Thai Tax on UK pensions

[JimGant]

22 hours ago, treetops said:

The UK State Pension (or OAP) is often confused with these Government pensions but shouldn't be as it is classed as "assessable income" for Thai tax purposes.  Have a look at the DTA and you'll see the exact language used.

 

Actually, the UK-Thai DTA is completely silent on pensions or similar payments -- except in Article 19, where pensions for govt and/or military service are addressed -- and where you find they are exempt from Thai taxation. And the UK-Thai DTA doesn't even have an "Other Income" Article, where incomes not specifically addressed in their own Articles are addressed. And which, in the UK-Thai DTA, could wrap up loose ends, like OAP and private pensions, which aren't addressed anywhere in the DTA.

 

Google the UK-Singapore, or UK-Vietnam DTAs -- and note they both have an Article 18 addressing pensions, other than those for govt service. Pretty explicit. Here's what the Singapore one says:

 

Quote

ARTICLE 18 – PENSIONS
(1) Subject to the provisions of paragraph 2 of Article 19 of this Agreement  [This is where govt pensions are shown as taxable only by the paying country.]
(a) pensions and other similar remuneration paid in consideration of past
employment,
(b) any payments made under the social security legislation of either Contracting
State, and
(c) any annuity paid, to an individual who is a resident of a Contracting State, and is subject to tax in respect thereof in that State, shall be taxable only in that State.

 

Hey, why doesn't the UK-Thai DTA have such clarifying language -- maybe 'cause it was ratified in 1981 and the Singapore and Vietnam DTAs with the UK were ratified in 1997 -- when maybe the Model OECD and UN treaties had been updated. Still, with such confusion, there are avenues for writing protocols/amendments to clear up such matters....

 

And, as mentioned, the UK-Thai DTA doesn't have an "Other Income" Article, which could clarify how OAP and private pensions are treated. Most DTAs have such an Article; here's the one from the Vietnam DTA:

 

Quote

Article 21 - OTHER INCOME

(1) Items of income beneficially owned by a resident of a Contracting State,
wherever arising, which are not dealt with in the foregoing Articles of this
Agreement, other than income paid out of trusts or the estates of deceased persons in
the course of administration, shall be taxable only in that state.

 

Such an Article in the UK-Thai DTA would probably put an end to any argument against Thailand having primary taxation rights on OAPs and private pensions. But, in its absence, if I were a Brit, I'd use my own interpretive thinking in my self-assessment of what's taxable -- and how the absence of definition could work in my favor. It might not make make a difference with a piddly OAP -- but it could with a large remitted private pension.

 

How such firms, like Expattax Thailand, can demonstrably declare that such pensions are primarily taxable by Thailand -- when there's nothing in the DTA or any related protocol -- is beyond me. Of course, their smooth presentation on their FAQ pages, and Webinars -- can set the hook. And, for a mere 14000 baht, you can hire their services to pay Thailand taxes the DTA says nothing about..... No thanks.

[OJAS]

1 hour ago, JimGant said:

Hey, why doesn't the UK-Thai DTA have such clarifying language -- maybe 'cause it was ratified in 1981 and the Singapore and Vietnam DTAs with the UK were ratified in 1997

 

And therein lies the rub, I strongly suspect. As I understand the position, the complete absence of any specific articles covering UK company occupational pensions and the UK State Pension - and even a general "Other Income" article as you have referred to - in the UK/Thailand DTA means that Thai tax residents who are in receipt of one or both pension types are not immune from being taxed twice over in both the UK and Thailand, with no relief from double taxation being seemingly possible. Indeed the Thailand section of HMRC's Digest of Double Taxation Treaties* (page 34) includes a note (4) which broadly seems to confirm this.

 

I informed HMRC of what I consider to be the fundamental flaws in the UK/Thailand DTA on the pensions front some months ago. Unfortunately - but perhaps not surprisingly - the tone of their eventual reply did not inspire me with any confidence that they would be initiating discussions with their TRD pals on this whole issue any time soon.

 

* https://assets.publishing.service.gov.uk/media/5b05425fed915d1317445ed2/DT_Digest_April_2018.pdf

 

[topt]

5 hours ago, OJAS said:

Unfortunately - but perhaps not surprisingly

Yes definitely not a priority as they have got a few rather more pressing issues to solve unfortunately as anybody who has dealt with them recently compared to years ago would be well aware - as probably you are also 

I also received an email yesterday saying that they were closing down the HMRC Online Community forums from the end of June.......

 

5 hours ago, OJAS said:

with no relief from double taxation being seemingly possible

HMRC at least have a theoretical defined process by which you can supposedly claim credit - https://www.gov.uk/government/publications/dual-residents-hs302-self-assessment-helpsheet/dual-residents-2025-hs302

 

something which Thailand does not seem to have thought through or detailed in any way........

[JimGant]

16 hours ago, OJAS said:

......means that Thai tax residents who are in receipt of one or both pension types are not immune from being taxed twice over in both the UK and Thailand, with no relief from double taxation being seemingly possible

Actually, it looks like relief is provided in Article 23: Elimination of Double Taxation:

 

Quote

(3) In the case of Thailand, United Kingdom tax payable in accordance with this
Convention in respect of income from sources within the United Kingdom shall be
allowed as a credit against Thai tax payable in respect of that income. The credit shall
not, however, exceed that part of the Thai tax, as computed before the credit is given,
which is appropriate to such item of income.

 

[sandyf]

17 hours ago, OJAS said:

Thai tax residents who are in receipt of one or both pension types are not immune from being taxed twice over in both the UK and Thailand, with no relief from double taxation being seemingly possible.

In the case of the state pension and government pension, there would be no tax "collected" from the state pension, all tax liability would be collected from the government pension.

I cannot see the TRD trying to understand how tax is collected in various countries and would want to see a P60 type document for each income stream.

The calculation on any credit against Thai tax liability for the UK  state pension could be as clear as mud.