Retirement Visa -- Tax Implications

[Yangpuss]

What does it do to your taxation status in Thailand to get a retirement visa?

In my case, I live on bank savings and interest from banks in the US. All my money is gotten from ATMs.

If I got a retirement visa, I would probably bring in 800K baht into a Thai bank account, get the visa, and then wire the money right back to the US bank because Thai banks don't pay enough interest. Then repeat the procedure each subsequent year.

Right now I just hang out and do border runs.

Would getting a retirement visa subject me to paying Thai income tax on the money I bring into the country?

[lopburi3]

Nobody is going to ask you for income tax just because you have a retirement visa. But yes, you might be subject to Thai income tax if you bring this money in during the year earned as believe only pension type income is covered by the dual tax treaty. So you obviously are bringing in money earned in previous years rather than current income.

[ProThaiExpat]

loburi3 is relating the latest "guessing" by attorneys in Thailand that have opined that money brought into Thailand "in the year it is earned" might be deemed taxable, although there has been no postings that I am aware of that it has occured yet.

To be safe, if you have sufficient funds to "age" the funds you bring into Thailand in any given year, such that no part of it contains earnings received in that year, you would be safe, in my view.

I channel all earned funds in one year into a separate account and then transfer it into residual funds after it has aged a year, thus I have a paper trail to prove my income is over a year old when I bring it into Thailand.

Since money is by its nature. fungible, one wonders how Thai taxation would be able to prove the funds brought in are this years earnings as opposed to last years earnings. In the U.S.. it used to be a burden borne by the taxpayer to prove this, however, now the government must prove it. I don't know upon whom the burden rests in Thailand.

[Firefan]

Gonna be about 20 years before I can get that retirement visa but lopburi covered it well.

The law is funny that way and I guess one way to do it is to simply take in the estimated full (coming) years expenses on the 1st of January. That leaves you with the no interest situation though...

My retired friend informs me that he had no trouble renewing his retirement visa even though no longer 800k in the account - he is from the US and apparently the US embassy issues a document for retirees which the emigration is happy with.

Cheers!

[lopburi3]

What you do is go to the US Embassy ACS and request a letter of pension income which you fill in the data, pay notary fee of $30/1,200 baht and have US seal impressed and signed by Consular Officer. You also have to have a current medical certificate and bank passbook with letter from bank of the amount in the account. With that and normal copies of passport pages you fill out TM.7 form and attach photo and pay 1,900 baht. With receipt you go to extension office and take number. When called it is a very fast process to receive a new stamp for another year. You do need the bank account but the amount in it is not that important if you have sufficient pension.

Edited July 19, 2005 by lopburi3

[boris]

loburi3 is relating the latest "guessing" by attorneys in Thailand that have opined that money brought into Thailand "in the year it is earned" might be deemed taxable, although there has been no postings that I am aware of  that it has occured yet.

To be safe, if you have sufficient funds to "age" the funds you bring into Thailand in any given year, such that no part of it contains earnings received in that year, you would be safe, in my view.

I channel all earned funds in one year into a separate account and then transfer it into residual funds after it has aged a year, thus I have a paper trail to prove my income is over a year old when I bring it into Thailand.

Since money is by its nature. fungible, one wonders how Thai taxation would be able to prove the funds brought in are this years earnings as opposed to last years earnings.  In the U.S.. it used to be a burden borne by the taxpayer to prove this, however, now the government must prove it.  I don't know upon whom the burden rests in Thailand.

<{POST_SNAPBACK}>

Pro Thai Expat,

I understand why you are "aging" the funds you bring into Thailand.However if these have already been taxed in the US, are they not exempt from Thai tax under a DTA? As far as pensions are concerned, these are almost always subject to tax in the country of origin.

[Firefan]

Lopburi; the original poster clearly stated that income came from savings/interest in the US. Nothing about pension. Will the US embassy STILL issue the letter of pension income based on some estimated interest/investing returns?

Cheers!

What you do is go to the US Embassy ACS and request a letter of pension income which you fill in the data, pay notary fee of $30/1,200 baht and have US seal impressed and signed by Consular Officer.  You also have to have a current medical certificate and bank passbook with letter from bank of the amount in the account.  With that and normal copies of passport pages you fill out TM.7 form and attach photo and pay 1,900 baht.  With receipt you go to extension office and take number.  When called it is a very fast process to receive a new stamp for another year.  You do need the bank account but the amount in it is not that important if you have sufficient pension.

[lopburi3]

My response was to you when I outlined the pension method. OP was talking 800k deposit.

Do not recall exact wording of Embassy letter but it had several source of funds listed. There might even be another letter for savings. Do not believe immigration is concerned much about source as long as regular and outside of Thailand.

But if you are asking would I lie under oath to the Embassy I would not.

[Firefan]

Hi Lopburi,

I see. So the letter from embassy can also be based on simply the 800k - makes sense as the rules says "OR".

Lying under oath (or at all) would certainly be stupid.

Cheers!

[chuckd]

Hi Lopburi,

I see. So the letter from embassy can also be based on simply the 800k - makes sense as the rules says "OR".

Lying under oath (or at all) would certainly be stupid.

Cheers!

<{POST_SNAPBACK}>

The letter from the Embassy is a form letter where you fill in the blanks. It merely says that you attest you have $??????? in monthly income and does not ask the source. The Vice Consul asks if the statements on the letter are true, you acknowledge verbally, sign the letter and he stamps and signs it. Simple enough but this notarial service is not free.

If you have the 800,000 baht, then no retirement letter is required.

Edit in: If you have as much as 65,000 baht monthly income reflected on the letter from the Embassy, then your bank letter does not have to reflect a balance of 800,000. Any amount is acceptable but you must have a bank letter and copy of your bank book (in Pattaya at least).

Edited July 20, 2005 by chuckd

[astral]

When I do a tax return in Thailand I show my tax return from the UK yo show that

funds have already been taxed. (Thailand and the UK have a Dual Tax agreement).

It also shows that the money was earned in the previous year, which

I believe also exempts it from taxation.

[RDN]

... I would probably bring in 800K baht into a Thai bank account, get the visa, and then wire the money right back to the US bank because ...

<{POST_SNAPBACK}>

Then probably immigration will ask to see your bank book, refuse the extension and you'll be on a plane back to the dear old US of A with a bid red stamp in your passport.

[ProThaiExpat]

Even with the 800K bank balance method, you will be asked during your immigration interview what your source of income is.

While I think you can freely transfer money right back overseas after qualifying with immigration, they will want to see withdrawals or other evidence of you using your funds for living expenses.

Immigration wants to see you spending your money, not living with no visible means of support or spending as they are looking for people working in Thailand under the table.

[RDN]

Even with the 800K bank balance method, you will be asked during your immigration interview what your source of income is.

While I think you can freely transfer money right back overseas after qualifying with immigration, they will want to see withdrawals or other evidence of you using your funds for living expenses.

Immigration wants to see you spending your money, not living with no visible means of support or spending as they are looking for people working in Thailand under the table.

<{POST_SNAPBACK}>

Sorry, PTE, that's what I should've said. Sometimes I get fed up reading people's posts about how they will cheat the system or implying that the immigration guys are idiots.

[Yangpuss]

Thanks for the replies. So, if I'm understanding this correctly, if I had a pension I could get a letter from the US consulate, and this letter would make it unnecessary for me to have 800,000 in a Thai bank?

Well I don't have a pension, just savings. But what about an annuity? I don't know anything about these, except that I've heard you can just open an annuity account with a lump sum and it would then act as a pension. Is that correct?

Would that suffice? Are annuities decent, safe investments?

I do wonder, though, why a monthly pension is deemed acceptable but the same amount in monthly interest income is not.

[Yangpuss]

By the way, yes, I do pay income tax on my interest every year to the US. So, does that mean I don't have to worry about "aging" my interest income? And would not have to file a Thai tax return?

[ProThaiExpat]

Even with the 800K bank balance method, you will be asked during your immigration interview what your source of income is.

While I think you can freely transfer money right back overseas after qualifying with immigration, they will want to see withdrawals or other evidence of you using your funds for living expenses.

Immigration wants to see you spending your money, not living with no visible means of support or spending as they are looking for people working in Thailand under the table.

<{POST_SNAPBACK}>

Sorry, PTE, that's what I should've said. Sometimes I get fed up reading people's posts about how they will cheat the system or implying that the immigration guys are idiots.

<{POST_SNAPBACK}>

You are easily forgiven, as you have demonstrated consistently an infinite patience in this area, asnwering the same quesions over and over, ad nauseaum, while I have shrunk away and let you and lopburi3 carry the burden of those too lasy to research. Keep up the good work. You at your worst are miles ahead of most of the "one liners" or "emotion only" posts we see so ofen in TV.

[ProThaiExpat]

Thanks for the replies. So, if I'm understanding this correctly, if I had a pension I could get a letter from the US consulate, and this letter would make it unnecessary for me to have 800,000 in a Thai bank?

Well I don't have a pension, just savings. But what about an annuity? I don't know anything about these, except that I've heard you can just open an annuity account with a lump sum and it would then act as a pension. Is that correct?

Would that suffice? Are annuities decent, safe investments?

I do wonder, though, why a monthly pension is deemed acceptable but the same amount in monthly interest income is not.

<{POST_SNAPBACK}>

Thai immigration is responsble for assuring itself that you have the resources to live in Thailand for the forthcoming year on the money you demonstrate to them you have.

A pension is a gruanteed monthy income that would suffice to sustain you during he forthcoming year. 800K in a Thai bank would likewise so indicate.

Funds lodged in investments are subject to "loss" due to market forces and are deemed less reliable than cash in a Thai bank or a documented pension.

An annuity presents an interesting altrnative I have explored. While I feel an annunity is not necessarily a good investment, if you took your annuity institutions letter of intent and pro-forma report of your anticipated next years earnings, prior to actually commiting to the annuity, to the Embassy and got your certification letter and then went off to immigration and determined if this approach was acceptable, then go for it.

After you commit to the annuity and then are turned down by immigration, you would really be in a pickle. From what many have posted, the Embassy certifies to almost anything, so there may be very little risk in committing to the annuity first, calling it a pension is not really a stretch as it is a guaranteed amount of monthly income for at least the forthcomng year.

Edited July 22, 2005 by ProThaiExpat

[Firefan]

As overseas cash interest can be in the range of 3-4-5% these days (depending on currency) I do get the original posters question - it could all be in cash in a US-MM fund and earn more than 3%.

On the other hand; as PTE points out (and PTE/lopburi; thanks for your patience - I have already learned a lot from reading your posts - Incl. when I researched MY situation PRIOR posting my first question) - for the emigration; CASH HERE or a proof of pension is the key.

As for annuities they are generally known as being one of the worst choices in the investment world (leaving Florida swamp land out of the equation) due to very high fees, on top of fees..). If I HAD to do it (and was in the USA) I would look at Vanguard having the lowest costs.

Your initial investment will be gone, but you will obtain about 5% in return for life (but remember the evil inflation). To get the $1500/mth being $18k/year one would need to dump about $360.000 into the annuity. Check the Vanguard funds site for instant quotes.

(disclaimer: there are a TON of different types annuities out there some that DO give some money back, some that includes spouse at death Etc. but those extras just reduces the 5% or so in payouts - nothing for free )

My US friend here on retirement-extensions and w. no pension informed me that he only had the B 800k at first application and have less there now, but he has not had a problem renewing - I believe it is due to the letter from embassy - like the original poster he has plenty of money back home so not lying about being able to support oneself).

Personally (when I reach that age) I would just ensure that there is B 800k in the account at every application - sure beats dumping $360k into a high fee annuity!

Cheers!

Edited July 22, 2005 by Firefan

[Yangpuss]

Here's the deal: my interest comes to substantially less than 65,000 baht per month. But my principle is also what I'm counting on to see me through until I get Social Security (if it still exists in 13 years).

I live simply and lately don't spend more than 20,000 baht per month, though I can imagine it growing to 30,000 when I start having more fun. But I don't need 65,000 baht.

My savings keep growing as I'm spending less than I earn in interest.

Yet these every-30 day trips to the border are killing me. I hate them.

So, it would seem that my choices are either to put 800K in a Thai bank, or to get an annuity, which doesn't sound like a great idea from what you guys have said.

Or, to put 800K in a Thai bank but move it back to the US after I get the visa.

Now I don't want to "cheat the system" or anything (like the system doesn't cheat us routinely?) but that last option sounds the best to me. Leaving 800K in a Thai bank means giving up at least USD 800 in interest every year.

I'm just wondering how little I can leave in the Thai bank account. Would like to leave as little as possible and rely on my US accounts accessed through ATM. I don't know whether Immigration want to see proof throughout the year that you are drawing funds from your Thai bank account.

[Firefan]

As long as you have the 800k at renewal time you are doing more than my American friend - he basically relies on the letter from the embassy I guess.

Personally I would leave my base budget (in your case B240000 worth) and wire the rest back. But then top it up again at next renewal. Imigration simply want to know (at application and renewal) that you can take care of yourself. What you do with the money in between I do not think they care much about.

Cheers!

[RDN]

As long as you have the 800k at renewal time you are doing more than my American friend - he basically relies on the letter from the embassy I guess.

Personally I would leave my base budget (in your case B240000 worth) and wire the rest back. But then top it up again at next renewal. Immigration simply want to know (at application and renewal) that you can take care of yourself. What you do with the money in between I do not think they care much about.

Cheers!

<{POST_SNAPBACK}>

If my memory serves me right, I recall other posters have stated that at extension renewal time, immigration have asked to see their bank book, to see that they are withdrawing money regularly to live on. So they may not like to see the majority of the money being transferred out soon after renewal.

Maybe some other posters can comment on this?

[lopburi3]

As long as you have the 800k at renewal time you are doing more than my American friend - he basically relies on the letter from the embassy I guess.

Personally I would leave my base budget (in your case B240000 worth) and wire the rest back. But then top it up again at next renewal. Immigration simply want to know (at application and renewal) that you can take care of yourself. What you do with the money in between I do not think they care much about.

Cheers!

<{POST_SNAPBACK}>

If my memory serves me right, I recall other posters have stated that at extension renewal time, immigration have asked to see their bank book, to see that they are withdrawing money regularly to live on. So they may not like to see the majority of the money being transferred out soon after renewal.

Maybe some other posters can comment on this?

<{POST_SNAPBACK}>

I would guess that this inspection is more the case with support Thai wife and the under 50 age group than for those in retirement. Age does and advantages, even if were too old to use them.

[RDN]

... Age does have advantages, even if we're too old to use them.

<{POST_SNAPBACK}>

Speak for yourself!