No Thai-tax On Received Retirement-funds ?

[Edge]

I have read this at a Dutch internetsite and just want to be sure.

They said:

If you move to Thailand you will have to pay personal income tax in Thailand on your yearly income. (Sound logical to me).

You DON'T have to pay personal income tax in Thailand on your yearly income received from your pension/retirement fund(s)! Is this true ?

They call Thailand 'the land of smiles' and if I don't have to pay tax on my retirementfund(s) I will SMILE for a long time for sure !

[lopburi3]

I believe Thai authorities consider any money remitted into Thailand during the year it is earned to be subject to Thai tax unless it is exempted by a bilateral tax treaty.

[Edge]

Lopburi3,

For you some extra information that might help...............

In this case a Dutch citizen can choose to pay taxes in Holland OR to pay taxes in Thailand. This is based upon an old tax-agreement from 1976 between Holland and Thailand.

In Holland you have to pay tax on everything, even if fart you have to pay gas-tax (just a joke).

So if it's true, you don't have to pay tax in Thailand on income from a pension/retirement-fund, it is important to know.

Is there a tax-specialist on this forum or does someone knows one ?

For me it is important to know before a make a decision (Dutch taxation OR Thai taxation).

Thanks in advance.

[ProThaiExpat]

There was a very informative thrad last year on this subject and I suggest you research it.

In summary, tax advisors in that thread suggested to be absolutely safe, age any pension income received one year before bringing it into

Thailand.

Lopburi3 is correct in his statement, however, no one has yet to report being taxed on their pension income yet. The tax department may get around to it someday, but so far, I have seen no reports of it.

Hopefully, your income flow is sufficient so you can accumulate your pension income in one year and bring it into Thailand in the following year, thus being extra safe from th tax man.

The previous thread got into the issue of the fungibility of money and posed the question as to how the Thai taxing authority could determine the age of the money drawn from an overseas account and brought to Thailand. The burden of proof used to be on the U.S. taxpayer but that has changed. My guess is that the Thai taxing authoities would have to prove the money you brought into Thailand was less than a year old, if it came from an account containing funds more than one year old.

I have a savings account that automatically accumulates pension funds from my general accout on a monthly bases so in the following year when I bring the money in, it is clear that the moeny was accumulated in the previous year.

Your guess is as good as mine on whether your talking YTD with the tax people or calendar year.

If they ever get around to collecting tax on our pension incomes, the foregoing problems face them.

The Dutch scenario appears somewhat problematical as I understand your post, as if you make an official election to avoid paying taxes in Holland, aren't you de facto agreeing to pay tax in Thailand, even though it is not collected as a matter of practice.

If I was a Dutch tax collector, I would make it my job to check on those pensioners who elected to pay in Thailand and see if indeed they did.

If they hadn't, I would collect back taxes from future pension checks.

Edited March 6, 2005 by ProThaiExpat

[Edge]

Sure, I want to pay taxes in Thailand or Holland. No problem with that. I just don't want to pay to much. Accordding to the tax-treaty between Thailand and Holland I just have to make a choice. I pay fully in Thailand or I pay fully in Holland.

[Edge]

Sorry, I pressed ENTER to fast !

Thank you ProThaiExpat for the very helpful information !

Sure, I want to pay taxes in Thailand or Holland. No problem with that. I just don't want to pay to much. Accordding to the tax-treaty between Thailand and Holland I just have to make a choice. I pay fully tax in Thailand or I pay fully tax in Holland.

I have sufficient funds to age my future monthly pension-payments for at least 1 year.

So, for all the Dutch-guys (and maybe other nationalaties as well): try to age your pension-payment for at least 1 year !

I will try to check the Dutch/Thai tax-treaty dated 1976 and also the NEW ONE which should be ready to sign now. Signing the last one will take at least 5 years they say ............

As soon as I know more, I will inform you all.

[Edge]

Additional information.

Read the webpage from the Revenue Department of Thailand http://www.rd.go.th/publish/6000.0.html and you will see, they do NOT mention anything about Income from PREVIOUS employment.

Funny, isn't it ?

So this would mean; that received pension-payments are not subjected to Thai Personal Income Tax.

Is there anyone who can proof that I am wrong ?

If so, I am happy to hear !

[dutch]

In Holland ALL pension paying institutes ( including social welfare) are NOT paying gross, but nett. That is the law.They will pay your tax and at the end of the tax year you can try to get a refund or if the expected refund is quite big,you can ask for monthly less tax paying.That request is mostly granted.

You will need to communicate with the Dutch Tax Office in Heerlen, who is dealing with the abroad living dutch citizens.That office will give you permission to pay tax in Thailand and will inform the pension fund, that they should not substract tax. HOWEVER this is only valid for a year ( or a couple of years as stated on the tax office statement) and they request to sent the proof of the Thai tax payment together with the renewal request. If not sent they will order the pensionfund to pay all the tax over the "freedom "years. The pension fund will NOT transmit any money till that is paid all.

You can calculate both taxes by visiting the dutch and Thai websites, and than make up your mind.

Above mentioned is not a" hear- say "story but I do have all related paperwork in my possession.

[lopburi3]

Additional information.

Read the webpage from the Revenue Department of Thailand http://www.rd.go.th/publish/6000.0.html and you will see, they do NOT mention anything about Income from PREVIOUS employment.

Funny, isn't it ?

So this would mean; that received pension-payments are not subjected to Thai Personal Income Tax.

Is there anyone who can proof that I am wrong ?

If so, I am happy to hear !

<{POST_SNAPBACK}>

I believe you are wrong but am not going to try and prove it except to point out this from your provided link - but as PTE has pointed out there is presently no hunt down to make anyone on a retirement type visa pay tax:

(3)  income from goodwill, copyright, franchise, other rights, annuity or income in the nature of annual payments derived from a will or any other juristic Act or judgment of the Court;

[Ajarn]

The only thing they've ever done to me is to tax me 15% on interest from my Thai bank accounts...

[ProThaiExpat]

Ajarn: Did you see the news that we retriees have a waiver on taxes on interest income in Thailand until such time as our total yearly interest income is in excess of 30k Baht?

I suspect we will all have to police our banks to ensure they don't continue to deduct tax from our accounts.

[lopburi3]

Ajarn: Did you see the news that we retriees have a waiver on taxes on interest income in Thailand until such time as our total yearly interest income is in excess of 30k Baht?

I suspect we will all have to police our banks to ensure they don't continue to deduct tax from our accounts.

<{POST_SNAPBACK}>

Believe you are thinking of the 30k deduction on Thai income tax - that is not the same thing as I mentioned in regards to passbook savings account. No tax needs to be paid to be exempt up to either 10k or 20k per account (reason you have more than one account when interest rates are high) and has nothing to do with being retired. If you have another exemption please advise as there seem to be a lot of open ears and eyes here.

The outline of tax is available here: http://www.bia.co.th/016.html

Edited March 7, 2005 by lopburi3

[Ajarn]

Ajarn: Did you see the news that we retriees have a waiver on taxes on interest income in Thailand until such time as our total yearly interest income is in excess of 30k Baht?

I suspect we will all have to police our banks to ensure they don't continue to deduct tax from our accounts.

<{POST_SNAPBACK}>

PTE, no, I hadn't heard about the waiver. Maybe I should spread it out among more accounts...

I'm not really complaining, though. I don't pay any taxes in the States anymore, and 15% of .75% interest gains isn't really that much, I feel. Makes me feel like I can now legitimately gripe about how the (Thai) government spends 'my' tax money..

[rcjoop]

Sure, I want to pay taxes in Thailand or Holland. No problem with that. I just don't want to pay to much. Accordding to the tax-treaty between Thailand and Holland I just have to make a choice. I pay fully in Thailand or I pay fully in Holland.

<{POST_SNAPBACK}>

Edge, Not sure if you interpreted the tax treaty correct

The treaty does not say much about a choice, see article 18 and 19.

http://www.rd.go.th/publish/7493.0.html#article18

BTW if you have a state pension aka ABP-type you will be taxed in the Netherlands anyway.

The choice for tax purposes "buitenlands belastingplichtig" has more implications, I am in LOS at the moment so I do not have all details at hand.

As mentioned by others do contact "Heerlen" they are rather helpful.

Joop

[Edge]

Lopburi3,

The outline of tax mentioned at: http://www.bia.co.th/016.html is very interesting. Especially the line: "Income earned abroad more than two years prior to its being brought into Thailand.............".

To me it sounds like : Put your pension etc. on a bankaccount abroad. Wait 2 years. After two years bring it into Thailand and you don't have to pay taxes.

Am I wrong ?

[ProThaiExpat]

Lopburi3:

All the information I have is based on faulty memory from a BKK Post article regarding a "governement announcement" that stated in effect that as tax relief for Thai pensioners, no tax on retirment savings would occur and that banks would no longer deduct the tax upfront. I assumed that I was benefited at the time, but what with translations and the reliability of governement announcements, who knows.

Edge: Lopburi3's link will be relied on by me and will update my information.

CAVEAT: Note the link is to a "regulation summary" prepared by an unkown person or entity, however, it is so comprehensively writen and in the best of English that it appears reliable.

While clearly your interpretation of "ageing" earned income for two years to avoid tax liability in Thailand is correct, the summary goes on in a subsequent chapter on "Double Taxation" with the following:

"Pensions Generally speaking, pensions are taxable only in the country in which they arise and not in the country in which the recipient lives. Accordingly, if a person from a tax treaty country shows the Revenue Department that his pension is paid from a tax treaty country, he will not be required to pay tax on this income.

Persons from other countries, including the United States, are often required to pay taxes on pensions, including government pensions such as military pensions and social security.

Pensions Generally speaking, pensions are taxable only in the country in which they arise and not in the country in which the recipient lives. Accordingly, if a person from a tax treaty country shows the Revenue Department that his pension is paid from a tax treaty country, he will not be required to pay tax on this income.

Persons from other countries, including the United States, are often required to pay taxes on pensions, including government pensions such as military pensions and social security."

The last paragraph of this post puts the whole issue in doubt once again.

We must keep clear the difference between "Amity" treaties and "Double Taxation" treaties.

Edited March 8, 2005 by ProThaiExpat

[ProThaiExpat]

Not satisfied with where I left lthe ast post, I researched the issue and went to the actual language of Article 20 of the Treatey between the U.S. and Thailand on "Double Taxation". Paragraph 2 of that article is specifically directed at social security benefits paid and taxed by the U.S. and it specifcally excempts taxation of those benefits by Thailand.

[ProThaiExpat]

For tax treaties between the U.S. and any other country, see:

http://www.unclefed.com/ForTaxProfs/Treaties/

Edited March 8, 2005 by ProThaiExpat

[lopburi3]

Lopburi3,

The outline of tax mentioned at: http://www.bia.co.th/016.html is very interesting. Especially the line: "Income earned abroad more than two years prior to its being brought into Thailand.............".

To me it sounds like : Put your pension etc. on a bankaccount abroad. Wait 2 years. After two years bring it into Thailand and you don't have to pay taxes.

Am I wrong ?

<{POST_SNAPBACK}>

I believe this is the safe thing to do but as of now there does not seem to be any move to enforce a tax in any case - so many are exempt by treaty that it would seem it might cost more to check than the receipts it would bring in. I strongly advise using the holding account rather than a direct deposit just in case things change in the future. As long at the money is not directly deposited do not believe there would ever be a problem.

But this is just my unprofessional opinion.

[Harmonica]

The only thing they've ever done to me is to tax me 15% on interest from my Thai bank accounts...

Ditto!

[Erwin1011]

Let's face it. it's the classical method. First you establish a minimum required level of income to be able to stay here. Then you look on how many cases you have. You wait for a couple of years, to make sure a large majority is sttled (hooked). Then you start claiming income tax.

[Edge]

ProThaiExpat,

Your recomended site http://www.unclefed.com/ForTaxProfs/Treaties/ is only of interest for people from the US.

For all other nationalities (including US) who are living in Thailand, please take a look at http://www.rd.go.th/publish/6005.0.html

Always trying to help 'poor' falang ............., don't we ?

Edge

[ProThaiExpat]

Edge: Did your reading of the treaty help answer your question regarding the taxing authority of Thailan on pensions received in the Netherlands and brought into Thailand??

I read the treaty with the Netherlands and it made no sense to me!!!

[Edge]

ProThaiExpat,

To me it makes sense ! Maybe it's because I am Dutch

If I decide to pay tax in Thailand, I will have to send prove to the Dutch tax collector that I really pay taxes in Thailand. If not: ###### brakes lose !

I did some calculating and according to me it is cheaper to pay taxes in Holland (concerning annuities). In my case I'll only have to pay approx. 5,5% nett in Holland.

In Thailand I'll have to pay approx. 12% nett or I can take a gamble and wait 2 year before bringing in the money into Thailand.

I think, that the last option (the gamble) won't please the Dutch tax collector.

This is definitely something I'll have to check !

Always trying to find the EDGE of taxation.............

[dclaryjr]

Not satisfied with where I left lthe ast post, I researched the issue and went to the actual language of Article 20 of the Treatey between the U.S. and Thailand on "Double Taxation".  Paragraph 2 of that article is specifically directed at social security benefits paid and taxed by the U.S. and it specifcally excempts taxation of those benefits by Thailand.

<{POST_SNAPBACK}>

What is your take on U.S. Military pensions (retirement pay)? I've read that document several times and I'm still not sure if it's taxable or not.

[Edge]

dclaryjr,

Reading the US<>Thai treaty, especially article 20 and the provisions of paragraph 2 of Article 21 I would say:

People from the US receiving annuities from the US will have to pay taxes in the US. Only in case a US-person changes his nationality into Thai, he/she can switch to Thai taxation.

I am not a treaty-specialist and I am only Dutch , but that's what I am reading in and between those lines ..........

Edge

[dclaryjr]

dclaryjr,

Reading the US<>Thai treaty, especially article 20 and the provisions of paragraph 2 of Article 21 I would say:

People from the US receiving annuities from the US will have to pay taxes in the US.

<{POST_SNAPBACK}>

Well I certainly like your interpretation!!

Only in case a US-person changes his nationality into Thai, he/she can switch to Thai taxation.

<{POST_SNAPBACK}>

Uh..oh. How about dual Nationality types. My wife will have two passports and two pensions (Civil Service and Soc Security).

[Edge]

Oh my god, that's a (double) tricky one !

I read the US<>Thai treaty one more time and now, same as you, I am puzzled .........

Maybe you have to make a 50/50 deal with the US tax collector and the Thai tax collector.

I think, in this case the IRS is the only one who can tell you what is right.

May the force be with you ............

[ProThaiExpat]

Edge: I have been an "aggessive" taxpayer for 40 years since I took a tax course from a tax attorney. He taught me that if you don't claim it, you won't get it and all you need is a reasonable belief that your interpretation is correct and a sound basis for that interpretation and you cannot go to jail for tax evasion.

I have taken positions with the tax colllector that later proved right after court rulings, however, I was not personally involved.

In your case, if you have to make a positive declaration to the Dutch governement that you will pay taxes in Thailand, you might check to see what the penalties are if you don't and your government follows up. Didn't i read that in one post by another that you can only do it for two years and must show tax receipts from Thailand to your government each year?

Declarvir: Paragraph 2 or Chapter 20 of the U.S. Thai treaty clearly makes social security payments exempt from Thai taxation. Other government pensions are probably only taxable in the U.S..

You are in a very strong position is maintaining that generally all pensions, especially government ones, are taxable in the country of origin, not the country of residence.

There is no effeort by the Thai government to collect taxes on retirement income at the present time, as far as we can tell, so enjoy the status quo and your strong tax position when and if the climate changes.

I do see a generic difference between your military pension, your wife's civil service pension and the social security benefit.

The military and civil service were earned by services rendered, ie. employment while social security is a contributory plan not involving employment. There is language in the treaty about pension income or annuities "earned" through employment. I would guess that area is more vulnerable to attack by the tax collectior if they every get around to it.

[dclaryjr]

I do see a generic difference between your military pension, your wife's civil service pension and the social security benefit.

The military and civil service were earned by services rendered, ie. employment while social security is a contributory plan not involving employment.  There is language in the treaty about pension income or annuities "earned" through employment.  I would guess that area is more vulnerable to attack by the tax collectior if they every get around to it.

<{POST_SNAPBACK}>

Thanks...appreciate the response. I'm confiident will be in pretty good shape--as long as the $ doesn't tank totally!