Is money sent to family from outside of Thailand subjected to the new foreign income tax?

[jakow]

Sorry if this is a stupid question. If I'm just sending money for daily living to my wife and children from my US bank account, is that money subjected to the new tax rules for foreign income?

[hotandsticky]

What new tax rule?

[richard_smith237]

1 hour ago, jakow said:

Sorry if this is a stupid question. If I'm just sending money for daily living to my wife and children from my US bank account, is that money subjected to the new tax rules for foreign income?

 

There's a lot of smoke and mirrors, information, misinformation and confusion...

 

But... As I understand it... IF you are 'gifting' your Wife money, then no... 

i.e. IF you can gift her 15 Million Baht per year....  She can spend that on living expenses or however she wishes.

 

Theoretically, you are not supposed to be benefiting from that... but that enters a deeper grey area.

 

 

Now comes the reality... As any expat actually been picked up for sending money from their overseas account to their Thai account, or more so, to their Thai Wife's account ??

 

... When that starts happening, I'll start to give this issue more than a passing moment of thought.

 

 

 

 

[NoDisplayName]

1 hour ago, jakow said:

Sorry if this is a stupid question. If I'm just sending money for daily living to my wife and children from my US bank account, is that money subjected to the new tax rules for foreign income?

 

Depends.....

Where do you live?

Do you benefit?

What is the source of the money?

Is the money assessable?

How much total during the year vs. your TEDA?

[OJAS]

10 hours ago, jakow said:

Sorry if this is a stupid question. If I'm just sending money for daily living to my wife and children from my US bank account, is that money subjected to the new tax rules for foreign income?

 

First and foremost, you need to be a tax resident of Thailand in order for Thai taxation requirements to apply - which means that you will need to stay in Thailand for at least 183 days in any relevant calendar year (it's not crystal clear - to me at any rate - from your posting as to whether you are currently based in Thailand or the USA).

 

Secondly, the source(s) of the income covering your family transfers might then come into play. If exclusively American Social Security payments for instance, these are specifically exempted from being liable to Thai tax as a result of the USA/Thailand Double Taxation Agreement.

 

[topt]

3 hours ago, OJAS said:

which means that you will need to stay in Thailand for at least 183 days in any relevant calendar year

Just a small correction - it is only 180 days.

[fleur3]

3 hours ago, OJAS said:

 

First and foremost, you need to be a tax resident of Thailand in order for Thai taxation requirements to apply - which means that you will need to stay in Thailand for at least 183 days in any relevant calendar year (it's not crystal clear - to me at any rate - from your posting as to whether you are currently based in Thailand or the USA).

 

Secondly, the source(s) of the income covering your family transfers might then come into play. If exclusively American Social Security payments for instance, these are specifically exempted from being liable to Thai tax as a result of the USA/Thailand Double Taxation Agreement.

 

Sending money to some one has two elements. One sending money to some one could be income taxes NOT at the sender but at the receiver. The second element is donation of money. That is a gift so gifttax is relevant.  But in practice gifttax in Thailand is zero unless high value. I expect there is no reason to tax you or your wife. But i am not an expert!

[Porthos]

13 hours ago, richard_smith237 said:

Has any expat actually been picked up for sending money from their overseas account to their Thai account, or more so, to their Thai Wife's account ??

 

In February 2023 a Thai woman was audited because she received gifts of several million baht from her foreign boyfriend. The foreign revenue department had informed the TRD about these transfers. The TRD ruled that the Thai girlfriend does not pay income tax if the unmarried couple lives together as husband and wife. This ruling happened before the remittance tax was implemented. The tax implications for the sender of the money were therefore not addressed.

 

https://www.rd.go.th/64926.html

 

[khunPer]

16 hours ago, jakow said:

Sorry if this is a stupid question. If I'm just sending money for daily living to my wife and children from my US bank account, is that money subjected to the new tax rules for foreign income?

Normally it says:

 

Gift tax of 5% is payable when the donor is a living person and the recipient is an ascendant (parents, etc.), descendant (children, etc.), spouse or others. However, the following gifts can be given without tax:

• Real estate received by a legitimate child if the value of the property is less than 20 million baht.
• Maintenance income or gifts received by an ascendant (parents, etc.), descendant (children, etc.) or a spouse when the amount is less than 20 million baht.
• Maintenance income or gifts to a person who is not an ascendant, descendant or spouse due to tradition or custom when the amount is less than 10 million baht.
• Gifts received by a person who intends to use the gift for educational, religious or public purposes according to the donor's intention.

 

[unblocktheplanet]

And inheritance tax from foreign bank account?

[Dogmatix]

3 hours ago, Porthos said:

 

In February 2023 a Thai woman was audited because she received gifts of several million baht from her foreign boyfriend. The foreign revenue department had informed the TRD about these transfers. The TRD ruled that the Thai girlfriend does not pay income tax if the unmarried couple lives together as husband and wife. This ruling happened before the remittance tax was implemented. The tax implications for the sender of the money were therefore not addressed.

 

https://www.rd.go.th/64926.html

 

 

Well done for citing that tax case.  It is only case relevant to this issue, as far as I know, and I spent some time searching before sending some gifts. 

 

 The September 2023 reinterpretation that foreign income was taxable has no bearing on gifts because remitted income will only be considered as remitted income, if you remit your offshore income to yourself in Thailand.  So the only issue is whether a remittance to a spouse  or unmarried partner is her income or a gift.  A lot of the case study goes into details of whether unmarried partners can be treated the same as married couples under the gift tax law.  There is no clear conclusion on this point.  They say that on the face of it unmarried couples are, well, unmarried as far as gift tax is concerned but if you look at certain rulings to do with asset disclosures for politicians, you can argue that unmarried couples are in fact married.  

 

None of that matters in the case of married couples with a marriage certificate from any country to prove it.  They are married which means that the Thai spouse may receive gifts up 20 million baht in any tax year free of gift tax and the gift is not subject to income tax either.  

 

Much has been made by farang "tax advisors", who usually can't read Thai and are unlicensed to advise on Thai tax, of conditions applicable to gift tax that they have largely invented to give themselves credibility and garner more clients.  But the truth is that the only evidence for how the RD interprets gift tax for spouses is the case you cited.  There is no evidence that a deed of gifting needs to be drawn up overseas and expensively notarised by a foreign lawyer for each gift made.  There is no evidence that the RD will painstakingly examine the application of the gift to see if the giftor had any benefit from the gift or not.  This is probably impractical anyway, given that the Civil and Commercial Code holds that all assets acquired by either spouse after marriage are deemed conjugal property. Thus the gift to the spouse immediately becomes conjugal property on receipt.

 

Bottom line.  Go ahead and make the gifts to the missus.  Make sure you never remit more than 20 million in one year and keep records of your remittance and her receipt from the bank statements.

 

[jcmj]

I wouldn’t worry about all this tax talk until someone actually goes through with it. Too many people try to scare us into registering for a tax I’d and what is and isn’t taxed. It’s all just up in the air right now. Blown up by a couple politicians. I’m not doing <deleted>e. It’ll take them years to get it sorted even if they try. 

[Guavaman]

2 hours ago, Dogmatix said:

This is probably impractical anyway, given that the Civil and Commercial Code holds that all assets acquired by either spouse after marriage are deemed conjugal property. Thus the gift to the spouse immediately becomes conjugal property on receipt.

Not including property acquired by either spouse during marriage through inheritance or gift.

 

Thai Civil and Commercial Code, Chapter 4. Property of Husband and Wife
Personal Property and Marital Property
Last updated: 26 Sep 2023
https://www.lafs-legal.com/blog/9633/personal-property-and-marital-property

Personal Property
According to Section 1471 of Thailand’s Civil and Commercial Code, which governs matters related to family, personal property is defined as follows:

 

3. Property acquired by either spouse during marriage through inheritance or gift

If a spouse acquires any assets or property during marriage through inheritance, whether as a statutory heir or a beneficiary named in a will, such assets are considered personal property of the acquiring spouse. The same applies to gifts received by either spouse, which are specifically intended for them and without any consideration. Such gifts are the sole property of the receiving spouse. This principle also applies when a spouse gives a gift to the other spouse, which will be deemed the separate property of the recipient, even during the marriage.

 

 

[topt]

3 hours ago, Dogmatix said:

Well done for citing that tax case. 

I remember when you originally quoted it - must be over a year ago now? 

[Dogmatix]

1 hour ago, Guavaman said:

Not including property acquired by either spouse during marriage through inheritance or gift.

 

Thai Civil and Commercial Code, Chapter 4. Property of Husband and Wife
Personal Property and Marital Property
Last updated: 26 Sep 2023
https://www.lafs-legal.com/blog/9633/personal-property-and-marital-property

Personal Property
According to Section 1471 of Thailand’s Civil and Commercial Code, which governs matters related to family, personal property is defined as follows:

 

3. Property acquired by either spouse during marriage through inheritance or gift

If a spouse acquires any assets or property during marriage through inheritance, whether as a statutory heir or a beneficiary named in a will, such assets are considered personal property of the acquiring spouse. The same applies to gifts received by either spouse, which are specifically intended for them and without any consideration. Such gifts are the sole property of the receiving spouse. This principle also applies when a spouse gives a gift to the other spouse, which will be deemed the separate property of the recipient, even during the marriage.

 

 

You are right except that your translation of 1471,3 translates more wording than is actually to be found in the original which says just  3) ที่ฝ่ายใดฝ่ายหนึ่งได้มาระหว่างสมรสโดยการรับมรดกหรือโดยการให้โดยเสน่หา or "Property acquired by either party during marriage through inheritance or given out of affection."

 

However, in Section 1474.2 the giftor has the right to specify in writing that a gift to a married person is to form part of the conjugal property.  When you think about it, the only person giving a gift out of affection to a married person with an interest in making that gift conjugal property is the other spouse.  Therefore, in the unlikely event that you were, for example, accused of living in a house or driving a car bought with the proceeds of a spousal gift, or even perhaps having some of the gift gifted back to your personal account, you could easily produce a document retroactively that assigns the gift as conjugal property.

 

So Section 1471.3 has the effect of protecting someone who receives a gift from a person other than their spouse, perhaps as an advance inheritance, from having to share it with their spouse, if they don't want to, or on divorce.  But it doesn't prevent a gifting spouse from assigning it to be conjugal property under 1474.2. 

[Porthos]

17 hours ago, Dogmatix said:

The September 2023 reinterpretation that foreign income was taxable has no bearing on gifts because remitted income will only be considered as remitted income, if you remit your offshore income to yourself in Thailand.

 

Not sure about this. An acquaintance spent 6 months in his Singapore apartment last year. During that time he realized investment gains and repatriated them back to Thailand. He had conflicting information from TRD and lawyers. A Thai lawyer said that he would pay income tax even if he sent the money as a gift to the account of his wife. The lawyer argued that Por.161 was meant to close a loophole. Any attempts to circumvent this regulation could be seen as tax evasion. To be on the safe side my acquaintance decided to leave Thailand for 6 months.

[Dogmatix]

1 hour ago, Porthos said:

 

Not sure about this. An acquaintance spent 6 months in his Singapore apartment last year. During that time he realized investment gains and repatriated them back to Thailand. He had conflicting information from TRD and lawyers. A Thai lawyer said that he would pay income tax even if he sent the money as a gift to the account of his wife. The lawyer argued that Por.161 was meant to close a loophole. Any attempts to circumvent this regulation could be seen as tax evasion. To be on the safe side my acquaintance decided to leave Thailand for 6 months.

 

Anyway Thai government departments and courts can interpret things in ways they feel like and that are inconsistent from case to case.  But on the face of it there is nothing to specify that a gift can only be made from income that has already been taxed in Thailand and, even, if it was made from after Thai tax income, it will still be taxable as a gift, if the gift to a spouse is over 20 million.  

 

Another thing you could look at is the device used by Ung Ing to avoid paying gift tax on transferring shares well over the gift tax limits to her family members.  The transfers were not structured as gifts which would have been taxable over the limits but structured as sales of assets.  The purchases were paid for using open ended promissory notes, callable at any time. Ung Ing got the DG of the RD to testify in parliament that that the transfers will only be deemed as taxable events when the promissory notes are cashed which will, of course, never happen.  When Ung Ing's time in politics comes to an end the shares will be transferred back to her, either as foreclosures on the repayment of defaulted promissory notes or some other tax avoidance scheme will be set up. 

 

The unpaid promissory note tax avoidance scam has the advantage that the DG of the RD has testified in parliament that it is rock solid.  However, that doesn't stop the RD or the Tax Court making a completely different ruling on the same scheme presented by a mere mortal. 

 

Nothing is rock solid apart from just declaring the transfers as income and pay Thai tax on them which will be gratefully received, even if the income was not strictly speaking assessable, or leaving the country, as your friend did.  But IMHO, the gift to spouse window is fairly solid, although I would expect to see the limits reduced at some point.  Parliamentarians would not want to see it eliminated completely because it is a handy way for them and their wealthy sponsors pass on chunks of their ill gotten gains  to wife and kids whilst still alive tax free.  

 

I should add that the gifts I have made to the missus are from income earned overseas prior to 2024.  So they wouldn't be taxable, even if I gifted them to myself.  Eventually I hope this whole thing will become clearer and then I might gift income earned after 2024.  Mrs Dog also has income and assets of her own which makes it more difficult to conclude I had benefit from the gifts.