Capital Gains Tax On Foreign Assets

[ianh68]

Any UK farangs resident in Thailand owning property in the UK they have rented out? Has anyone in this situation sold their property?

If the UK farang is not resident and not ordinarily resident in the UK for at least five years there is no UK Capital Gains Tax to pay but "one may be liable to tax in the country in which one is resident".

Has anyone been through this scenario? Did they have to pay tax to the Thai authorities?

[wana]

dont bring tonnes of cash in at once ,leave it in a uk bank and set up a monthly direct debit paid to your thai bank like a salary you can spend

im sure if you go to the tax office ,they will find some tax that a farang bringing in loads of money has to pay !

if there isnt one ,they wil invent one just for you

btw you should see a professional ,random advice on an internet forum on motorcycles may not be the best for your personal circumstances

[SantiSuk]

dont bring tonnes of cash in at once ,leave it in a uk bank and set up a monthly direct debit paid to your thai bank like a salary you can spend

im sure if you go to the tax office ,they will find some tax that a farang bringing in loads of money has to pay !

if there isnt one ,they wil invent one just for you

btw you should see a professional ,random advice on an internet forum on motorcycles may not be the best for your personal circumstances

Thai tax authorities will not have to invent a tax:

"Most types of capital gains are taxable as ordinary income, except for the following which are exempt from tax: (lists certain Thai share transactions and certain Thai bonds)"

[source: PricewaterhouseCoopers Thailand Tax booklet 2011]http://www.pwc.com/en_th/th/publications/2011/assets/thai-tax2011-booklet-update100311.pdf]

You may find that there would be less tax to pay if you were to file a UK tax return. There is a GBP10,100 annual exemption (reduces the gain subject to tax by that amount) and you might well qualify for only an 18% CGT rate in the UK, which may well be lower than the income tax rate applicable if you were to declare the gain in Thailand. The double tax treaty would mean that if you pay tax in the UK you should not have to pay Thai tax, but that could have longer term implications for your tax affairs and should not be done without professional tax advice.

If the gain is trivial declare it in Thailand and pay the tax. If the gain is non-trivial pay for advice (in Thailand first). If you went to an international tax adviser they could probably deal with both UK and Thai aspects together. I recommend PricewaterhouseCoopers (but then I would, having been with them for 30 years - but not re tax - before retiring here!)

Or follow Wana's suggestion. But that would be tax evasion, which is not legal and could bring penalties including you being thrown out of the country if discovered! For the avoidance of doubt you should NOT DO THIS. Like he says, don't rely on forums (when serious money is involved).

[Tywais]

Moved from Bikes in Thailand to Business

[wordchild]

There should be no issue , as far as Thai taxation is concerned, as long as you keep the proceeds offshore for a period. This is not evasion; the Thai tax authorities are only concerned about income (or gain) that is brought into Thailand. If you then wait till after Jan 1 of the year following the disposal and then bring some of the money in, you would be regarded as bringing in capital and not income and therefore not subject to tax.

Edited March 14, 2012 by wordchild

[SantiSuk]

There should be no issue , as far as Thai taxation is concerned, as long as you keep the proceeds offshore for a period. This is not evasion; the Thai tax authorities are only concerned about income (or gain) that is brought into Thailand. If you then wait till after Jan 1 of the year following the disposal and then bring some of the money in, you would be regarded as bringing in capital and not income and therefore not subject to tax.

Good point - you could well be right. Personally I would still check it out with a professional if we are talking non-trivial sums.

[PattayaParent]

There should be no issue , as far as Thai taxation is concerned, as long as you keep the proceeds offshore for a period. This is not evasion; the Thai tax authorities are only concerned about income (or gain) that is brought into Thailand. If you then wait till after Jan 1 of the year following the disposal and then bring some of the money in, you would be regarded as bringing in capital and not income and therefore not subject to tax.

Good point - you could well be right. Personally I would still check it out with a professional if we are talking non-trivial sums.

Isn't the regulation that it is only taxable as income in Thailand if it is brought in in the year that it is earned?

[wordchild]

There should be no issue , as far as Thai taxation is concerned, as long as you keep the proceeds offshore for a period. This is not evasion; the Thai tax authorities are only concerned about income (or gain) that is brought into Thailand. If you then wait till after Jan 1 of the year following the disposal and then bring some of the money in, you would be regarded as bringing in capital and not income and therefore not subject to tax.

Good point - you could well be right. Personally I would still check it out with a professional if we are talking non-trivial sums.

Isn't the regulation that it is only taxable as income in Thailand if it is brought in in the year that it is earned?

yes, sorry i thought that is what i said

[partington]

As has been pointed out earlier, only sums brought into Thailand would be liable for tax. If the money you brought in was not earned in the current year it is savings, and therefore not liable for taxation.

In the UK you have to declare rental income arising within the UK, but again, as has been pointed out,you will not have to pay if the net earnings are below the taxable income minimum for that year.

You are allowed to deduct many expenses from the rental income to arrive at the net earnings, including repairs, agent's fees, insurance and wear and tear.

Capital gains occurs when you sell an asset, it has no relevance to rental income and therefore does not need to be considered either in the UK or Thailand for the situation described.

[lannarebirth]

Masochist?

[ianh68]

Thanks to SantiSuk for the link, very useful. It would appear the best plan is to stash the proceeds in the UK where it is exempt from tax and then drip feed it into Thailand as required.

Since the proceeds would be a necessary pension top up that seems to point to some sort of annuity, professional advice needed, agreed.

I've met farangs of retirement age who say they are going to sell their property back home. If anyone out there has actually done it and can share their experience, please do.

[SantiSuk]

Thanks to SantiSuk for the link, very useful. It would appear the best plan is to stash the proceeds in the UK where it is exempt from tax and then drip feed it into Thailand as required.

Since the proceeds would be a necessary pension top up that seems to point to some sort of annuity, professional advice needed, agreed.

I've met farangs of retirement age who say they are going to sell their property back home. If anyone out there has actually done it and can share their experience, please do.

Those farangs that are still UK tax resident when they sell a property in the UK may have been able to claim it as their "principle private residence" in the UK. There is often no UK CGT on the sale of a principle private residence and I would be very confident that no Thai tax is payable in Thailand in that event, whether the proceeds are remitted in the current year or a succeeding year, since the gain has already been subject to tax (even though there is a tax relief that means no tax is payable) in the UK: the double tax treaty could be applied to deny the gain as being subject to Thai tax.

There are however restrictions relating to a PPR claim in cases where properties have large amounts of land, have been wholly or partly used for business purposes or have been partly or wholly rented out. See

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4020890

Looks like the OP should also be talking to UK HMRC to establish what would be his CGT position in the UK. That would not be necessary if he has clearly 'left the UK for tax purposes', including having made the necessary declaration to HMRC and if he has left the UK for tax purposes he has no interest in exploring whether he can go back into the UK tax net with the prospect of getting all or part of the gain tax relieved in the UK and thereby definitively non-taxable in Thailand.

Tax is really simple - until you have some money!