Should income for visa 800K (retired) or 400K (married) not be taxable?

[Briggsy]

On 1/29/2025 at 1:07 AM, NoDisplayName said:

 

That only applies to Thai social security payments.

 

Foreign social security and foreign pensions are covered under the DTA's.

 

 

They don't say that. 

I am afraid I totally disagree with everything you have said.

 

State pensions are deemed to be "social security payments" and thus exempt under Thai tax legislation.

 

I believe you are totally wrong in thinking the DTA covers all aspects of what is taxable and what is not. If you think that, you fundamentally misunderstand what a DTA is.

 

There are reports on this forum of the Revenue Department specifically telling foreigners that their foreign old age pensions from the state, e.g. the UK State Pension, are exempt.

 

We will have to disagree.

[Briggsy]

On 1/30/2025 at 7:58 AM, Phulublub said:

Not true.  The UK state pension (unlike US) is not covered byt he DTA.

 

PH

You appear to have totally misunderstood my post.

 

The fact that state pensions such as the UK State Pension are exempt, are covered in Thai tax legislation and absolutely not in the DTA. (That is not what a DTA is for.)

 

Use the Thai tax legislation to tell you what is exempt and what is not. Do not use the DTA. Thai tax legislation is your most important guide.

[Phulublub]

1 minute ago, Briggsy said:

You appear to have totally misunderstood my post.

 

The fact that state pensions such as the UK State Pension are exempt, are covered in Thai tax legislation and absolutely not in the DTA. (That is not what a DTA is for.)

 

Use the Thai tax legislation to tell you what is exempt and what is not. Do not use the DTA. Thai tax legislation is your most important guide.

I wish to be educated...

 

I have looked, but cannot find it, so, can you point me to the section in the Thai Tax legislation that tells us that I, as  tax resident in Thailand, am not liable to tax on my UK State Pension because it is exempt?

 

PH

[Briggsy]

@Phulublub

 

The decision as to what is exempt and what is assessable under Thai Income Tax legislation is first and foremost laid out in the Thai tax legislation NOT the DTA.

 

Revenue Code (Official English Translation)

Chapter 3 Income Tax

Section 42 Exempt Income

Paragraph 25 Compensatory benefit received by the taxpayer from the social security fund under the law governing social security.

 

There are reports on this forum of foreigners asking the Revenue Department about how to fill in their Thai tax return and they have been told not to declare their UK State Pension as it is exempt income.

 

It is also very important to understand what a DTA is. It is NOT a list of what foreign income is assessable and what is not. A DTA (double taxation agreement) simply aims to prevent tax residents of both countries being taxed twice on the same income. If anybody looks in the DTA for a comprehensive list of what income is assessable, I guarantee they will not find it because it is not there.

 

I hope this is of assistance.

[KhunHeineken]

4 minutes ago, Briggsy said:

If anybody looks in the DTA for a comprehensive list of what income is assessable, I guarantee they will not find it because it is not there.

Pensions are well documented in the Australia / Thailand DTA.  Article 18 and Article 19 specifically set out the rules between the two countries regarding pensions.  

 

Government service pensions are covered by the DTA.  The aged pension welfare payment is not covered by the DTA. Both are deemed to be an "income" at Australian tax law.    

[NoDisplayName]

24 minutes ago, Briggsy said:

I am afraid I totally disagree with everything you have said.

 

State pensions are deemed to be "social security payments" and thus exempt under Thai tax legislation.

 

I believe you are totally wrong in thinking the DTA covers all aspects of what is taxable and what is not. If you think that, you fundamentally misunderstand what a DTA is.

 

There are reports on this forum of the Revenue Department specifically telling foreigners that their foreign old age pensions from the state, e.g. the UK State Pension, are exempt.

 

We will have to disagree.

 

The comment on social security was the claim that all social security benefits are not taxable under paragraph 25.  That only applies to the Thai national fund, noting the wording

 

Compensatory benefit received by the taxpayer from the social security fund under the law governing social security.

 

That's the Thai social security fund under the law governing Thai social security.

 

As to pensions, I believe they are normally considered assessable if remitted, unless otherwise exempt by DTA, royal decree, or specified law.

 

There are reports of local TRD officials telling foreigners one thing, and other TRD officials telling them the opposite.  "Some guy said a thing" is not always the best reason to believe the thing around these parts.

[Briggsy]

Just now, KhunHeineken said:

Pensions are well documented in the Australia / Thailand DTA.  Article 18 and Article 19 specifically set out the rules between the two countries regarding pensions.  

 

Government service pensions are covered by the DTA.  The aged pension welfare payment is not covered by the DTA. Both are deemed to be an "income" at Australian tax law.    

You are correct in stating that government service (aka. civil service) pensions are covered as an exception in the Thai-foreign country DTA's. You are correct in stating that state pensions are not mentioned. You are, I assume, correct in stating both are taxable income in Australia.

 

However, under Thai tax legislation, your Australian state pension is not taxable, it is tax exempt.

 

What does this mean? I will talk about the UK because that is what I know.

 

Your UK state pension will be included in your taxable income when calculating your UK tax bill. Even though UK citizens may be non-resident in the UK for tax purposes, they still suffer tax on their UK income.

 

If they have to or choose to fill in a Thai tax return as they are resident in Thailand for tax purposes, they should omit their UK State Pension (if they remitted it to Thailand) as it is exempt income in Thailand.

 

I assume a similar position applies for Australia.

 

 

[scottiejohn]

33 minutes ago, Briggsy said:

pensions such as the UK State Pension are exempt,

That does NOT appear to be the general opinion!

Most people state that UK Government pensions, civil service/Mod/Police etc are exempt but the UK OLD AGE pension is NOT!

 

PS;  The post above was posted as I typed this!

[Briggsy]

3 minutes ago, NoDisplayName said:

 

The comment on social security was the claim that all social security benefits are not taxable under paragraph 25.  That only applies to the Thai national fund, noting the wording

 

Compensatory benefit received by the taxpayer from the social security fund under the law governing social security.

 

That's the Thai social security fund under the law governing Thai social security.

 

As to pensions, I believe they are normally considered assessable if remitted, unless otherwise exempt by DTA, royal decree, or specified law.

 

There are reports of local TRD officials telling foreigners one thing, and other TRD officials telling them the opposite.  "Some guy said a thing" is not always the best reason to believe the thing around these parts.

The wording is not clear and does not specify Thai social security payments only. I believe state pensions are exempt.

[Briggsy]

Just now, scottiejohn said:

That does NOT appear to be the general opinion!

Most people state that UK Government pensions, civil service/Mod/Police etc are exempt but the UK OLD AGE pension is NOT!

I beg to differ. It is the Thai tax legislation. I also believe it is the opinion of most people.

[Briggsy]

Lol at somebody putting the confused face on all my posts. I am the only one providing sources and references!

[Phulublub]

9 minutes ago, Briggsy said:

@Phulublub

 

The decision as to what is exempt and what is assessable under Thai Income Tax legislation is first and foremost laid out in the Thai tax legislation NOT the DTA.

 

Revenue Code (Official English Translation)

Chapter 3 Income Tax

Section 42 Exempt Income

Paragraph 25 Compensatory benefit received by the taxpayer from the social security fund under the law governing social security.

 

There are reports on this forum of foreigners asking the Revenue Department about how to fill in their Thai tax return and they have been told not to declare their UK State Pension as it is exempt income.

 

It is also very important to understand what a DTA is. It is NOT a list of what foreign income is assessable and what is not. A DTA (double taxation agreement) simply aims to prevent tax residents of both countries being taxed twice on the same income. If anybody looks in the DTA for a comprehensive list of what income is assessable, I guarantee they will not find it because it is not there.

 

I hope this is of assistance.

Your reading is flawed.  Pensions are specifically coverd in Section 40:

 

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

• (1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.

(Thai) social security benefit is different.  The UK State Pension is a Pension and, while is now claased a a beneifit, is not a social security benefit.

 

Section 19 of the UK/Thailand DTA (like the Aus version) specifies which types of Pension are exempt from assessment here.  The State Pension is not included.  There is a comprehensive list of HMRC website (cannot cuyrently find the link) of which pensions are exempt..

 

Heresay evidence of what individual people have been told by individual front office tax officers is not particularly helpful as they are unlikley to be fully up to speed on the nuances of foreign pensions especially as SOME (eg US)  ARE exempt, 

 

PH

 

[Phulublub]

8 minutes ago, Briggsy said:

The wording is not clear and does not specify Thai social security payments only. I believe state pensions are exempt.

The wording is very clear.  Why would the Thai Tax code need to explain it is the Thai social security system that it is taling about?

 

In any event, the UK State Pesnion is not a social security benefit so would not qualify under this section even if it applied to foreign systems.

 

PH

[Briggsy]

@Phulublub

 

Excellent, now we are both looking at the legislation.

 

My reading is that income mentioned in Section 40, Par. 1 that you have highlighted is clearly a company pension (exempting civil service pensions) and not a state pension which is exempted in Section 42.

 

The answer to this question is NOT found in the DTA but in the Thai tax legislation, I think we can agree.

[Phulublub]

2 minutes ago, Briggsy said:

@Phulublub

 

Excellent, now we are both looking at the legislation.

 

My reading is that income mentioned in Section 40, Par. 1 that you have highlighted is clearly a company pension (exempting civil service pensions) and not a state pension which is exempted in Section 42.

 

The answer to this question is NOT found in the DTA but in the Thai tax legislation, I think we can agree.

Clearly a comapny pension????Where does is say that?  (Clue:  It doesn;t.)

 

You are clearly (!) not open to suggestion that you may be wrong; so I will not engage further.

 

PH

[Briggsy]

Just now, Phulublub said:

The wording is very clear.  Why would the Thai Tax code need to explain it is the Thai social security system that it is taling about?

 

PH

This is because The Thai tax code is written with a view to what is taxable in Thailand, irrespective of whether the income is derived within Thailand or overseas. Tax residents of Thailand with foreign income must consult the Thai tax legislation to know what is taxable. Social security payments are exempt. Even in the UK, many social security payments are exempt, e.g. Universal Credit. UK tax legislation specifies which are taxable and which are not. Thai tax legislation blanket exempts them all.

 

That's the law! (in Thailand)

 

Feel free to pay thousands of baht in tax on non-taxable exempt income if you think otherwise.

[Briggsy]

Just now, Phulublub said:

Clearly a comapny pension????Where does is say that?  (Clue:  It doesn;t.)

 

You are clearly (!) not open to suggestion that you may be wrong; so I will not engage further.

 

PH

Because it says "income derived from employment" so it must be a company pension. It is very clear in my mind.

[NoDisplayName]

15 minutes ago, Briggsy said:

The wording is not clear and does not specify Thai social security payments only. I believe state pensions are exempt.

 

So under the same paragraph,

15) Income of a farmer from sale of rice cultivated by the farmer and/or his family.

 

I just found the bestest loophole!  I can buy a rice farm in Mississippi, then all my income from rice sales will be exempt from tax.

 

"Well, gosh, yer honour, it just says rice, it doesn't say Thai rice!"

 

Or for the lazy folks, there's

22)  Income from sale of investment units in a mutual fund.

 

Another great loophole.  My US brokerage capital gains from mutual fund sales are now fully tax exempt! 

[Briggsy]

Just now, NoDisplayName said:

 

So under the same paragraph,

15) Income of a farmer from sale of rice cultivated by the farmer and/or his family.

 

I just found the bestest loophole!  I can buy a rice farm in Mississippi, then all my income from rice sales will be exempt from tax.

 

"Well, gosh, yer honour, it just says rice, it doesn't say Thai rice!"

 

Or for the lazy folks, there's

22)  Income from sale of investment units in a mutual fund.

 

Another great loophole.  My US brokerage capital gains from mutual fund sales are now fully tax exempt! 

I am afraid your loophole would not work and it has demonstrated your misunderstanding of double taxation.

 

Income derived in the US would first be taxed in the US under the US tax code. If the Thai tax due is less, you don't get a refund.

 

It is key that you understand what double taxation relief is.

 

I hope this post helps you to understand.

[NoDisplayName]

20 minutes ago, Briggsy said:

I am afraid your loophole would not work and it has demonstrated your misunderstanding of double taxation.

 

Income derived in the US would first be taxed in the US under the US tax code. If the Thai tax due is less, you don't get a refund.

 

It is key that you understand what double taxation relief is.

 

I hope this post helps you to understand.

 

Refund?  What refund?  That paragraph is listing assessable income streams that are exempt from tax.  Nothing about double taxation or refunds.  I can pull tax-free money from the US, and according to you is also tax-free in Thailand.

 

 

We buy a small family rice farm, and with subsidies and rebates and credits, we're squeaking by barely pulling in a $quarter million profit.......currently at zero tax.

 

All of that can be remitted tax free to Thailand.

 

Or we can take a real life example.........my wife and I file joint, with standard deduction and 0% capital gains bracket, we can earn ~$120,000 in capital gains from stock sales in the US with ZERO tax due.  You telling me that's tax free if remitted into Thailand?

 

Of course not.

 

Those exclusions in that paragraph are solely limited to Thai situations.  Thailand provides special subsidies to Thai rice farmers, Thailand does not tax gains on sales of Thai mutual funds and SET registered stocks.  Thailand does not tax benefits from the Thai social security fund.

 

I hope this post helps you to understand.

 

 

[Briggsy]

@NoDisplayName

 

I find it very hard to understand what it is you are trying to say in your post.

 

I assume you are talking about income derived in the US. If I am right, and again it is very difficult to understand what you are saying, then 2 tax authorities could potentially consider this income.

i) The IRS who will apply the US tax code.

ii) The Thai Revenue Department if the income is remitted to Thailand in the same tax year or the following one. This authority will then apply Thai tax legislation.

 

These 2 tax authorities will act independently. However any DTA will allow you to avoid paying tax twice on the same income.

 

That's it.

[NoDisplayName]

4 minutes ago, Briggsy said:

@NoDisplayName

 

I find it very hard to understand what it is you are trying to say in your post.

 

I assume you are talking about income derived in the US. If I am right, and again it is very difficult to understand what you are saying, then 2 tax authorities could potentially consider this income.

i) The IRS who will apply the US tax code.

ii) The Thai Revenue Department if the income is remitted to Thailand in the same tax year or the following one. This authority will then apply Thai tax legislation.

 

These 2 tax authorities will act independently. However any DTA will allow you to avoid paying tax twice on the same income.

 

That's it.

 

I find it hard to understand that you don't understand.

 

You are citing an exemption in a paragraph in Thai tax law that applies to the Thai social security fund and claiming, apparently because the translation sounds like a foreign social program, that it also applies to foreign funds.

 

I am citing the same paragraph, citing similar exemptions for Thai sourced income, as evidence that the exemptions in that paragraph do not apply to foreign sources.

 

That's it.

[Briggsy]

2 minutes ago, NoDisplayName said:

 

I find it hard to understand that you don't understand.

 

You are citing an exemption in a paragraph in Thai tax law that applies to the Thai social security fund and claiming, apparently because the translation sounds like a foreign social program, that it also applies to foreign funds.

 

I am citing the same paragraph, citing similar exemptions for Thai sourced income, as evidence that the exemptions in that paragraph do not apply to foreign sources.

 

That's it.

Correct.

 

However it is the other stuff that you wrote that I do not understand.

 

Whilst foreign income may be exempt (e.g. social security payments) IN THAILAND, it is very important that they may well not be exempt IN THE FOREIGN COUNTRY and if taxable, they will be taxed there.

 

An example of this is the UK State Pension. (I am from the UK.) Even if a taxpayer is resident in Thailand for tax purposes, their UK State Pension will be taxable in the UK. However if remitted to Thailand within the assessable period, it will be exempt from Income Tax in Thailand.

 

[NoDisplayName]

1 hour ago, Briggsy said:

Correct.

 

However it is the other stuff that you wrote that I do not understand.

 

Whilst foreign income may be exempt (e.g. social security payments) IN THAILAND, it is very important that they may well not be exempt IN THE FOREIGN COUNTRY and if taxable, they will be taxed there.

 

An example of this is the UK State Pension. (I am from the UK.) Even if a taxpayer is resident in Thailand for tax purposes, their UK State Pension will be taxable in the UK. However if remitted to Thailand within the assessable period, it will be exempt from Income Tax in Thailand.

 

 

You're almost there.  This is covered by your DTA, not paragraph 25, which applies to Thai social security income.

 

Harry receives $3500/month US social security.  Let's say he pays $500 in tax and remits $3000/month to Thailand.  That remittance is tax exempt by DTA.  He doesn't need a tax credit, nor a claim on paragraph 25.  Thailand can't touch it.

 

Me?  If I collect, I get a measly $1000/month and pay no tax.  As that's my only income, I don't even have to file a return.  I'll remit it all to Thailand, but I'm not worried.  It's exempt.  No matter if its not taxed, and I haven't paid tax so would have no foreign tax credit.  I'd be over my TEDA for assessable income, but I don't need to file.  I don't even need a TIN.  And paragraph 25 still wouldn't apply.   Thailand still can't touch it.

 

When Trump makes good on his promise to abolish tax on social security benefits, the DTA language will still be there.  US social security will remain exempt, not taxed anywhere.  And paragraph 25 will still not be applicable.  Thailand better not even look at it sideways, or tariffs will rain down bigly!

 

But what of poor Victor V. from the Kingdom of Latveria, which does not have a DTA with Thailand?  He receives Latverian social security of $5000/month, but the meanies at the LRD withhold 50% tax.  He remits his $2500/month which is fully assessable and taxable by Thailand.  Without a DTA he doesn't even get a tax credit.  He pays tax.  Paragraph 25 does not apply.

 

Works the same for other types of income.

 

My wife has a Schwab account holding mutual funds.  As a non-resident she pays no capital gains tax in the US.  When she remits her gains to Thailand she pays tax on the gains as ordinary income.  Paragraph 23 excluding "Income from sale of investment units in a mutual fund" does not apply.  As above, only applies to Thai income.

[Yumthai]

7 hours ago, NoDisplayName said:

My wife has a Schwab account holding mutual funds.  As a non-resident she pays no capital gains tax in the US.  When she remits her gains to Thailand she pays tax on the gains as ordinary income.

Considering there is no capital gains tax on Thai stocks/funds, isn't it more profitable, even computing the high Thai banks fees, to invest in Thai funds replicating US funds say S&P 500/Nasdaq-100 indexes? Besides, a confiscatory US estate tax shouldn't be triggered on the Schwab account holdings in case of death?

 

 

[NoDisplayName]

1 hour ago, Yumthai said:

Considering there is no capital gains tax on Thai stocks/funds, isn't it more profitable, even computing the high Thai banks fees, to invest in Thai funds replicating US funds say S&P 500/Nasdaq-100 indexes? Besides, a confiscatory US estate tax shouldn't be triggered on the Schwab account holdings in case of death?

 

 

 

 

Thai funds?  All I've seen are funds managed by banks that hold one foreign mutual fund in a Thai wrapper.  Dividends paid by the base fund are retained by the Thai fund, reinvested in itself, not credited to shareholders, thus pay no dividends...so no tax for the retail holders.  For that, you get to pay the original base fund fee, plus excruciating bank management fees, plus front and back end loads, and switching fees.

 

Per treaty, and when you've filled out your W8-BEN, interest and dividends are taxed/withheld at 15% with no refund, and no tax return needed.  Capital gains are not taxed.

 

Possible solution?  Invest in capital appreciation ETF's that don't pay dividends.  This is long-term money, gifted, to sustain her in the event, as IRS can take up to a year to provide the tax clearance certificate to release my brokerage account.  No estate tax on this, her individual account.

 

But that's all for another thread..........'twas only mentioned here as a real-world example.

[KhunHeineken]

20 hours ago, Briggsy said:

However, under Thai tax legislation, your Australian state pension is not taxable, it is tax exempt.

This seems to be the source of some debate. 

 

Exempt, or not, it's certainly remitted funds. 

 

The funny thing is, I can't see any test cases brought about by foreigners against the TRD / Thai government in relation to this tax.

 

Such a case would probably be not only a waste of time, as there would not be a fair hearing, but risky if one wanted to continue to reside here.  On that basis, many tax disputes involving foreigners may never go to a Thai court for determination. 

 

Like I have said, they have us by the b*lls here, and they know it. 

[Briggsy]

@KhunHeinekenYou may find if you speak to Revenue Department officials, and you probably have, they are very happy to follow the tax code and in my experience play it by the rules for the hapless retired farang.

19 minutes ago, KhunHeineken said:

This seems to be the source of some debate. 

Indeed it does, at least on Aseanow.

 

[KhunHeineken]

26 minutes ago, Briggsy said:

@KhunHeinekenYou may find if you speak to Revenue Department officials, and you probably have, they are very happy to follow the tax code and in my experience play it by the rules for the hapless retired farang.

Indeed it does, at least on Aseanow.

 

I will be using an agent.  I minimize my contact with Thai government officials whenever I can. 

 

Like some other members, I will pay just to have a certificate to say I have paid, so none of any of this can come back to bite me, particularly at extension time.   

 

Depending on the size of that payment, determines if I remain in Thailand for the second half of 2025.  That said, I reduced my remittances in 2024, and brought in cash from the Singapore F1, and also had a friend bring in some cash from Australia.  Both were reasonable amounts, and in Thai baht.   

 

I am over the threshold, so I'll see how good the agent is.