Establishing Tax Residence In Thailand

[pluto_manibo]

My original residence was in the EU...I have been living in Thailand and do not work but live from income from investments abroad. I will have to change my resident status in the EU early next year. As, I have been told that one must have a Tax residence somewhere, I would like to establish mine as Thailand....I believe this would facilitate renewal of Passport and staying within the legal realm of tax laws....The problem is I do not own a business or work in Thailand...Anyone in the same situation who could enlighten me in regards to this issue?

[Dave the Dude]

My original residence was in the EU...I have been living in Thailand and do not work but live from income from investments abroad. I will have to change my resident status in the EU early next year. As, I have been told that one must have a Tax residence somewhere, I would like to establish mine as Thailand....I believe this would facilitate renewal of Passport and staying within the legal realm of tax laws....The problem is I do not own a business or work in Thailand...Anyone in the same situation who could enlighten me in regards to this issue?

Hi

Have you checked your Embassy or your countries government tax websites?

I think it would be a reasonable idea to inform TV members what is your home country, then you may get assistance from your fellow kinsmen

Good luck

[pluto_manibo]

My original residence was in the EU...I have been living in Thailand and do not work but live from income from investments abroad. I will have to change my resident status in the EU early next year. As, I have been told that one must have a Tax residence somewhere, I would like to establish mine as Thailand....I believe this would facilitate renewal of Passport and staying within the legal realm of tax laws....The problem is I do not own a business or work in Thailand...Anyone in the same situation who could enlighten me in regards to this issue?

Hi

Have you checked your Embassy or your countries government tax websites?

I think it would be a reasonable idea to inform TV members what is your home country, then you may get assistance from your fellow kinsmen

Good luck

I have Netherlands nationality but I have never lived there and I was a resident of Andorra( a small tax free principality between Spain and France). Tax residence is not established on Nationality but on where you are physically present most of the year or where you perceive income or work.....thank you for the insight.

[jstumbo]

I would think that tax residency is up to the country that your citizenship is from. I know that the US has rules on what is needed for one of its citizens to have a tax home in another country, I would imagine that the Netherlands also has similar rules.

[GuestHouse]

Tax residence is not established on Nationality but on where you are physically present most of the year or where you perceive income or work.....thank you for the insight.

I think you'll find the criteria also includes 'status of residence', so you'll need to have the right visa to claim that you are resident in another country.

Likewise with your embassy renewing passports.

[ray08]

I have both EU and Austrelian citizenship , now living in Thailand , I am called a Non Tax Residence for Australia ,but i do not have to be a Thai Resident to acheive this ,what i did is cut all finacial and living arrangements with Australia , cannot just live outside forhalf the year ,must have no address in country where you are and show that you now reside in another country eg lease , phone bills , expenses, Residence is not an issue for exampleit would take at least 4 years if lucky to get a thai Residence

[pluto_manibo]

Has anyone done this, established Thailand as their Tax residence. I know you must then apply for a Tax card and pay an income tax on monies brought into Thailand....Is it absolutely necessary to establish a business? I am still far away from retirement age and will have no address or desire to establish one in the EU after august of this year. Being a financial nomad sounds appealing but apparently things can become complicated if one needs to reapply for a passport...so I have been mis(informed)? I understand americans are taxed no matter where they are in the world.....but in my case I have never lived in the Netherlands(of which I am passport holder) and I have been told they have nothing to do with this...you are taxed on where you establish domicile and live most of the year...

[WilliamJarvis]

you can just walk into any tax office in Thailand, explain your situation and get a tax number. hel_l, you can get a tax number in Thailand and not pay any tax - just say you need it.

In any event, it is possible to be a tax resident in Thailand without having a tax ID number or paying tax. Under the Revenue Code you become a tax resident automatically once you spend - I think - 180 days in Thailand in any one calendar year (based on the fact that a tax year in Thailand is a calendar year).

Moreover, provided you bring money earnt in a different tax year to the year you import it inot Thailand, it's not taxable under the Revenue Code as there is an assumption it was tax in the source country.

Basically, I don't see the OP having any problem. If he has lived in Thailand more than one year, he will be a tax resident already.

There's one caveat to that, however, which would relate to the visa he is on. I'm assuming he is on a retirement visa, in which case the above applies. If he were here on a tourist visa or VOA, this may not be the case.

Edited February 13, 2008 by WilliamJarvis

[Naam]

you can just walk into any tax office in Thailand, explain your situation and get a tax number. hel_l, you can get a tax number in Thailand and not pay any tax - just say you need it.

In any event, it is possible to be a tax resident in Thailand without having a tax ID number or paying tax. Under the Revenue Code you become a tax resident automatically once you spend - I think - 180 days in Thailand in any one calendar year (based on the fact that a tax year in Thailand is a calendar year).

Moreover, provided you bring money earnt in a different tax year to the year you import it inot Thailand, it's not taxable under the Revenue Code as there is an assumption it was tax in the source country.

Basically, I don't see the OP having any problem. If he has lived in Thailand more than one year, he will be a tax resident already.

There's one caveat to that, however, which would relate to the visa he is on. I'm assuming he is on a retirement visa, in which case the above applies. If he were here on a tourist visa or VOA, this may not be the case.

that information is not correct as the official thai government site does not mention that option. it was/is however mentioned by a website of well known international auditors.

[WilliamJarvis]

^it may no longer be correct, as I no longer live in Thailand. It was, however, previously a provision in the Revenue Code regarding earnings brought into Thailand. Something along the lines of the definition of "taxable income"

[Naam]

^it may no longer be correct, as I no longer live in Thailand. It was, however, previously a provision in the Revenue Code regarding earnings brought into Thailand. Something along the lines of the definition of "taxable income"

when i heard first of this provision in 2004 i checked the Thai Government site and could not find it then nor can i find it now in any official publication.

http://www.rd.go.th/publish/6045.0.html

[Misty]

Moreover, provided you bring money earnt in a different tax year to the year you import it inot Thailand, it's not taxable under the Revenue Code as there is an assumption it was tax in the source country.

I don't have an English translation of the Thai Revenue Code. But for what it's worth, this is posted on the American Chamber of Commerce, Thailand website under "Taxation in Thailand" :

"A resident is an individual who lives in Thailand for one or more periods totaling 180 days or more in any tax year. A resident is subject to tax on all income from sources in Thailand and on income derived from sources outside of Thailand, should such income be brought into Thailand. A non-resident individual is subject to tax only on income earned from sources within Thailand."

The devil is in how one separates savings from income. And where income has already been taxed elsewhere, there's also double taxation treaties to consider. Perhaps that's why some are saying in practice it's only taxable by Thailand in the year it's earned?

Edited February 14, 2008 by Misty

[Naam]

Moreover, provided you bring money earnt in a different tax year to the year you import it inot Thailand, it's not taxable under the Revenue Code as there is an assumption it was tax in the source country.

I don't have an English translation of the Thai Revenue Code. But for what it's worth, this is posted on the American Chamber of Commerce, Thailand website under "Taxation in Thailand" :

"A resident is an individual who lives in Thailand for one or more periods totaling 180 days or more in any tax year. A resident is subject to tax on all income from sources in Thailand and on income derived from sources outside of Thailand, should such income be brought into Thailand. A non-resident individual is subject to tax only on income earned from sources within Thailand."

The devil is in how one separates savings from income. And where income has already been taxed elsewhere, there's also double taxation treaties to consider. Perhaps that's why some are saying in practice it's only taxable by Thailand in the year it's earned?

before i decided to settle in Thailand i was willing to pay a fair share of taxes but not the 48% the taxman in home country asks! i put the question "how do i pay?" to friends, my thai lawyer, in ThaivisaForum, farangs who live here since a decade or more and the answer was always more or less the same "ARE YOU OUT OF YOUR F@CKING MIND?!?!"

[pluto_manibo]

I am on non immigrant O visa and have a Thai wife I am not eligible for retirement visa for another 15 yrs. The only and main reason I would like to establish Tax residency is in case of Passport renewal from my embassy(Netherlands), as I explained in the opening post I am a netherlands national but have never lived there, probably never will. I was a resident of Andorra(tax free). The thing is when you ask for a new passport and have no tax residence or residence in the counry of nationality....things could get complicated and messy. In our modern world "Big Brother" wants us to pay taxes somewhere.....Therefore my reasoning of establishing my tax residence here, since I do not have any other residences.

[PattayaParent]

Why does having a passport have anything to do with tax? Is this a peculiarity of only the Dutch?

[Khun Jean]

Nope. For the Dutch it is important where you live.

My solution, i am a nomad too, is to have a BVI company domiciled in Hong Kong.

Problem solved.

[Naam]

Nope. For the Dutch it is important where you live.

My solution, i am a nomad too, is to have a BVI company domiciled in Hong Kong. Problem solved.

so the BVI company will issue a passport when you need one? that's good to know as i have a BVI company too which i will ask to issue a passport when my set of two expires. i also did not know that BVI companies can be domiciled outside the British Virgin Islands

here's what pluto_manibo said:

"The thing is when you ask for a new passport and have no tax residence or residence in the counry of nationality....things could get complicated and messy."

[meom]

The thing is when you ask for a new passport and have no tax residence or residence in the counry of nationality....things could get complicated and messy.

As far as I understand it the Dutch government only cares when you are tax eligible in Holland. Since that is not the case they don't care if you pay or not pay tax somewhere else so with your thai visa there should be no problem in getting your passport renewed. It don't really matter to them whether you are tax resident in Thailand or just resident.

[Khun Jean]

The thing is when you ask for a new passport and have no tax residence or residence in the counry of nationality....things could get complicated and messy.

As far as I understand it the Dutch government only cares when you are tax eligible in Holland. Since that is not the case they don't care if you pay or not pay tax somewhere else so with your thai visa there should be no problem in getting your passport renewed. It don't really matter to them whether you are tax resident in Thailand or just resident.

Yes that is what i meant. 'Nope' was a little short i guess.

I renewed my passport recently with only a non 'o' visa. No problem.

The 'Hong Kong' option is easy when you travel around frequently.

And you can choose to give yourself a salary if you wish and pay tax wherever you are at the moment.

I started and stopped to many businesses in different countries that i got fed up with it.

The traveling is now less, kids, school etc... but the tax advantages are very nice.

[Maestro]

...I will have to change my resident status in the EU early next year. As, I have been told that one must have a Tax residence somewhere, I would like to establish mine as Thailand....I believe this would facilitate renewal of Passport and staying within the legal realm of tax laws...

Told by whom?

Each country has its own rules regarding the issuance of passports and I do not discount the possibility that the Dutch consulates are forbidden to process an application for a new passport without documentary evidence that the applicant is a tax paying resident in some country in the world. But you do not seem to be sure that this is indeed the case.

Is there any Dutch national here who can relate his experience with getting a new passport from the Dutch embassy in Bangkok without proof of tax domicile?

Does the Dutch embassy list the requirements for a passport application on its web site? If so, does it say anything about tax domicile?

--

Maestro

[Maestro]

you can just walk into any tax office in Thailand, explain your situation and get a tax number. hel_l, you can get a tax number in Thailand and not pay any tax - just say you need it...

If you get a Thai tax card but have no income, does it mean that you still have to submit an annual tax return, declaring zero income?

--

Maestro

[Maestro]

...posted on the American Chamber of Commerce, Thailand website under "Taxation in Thailand" :

"A resident is an individual who lives in Thailand for one or more periods totaling 180 days or more in any tax year. A resident is subject to tax on all income from sources in Thailand and on income derived from sources outside of Thailand, should such income be brought into Thailand. A non-resident individual is subject to tax only on income earned from sources within Thailand."... The devil is in how one separates savings from income.

I think it is relatively simple to make this separation. Taxation is for a 12-month period, usually a calendar year. Let’s say you had 10,000 dollars income from sources outside Thailand last year. You brought 20,000 dollars into Thailand.

The first thing to consider is that the Thai revenue office has no way to check whether any of the money you brought into Thailand in 2007 was income from sources outside Thailand in 2007. If you nevertheless want to establish evidence to satisfy your own curiosity you have to look at the total of your assets at the end of the years 2006 and 2007. For example:

+ 50,000 assets outside Thailand end 2006
+ 10,000 income from sources outside Thailand in 2007
-  2,000 expenses outside Thailand in 2007
- 20,000 transfers to Thailand in 2007
= 38,000 assets outside Thailand end 2007

If the last line, i.e. assets outside Thailand end 2007, is negative then this is the amount of foreign income you transferred to Thailand in 2007.

--

Maestro

[Khun Jean]

...I will have to change my resident status in the EU early next year. As, I have been told that one must have a Tax residence somewhere, I would like to establish mine as Thailand....I believe this would facilitate renewal of Passport and staying within the legal realm of tax laws...

Told by whom?

Each country has its own rules regarding the issuance of passports and I do not discount the possibility that the Dutch consulates are forbidden to process an application for a new passport without documentary evidence that the applicant is a tax paying resident in some country in the world. But you do not seem to be sure that this is indeed the case.

Is there any Dutch national here who can relate his experience with getting a new passport from the Dutch embassy in Bangkok without proof of tax domicile?

Does the Dutch embassy list the requirements for a passport application on its web site? If so, does it say anything about tax domicile?

--

Maestro

I am Dutch and i did just that. Fill in a simple form, pictures. That's it.

Oh yeah i showed my non 'o' that had to be transferred to my new passport.

[pluto_manibo]

Thank you for all the valuable contributions. I knew I wasn't the only one in this situation. I can conclude that the Netherlands government is not interested in its' subjects as Tax residents if not residing within the Netherlands....therefore the embassy will not ask for proof of domiciliation? The idea of a BVI in Hong Kong is still a little puzzling to me...I would be interested in learning more about this alternative. Thanks again to Khun Jean, maemo, naam, maestro.....

[Misty]

I think it is relatively simple to make this separation. Taxation is for a 12-month period, usually a calendar year. Let’s say you had 10,000 dollars income from sources outside Thailand last year. You brought 20,000 dollars into Thailand.

The first thing to consider is that the Thai revenue office has no way to check whether any of the money you brought into Thailand in 2007 was income from sources outside Thailand in 2007. If you nevertheless want to establish evidence to satisfy your own curiosity you have to look at the total of your assets at the end of the years 2006 and 2007. For example:

+ 50,000 assets outside Thailand end 2006
+ 10,000 income from sources outside Thailand in 2007
-  2,000 expenses outside Thailand in 2007
- 20,000 transfers to Thailand in 2007
= 38,000 assets outside Thailand end 2007

If the last line, i.e. assets outside Thailand end 2007, is negative then this is the amount of foreign income you transferred to Thailand in 2007.

--

Maestro

Agreed in the example that you give it's quite straight forward. But in other examples it might be a little more tricky. Say you earned Bt100,000 in Thailand in 2004 (and of course paid Thai tax). You transferred this out of Thailand in 2005, and (just to make it interesting) invested it along with another Euro400k in real estate in Spain. In 2006 you sell your Spanish real estate investment at a loss, and then transferred the sales proceeds to an offshore account containing the rest of your investment portfolio in 2007. The overall portfolio makes a decent return from 2003-mid 2007. At the end of 2007, you sold a portion of your portfolio and put it in cash. In 2008, you transfer Bt50,000 back in to Thailand.

So which Bt50,000 did you transfer in in 2008? Was it the salary income you already paid Thai tax on from 2004? Was it earnings on the taxable portfolio earned from 2003-2007? Was it some combination of the two, and how do you (or the Revenue Dept) determine this?

This example is intentionally complex, but you can see that once you get one tax year removed it becomes very difficult to determine if cash transferred is from salary earnings, investment earnings, or original capital.

Edited February 15, 2008 by Misty

[TCA]

Nope. For the Dutch it is important where you live.

My solution, i am a nomad too, is to have a BVI company domiciled in Hong Kong.

Problem solved.

Khun Jean or anyone else - could you please expand a bit on the advantages and costs of a BVI company and how and why you use it? I am in a similar position to the OP on a non imm O visa (employment prohibited) but have investment income (non EU currently paid to an Isle of Man account) which I'd like to shelter from UK tax, which I currently pay by reason of being UK domiciled ,resident and ordinarily resident for all my life. I moved to Thailand last year. Any tips appreciated. Thanks.

[cclub75]

Khun Jean or anyone else - could you please expand a bit on the advantages and costs of a BVI company and how and why you use it? I am in a similar position to the OP on a non imm O visa (employment prohibited) but have investment income (non EU currently paid to an Isle of Man account) which I'd like to shelter from UK tax, which I currently pay by reason of being UK domiciled ,resident and ordinarily resident for all my life. I moved to Thailand last year. Any tips appreciated. Thanks.

-tax "optimization" (I use a "shy" word ). Your company in Thailand for instance does trade with... your company in BVI.

This article speaks about this scheme.

-then the other idea : to use the BVI company as an assets holder (real estate, stocks etc.).

[Naam]

Nope. For the Dutch it is important where you live.

My solution, i am a nomad too, is to have a BVI company domiciled in Hong Kong.

Problem solved.

Khun Jean or anyone else - could you please expand a bit on the advantages and costs of a BVI company and how and why you use it? I am in a similar position to the OP on a non imm O visa (employment prohibited) but have investment income (non EU currently paid to an Isle of Man account) which I'd like to shelter from UK tax, which I currently pay by reason of being UK domiciled ,resident and ordinarily resident for all my life. I moved to Thailand last year. Any tips appreciated. Thanks.

you open a BVI corporation via a provider (there are zillions of offers) through the internet. it takes about two weeks to get all necessary documents which enable you to open a corporate account. the income of the corporation which holds your assets is not taxed by EU, UK or any other country. however you are liable to pay income tax on your income according to the tax laws of the country you reside. presently it looks like that you don't pay any income tax in Thailand especially if you are "residing" as a retiree.

cost of establishing a BVI corporation is about 800-1,200 us-dollars (depending on required documents), running cost is 600-800 us-dollars per annum.

caveat: before you take any steps let the bank where you would like to open a corporate account give you in writing exactly what documents are required. different banks have different requirements. it will cost you an arm and a leg if you ask for additional documents which were not included in the original package!

another caveat is that banks where you would like to establish a corporate account will try to sell you their own highly overpriced setups and running cost.

p.s. Khun Jeans statement "BVI corporation domiciled in Hong Kong" is incorrect. A BVI corporation is domiciled in/on the British Virgin Islands as a Brunei corporation is domiciled in Brunei or a Singapore corporation in Singapore.

if you have additional questions please do not hesitate to ask. if possible not by PM but here in TVforum as there a bunch of other participants interested in this subject.

[Naam]

-then the other idea : to use the BVI company as an assets holder (real estate, stocks etc.).

some continental european EU states (and of course Thailand) do not accept BVI, Panama, Nauru or Brunei (the list is much longer) corporations as owners of real estate. any other financial assets = no problems at all.

[Thailsacien]

Hi pluto,

I don't know if this can help you, but I'm in the same situation in Thailand (i.e. UE citizen, thai wife visa, no work permit, income from UE).

When we moved 4 years ago, I just went to the nearest tax office to register and receive a tax-ID. France and Thailand have a tax convention, just like Netherland and Thailand. Maybe you can find some ideas : http://www.rd.go.th/publish/784.0.html