

9 minutes ago, potless said:

Got it. Whats a Roth ?

A type of IRA.

[redwood1]

1 hour ago, NoDisplayName said:

 

Some things to remember when watching these infotainment commercials:

 

The translations are not always correct.

 

AI-generated subtitles do not always match the English spoken, due to fast talkin' or poor pronunciation.

 

The translator middleman between the TRD official and the foreign tax expert does not translate everything.   Often the TRD official will speak for a minute or more, yet the translated answer is one short sentence.

 

In addition, the translator may mistranslate, he may misunderstand, he may say what he thinks the interviewer wants to hear.

 

Exactly......People here who keep trying to quote info from these translated tax videos are quoting from half baked translations...

 

And lets not forget all the farang (My free tax advice, can be very profitable to my tax business $$$ videos) .... 

 

 

 

 

[anrcaccount]

50 minutes ago, Jingthing said:

Again, the information I have is that TRD sees both Roth and Traditional as accessable pension income.  I understand why people with Roths will balk at that. Don't shoot the messenger.

 

 

Not shooting the messenger, I just don't believe the message is accurate.

 

As I said, if this was the case, these remittances would have been assessable every year, for many years. The updated POR internal directives make no difference in this situation. 

 

Where was the 'Slick Talking Brit in a Blue Suit' ( or any equivalent) in 2021, 2015 etc when he could have been filing expat tax returns based on Roth/Traditional IRA remittances?

 

Worth repeating, IMO anyone actually paying Thai tax on these remittances, given the many structuring options,  is ill-advised. 

 

 

 

 

[Jingthing]

14 minutes ago, anrcaccount said:

 

Not shooting the messenger, I just don't believe the message is accurate.

 

As I said, if this was the case, these remittances would have been assessable every year, for many years. The updated POR internal directives make no difference in this situation. 

 

Where was the 'Slick Talking Brit in a Blue Suit' ( or any equivalent) in 2021, 2015 etc when he could have been filing expat tax returns based on Roth/Traditional IRA remittances?

 

Worth repeating, IMO anyone actually paying Thai tax on these remittances, given the many structuring options,  is ill-advised. 

 

 

 

 

I find your argument totally specious.

The environment has radically changed.

Before now, pretty much nobody, certainly not retired expats, was filing or paying Thai tax based on remittances during the current year, regardless of the vehicle. 

And TRD wasn't interested either.

Have you heard of something called POLITICS and changes of government?

The priorities and targets changed and expats would need to be totally in denial not to see that.

[ukrules]

44 minutes ago, NoDisplayName said:

Downside to that is you're setting yourself up for capital gains tax in your home country.  It looks like if you're 60 or over and have held your ROTH for at least 5 years, you can withdraw the entire balance tax-free without penalty.  Not taxed as income so won't affect the tax bracket on social security.  You'd lose the future tax-free earnings, but if planning to remit soon anyway...........

 

Yes, there are ways to avoid paying any tax but that needs planning years in advance and involves investments in third countries where you're also non resident.

It can be done - and my plan all along has been to use the previous years income method to remit - until they changed the rules - that was a major upset and what prompted me to hop on a plane to Cambodia for most of last year.

Most people will remain unaffected - but if you sell something for quite a lot of money - think $1m and up then you can save very large amounts which would be taxable under this tiny change in the law - especially if whatever you're selling is not taxable at all - like a primary residence you've owned for 40 years.

For me as a Brit believe it or not I can keep my money in the US and nobody considers it for tax due to me being non resident there and having zero connections with the country. It's never remitted to the UK - not that it would matter as I'm a non resident there as well and have been for a very long time.

So there are advantages to moving around - but you need to be careful where you remit to - for example - Cambodia likes to think they tax your worldwide income but in practice there's no way to even file a personal income tax return in Cambodia as an individual person who doesn't have a job or own some kind of corporation - at the moment. I will seek more advice on this when I return there in a couple of months as the ABA Bank account down there is very easy to open and operate, so far I only used it for local payments such as rent, etc.

 

[potless]

21 minutes ago, Jingthing said:

31 minutes ago, potless said:

Got it. Whats a Roth ?

A type of IRA.

I googled USA Roth and and read the Wikipedia article Roth IRA. It describes the differences between the Roth, The IRA and the traditional IRA. Also the requirements and a variety of other information. My head is still spinning.

[Jingthing]

2 minutes ago, potless said:

I googled USA Roth and and read the Wikipedia article Roth IRA. It describes the differences between the Roth, The IRA and the traditional IRA. Also the requirements and a variety of other information. My head is still spinning.

Very different rules in the U.S.

Both accessable pension income if remitted to Thailand.

[JimGant]

1 hour ago, Jingthing said:

Again, the information I have is that TRD sees both Roth and Traditional as accessable pension income

TRD actually used the phrase "Roth IRA" when they defined assessable income?

[Jingthing]

2 minutes ago, JimGant said:

TRD actually used the phrase "Roth IRA" when they defined assessable income?

If Roths are accessable then there would no doubt that traditional IRAs would be as well. 

[NoDisplayName]

18 minutes ago, ukrules said:

For me as a Brit believe it or not I can keep my money in the US and nobody considers it for tax due to me being non resident there and having zero connections with the country.

 

Sure, you can open a brokerage account as a non-resident alien, fill out the W8-BEN, and you'll have tax withheld on interest and dividends according to your DTA, with no tax return required.  For Thais it's 15%, for Chinese 10%.  But capital gains are not taxed.

 

Stick with capital appreciation funds, or stocks, not paying dividends, and you pay no US tax.  Sell and remit in a year not tax-resident in Thailand and your gains are not taxed here, either.

 

Winning!

[JimGant]

1 minute ago, Jingthing said:

If Roths are accessable then there would no doubt that traditional IRAs would be as well. 

I think you have things backwards.... Traditional IRAs are assessable per the DTA. Roth IRAs -- not mentioned in the DTA -- are a completely different breed of animal, so there "would be doubt" as to their assessability in comparison to a traditional IRA. (See my response to potless, below.)

[Jingthing]

1 minute ago, JimGant said:

I think you have things backwards.... Traditional IRAs are assessable per the DTA. Roth IRAs -- not mentioned in the DTA -- are a completely different breed of animal, so there "would be doubt" as to their assessability in comparison to a traditional IRA. (See my response to potless, below.)

I think the issue here is that you think that the TRD takes the peculiarities of IRS taxation into account on how they classify types of pension income.

[Jingthing]

Here's an interesting question.

The current U.S. president (God help us) has promised to end taxation of social security.

Social security is currently exempt if remitted to Thailand.

Would it become accessable in Thailand if the U.S. makes that change?

I don't think so. 

[JimGant]

31 minutes ago, potless said:

I googled USA Roth and and read the Wikipedia article Roth IRA. It describes the differences between the Roth, The IRA and the traditional IRA. Also the requirements and a variety of other information. My head is still spinning.

The US and UK dealt with Roth IRAs, and their tax exemption aspect, by the following. Thus, the difference between Traditional and Roth IRAs is dealt with in the US-UK DTA. Nothing (yet) in Thai-US DTA similar to this. But a protocol handshake between "competent authorities" dealing with DTAs (Ministry of Finance rep, US Treasury Dept rep) could rectify this.

 

Quote

However, the State of residence, under subparagraph (b), must exempt from tax any amount of such pensions or other similar remuneration that would be exempt from tax in the State in which the pension scheme is established if the recipient were a resident of that State. Thus, for example, a distribution from a U.S. "Roth IRA" to a U.K. resident would be exempt from tax in the United Kingdom to the same extent the distribution would be exempt from tax in the United States.

https://home.treasury.gov/system/files/131/Treaty-UK-Protocol-TE-7-22-2002.pdf

 

[NoDisplayName]

6 minutes ago, Jingthing said:

Here's an interesting question.

The current U.S. president (God help us) has promised to end taxation of social security.

Social security is currently exempt if remitted to Thailand.

Would it become accessable in Thailand if the U.S. makes that change?

I don't think so. 

 

It would not.  US sociable security is exempt by DTA.

The US choosing not to tax doesn't change Thailand's inability to tax.

 

Abolishing socsec tax would be maga-nificent!

 

[Jingthing]

3 minutes ago, JimGant said:

The US and UK dealt with Roth IRAs, and their tax exemption aspect, by the following. Thus, the difference between Traditional and Roth IRAs is dealt with in the US-UK DTA. Nothing (yet) in Thai-US DTA similar to this. But a protocol handshake between "competent authorities" dealing with DTAs (Ministry of Finance rep, US Treasury Dept rep) could rectify this.

 

 

Makes sense that it "could" but that doesn't mean that it will happen. 

[Jingthing]

2 minutes ago, NoDisplayName said:

 

It would not.  US sociable security is exempt by DTA.

The US choosing not to tax doesn't change Thailand's inability to tax.

 

Abolishing socsec tax would be maga-nificent!

 

The funny thing about that is that the vast majority of social security recipients are NOT taxed federally as their overall income excludes that, so the benefit  would only be to wealthier Americans. (See a pattern?) Also that policy would mean that the mandated about 20 percent cut would happen years sooner if no other funding changes are made. So be careful what you wish for.

[JimGant]

13 minutes ago, Jingthing said:

I think the issue here is that you think that the TRD takes the peculiarities of IRS taxation into account on how they classify types of pension income.

Well, the Brit TRD equivalent certainly does (per my posting,above). When the TRD even figures out what a Roth IRA is, they could just do a Por exempting it from taxation, with no need for a meeting with a US "competent authority" to do a protocol arrangement -- unless they agree Por 162 already exempts it.

[Jingthing]

5 minutes ago, JimGant said:

Well, the Brit TRD equivalent certainly does (per my posting,above). When the TRD even figures out what a Roth IRA is, they could just do a Por exempting it from taxation, with no need for a meeting with a US "competent authority" to do a protocol arrangement -- unless they agree Por 162 already exempts it.

A lot of wishful speculation.