Offshore Company Dividends Paid To Personal Account In Thailand

[rwdrwdrwd]

Hi, I wonder if someone can confirm my understanding regarding taxation of offshore dividend income

If a non Immigrant O visa holder is a shareholder of an offshore company and receives dividends of 50k a month paid to a personal account in Thailand, is it correct that a Work Permit is unnecessary but they can declare this dividend income, pay tax / receive paperwork for it and use it to qualify for Non Imm O visa extensions on the basis of 40k a month income (or 400k in a Thai bank)? If so what would be the process to follow to declare this income?

Furthermore, if they were to maintain an offshore personal account in a third jurisdiction and hold further dividends there for a year, is my thinking correct in that after 1 year passes they would then be able to bring this in to Thailand tax free regardless of the sum? If so is there any process that needs to be followed?

Edited April 20, 2013 by rwdrwdrwd

[Mario2008]

For receiving money no work permit is necessary.

Regarding the money, you must pay taxes and the tax forms can be used to proof your income. But income can also come from outside Thailand, in which case you need to provide a letter from your embassy confirming your income. The income does not have to be earned in Thailand or being received here.

For 400,000 baht in a bank account in Thailand for 2 months, you only show your bank book and a letter from the bank (standard letter that each bank has). You do not have to proof that the money comes from outside of Thailand.

[rwdrwdrwd]

For receiving money no work permit is necessary.

Regarding the money, you must pay taxes and the tax forms can be used to proof your income. But income can also come from outside Thailand, in which case you need to provide a letter from your embassy confirming your income. The income does not have to be earned in Thailand or being received here.

For 400,000 baht in a bank account in Thailand for 2 months, you only show your bank book and a letter from the bank (standard letter that each bank has). You do not have to proof that the money comes from outside of Thailand.

Thanks for the input, appreciated!

In this scenario, since the 50k income would be declared in Thailand and taxed here would this remove the need for a letter from an embassy? In my case the company is not based in my home country either, so not sure whether my embassy could issue confirmation.

Also if anybody knows the answer to the second part of my question (zero tax due on income remitted to Thailand one year after being paid to an offshore personal account) it would be great to get some confirmation and advice on whether it must be declared as zero-rated when it is remitted to Thailand.

[Mario2008]

With income declared and taxed in Thailand, there should be no need for an embassy letter. (I mentioned it to advise you of taxation options). That the company is not based in your home country doesn't matter. An Australian having income from the UK still goes to the Australian embassy and not to the UK embassy.

As far as I know, yes if you don't receive it in Thailand within 1 year you don't pay taxes over it. That is why foreign pensioners normally don't pay income tax in Thailand. (They simply do not declare it). But than it will not be Thai income, and must be proven with the embassy letter and not Thai tax papers.

if you can, 400,000 in the bank might be the easiest option. Less paperwork and no inquiries about a work permit.

[wordchild]

In general you are only liable for Thai tax on offshore income if you bring it in to the country in the Thai tax year ( same as calendar year jan to dec) in which it was earned. So in the situation you describe if you receive a dividend offshore in say December 2013 and hold it offshore for a month and bring it in in jan 2014 then there should be no Thai tax liability . So in effect it does not need to be offshore for a year just .so long as you don't bring it in in the same year.

[rwdrwdrwd]

With income declared and taxed in Thailand, there should be no need for an embassy letter. (I mentioned it to advise you of taxation options). That the company is not based in your home country doesn't matter. An Australian having income from the UK still goes to the Australian embassy and not to the UK embassy.

Thanks for that info Is there any other known benefit beside simplified visa extensions to having tax receipts but no WP - I was thinking about buying a car in my name with finance but I suspect that would require WP anyway so the 400k does make sense if there is nothing else that monthly taxed income without WP could aid

In general you are only liable for Thai tax on offshore income if you bring it in to the country in the Thai tax year ( same as calendar year jan to dec) in which it was earned. So in the situation you describe if you receive a dividend offshore in say December 2013 and hold it offshore for a month and bring it in in jan 2014 then there should be no Thai tax liability . So in effect it does not need to be offshore for a year just .so long as you don't bring it in in the same year.

Wow even better than I thought - cheers for the heads up! Going by the letter of the law, is there any reporting requirement when bringing in money that is exempt from tax?

Edited April 20, 2013 by rwdrwdrwd

[wordchild]

With income declared and taxed in Thailand, there should be no need for an embassy letter. (I mentioned it to advise you of taxation options). That the company is not based in your home country doesn't matter. An Australian having income from the UK still goes to the Australian embassy and not to the UK embassy.

Thanks for that info Is there any other known benefit beside simplified visa extensions to having tax receipts but no WP - I was thinking about buying a car in my name with finance but I suspect that would require WP anyway so the 400k does make sense if there is nothing else that monthly taxed income without WP could aid

>>>>>>>In general you are only liable for Thai tax on offshore income if you bring it in to the country in the Thai tax year ( same as calendar year jan to dec) in which it was earned. So in the situation you describe if you receive a dividend offshore in say December 2013 and hold it offshore for a month and bring it in in jan 2014 then there should be no Thai tax liability . So in effect it does not need to be offshore for a year just .so long as you don't bring it in in the same year.

Wow even better than I thought - cheers for the heads up! Going by the letter of the law, is there any reporting requirement when bringing in money that is exempt from tax?

short answer is no, there is no requirement to report money brought into the country, in those circumstances, to the Thai tax authorities. If you bring in money that was earned (outside Thailand) in the previous year then you are considered to be bringing in savings rather than income. You can treat it just as any other transfer that you make into Thailand.

Edited April 21, 2013 by wordchild

[lopburi3]

It is my understanding that money tax records in Thailand would require either a work permit (money from inside Thailand) or an Embassy letter (money from outside Thailand) for extensions of stay in addition to the tax records themselves.

[ubonjoe]

With income declared and taxed in Thailand, there should be no need for an embassy letter. (I mentioned it to advise you of taxation options). That the company is not based in your home country doesn't matter. An Australian having income from the UK still goes to the Australian embassy and not to the UK embassy.

Thanks for that info Is there any other known benefit beside simplified visa extensions to having tax receipts but no WP - I was thinking about buying a car in my name with finance but I suspect that would require WP anyway so the 400k does make sense if there is nothing else that monthly taxed income without WP could aid

>In general you are only liable for Thai tax on offshore income if you bring it in to the country in the Thai tax year ( same as calendar year jan to dec) in which it was earned. So in the situation you describe if you receive a dividend offshore in say December 2013 and hold it offshore for a month and bring it in in jan 2014 then there should be no Thai tax liability . So in effect it does not need to be offshore for a year just .so long as you don't bring it in in the same year.

Wow even better than I thought - cheers for the heads up! Going by the letter of the law, is there any reporting requirement when bringing in money that is exempt from tax?

You would need a work permit to use tax payments for an extension of stay. A letter from your embassy would be the only way you can prove that income.

You do not need to have a work permit to purchase a car. Since you are married to a Thai lady your proof of income by way of regular bank deposits would help with getting financing for the car. You could have joint ownership of the car.

According to info that can be found here http://www.rd.go.th/publish/6045.0.html dividend income from an offshore source is not taxable. Only earned income from working, a business or rental property is taxable.

This is also why pensions are not taxable.

[wordchild]

With income declared and taxed in Thailand, there should be no need for an embassy letter. (I mentioned it to advise you of taxation options). That the company is not based in your home country doesn't matter. An Australian having income from the UK still goes to the Australian embassy and not to the UK embassy.

Thanks for that info Is there any other known benefit beside simplified visa extensions to having tax receipts but no WP - I was thinking about buying a car in my name with finance but I suspect that would require WP anyway so the 400k does make sense if there is nothing else that monthly taxed income without WP could aid

>>In general you are only liable for Thai tax on offshore income if you bring it in to the country in the Thai tax year ( same as calendar year jan to dec) in which it was earned. So in the situation you describe if you receive a dividend offshore in say December 2013 and hold it offshore for a month and bring it in in jan 2014 then there should be no Thai tax liability . So in effect it does not need to be offshore for a year just .so long as you don't bring it in in the same

year.lockquote>

Wow even better than I thought - cheers for the heads up! Going by the letter of the law, is there any reporting requirement when bringing in money that is exempt from tax?

You would need a work permit to use tax payments for an extension of stay. A letter from your embassy would be the only way you can prove that income.

You do not need to have a work permit to purchase a car. Since you are married to a Thai lady your proof of income by way of regular bank deposits would help with getting financing for the car. You could have joint ownership of the car.

According to info that can be found here http://www.rd.go.th/publish/6045.0.html dividend income from an offshore source is not taxable. Only earned income from working, a business or rental property is taxable.

This is also why pensions are not taxable.

strictly speaking dividend income from overseas is taxable if it is brought into Thailand in the year in which it is earned. But, like any other sort of income from overseas, there is no tax due if it is brought into country as savings in a subsequent tax year.

The tax concession which limits taxation of dividends to the 10% withholding tax (referred to in the link above) only applies to dividends from Thai registered companies, on the basis that the company has already paid Thai tax. There is no such concession for dividends from companies not registered in Thailand.

Edited April 21, 2013 by wordchild

[ubonjoe]

From webpage that posted link leads to.

1. Taxable Person Taxpayers are classified into “resident” and “non-resident”. “Resident” means any individual residing in Thailand for a period or several periods in total of at least 180 days in a tax year (January 1 – December 31). A resident of Thailand has a duty to pay tax on income remitted from a source in Thailand as well as on any income from a foreign source in connection with the taxpayers’ employment or business carried on abroad or a property situated abroad, and that income is remitted into Thailand within the year that the taxpayer receives that income (i.e. cash basis). A non-resident is subject to tax only on income from sources in Thailand.

[wordchild]

From webpage that posted link leads to.

1. Taxable Person Taxpayers are classified into “resident” and “non-resident”. “Resident” means any individual residing in Thailand for a period or several periods in total of at least 180 days in a tax year (January 1 – December 31). A resident of Thailand has a duty to pay tax on income remitted from a source in Thailand as well as on any income from a foreign source in connection with the taxpayers’ employment or business carried on abroad or a property situated abroad, and that income is remitted into Thailand within the year that the taxpayer receives that income (i.e. cash basis). A non-resident is subject to tax only on income from sources in Thailand.

Humm! i see what you mean, i find this a little confusing as the clear advice i have always had from the Thai accountants my company uses is that any personal income brought in from overseas (incl dividends or earned interest) is subject to Thai tax if it is brought in in the year it was earned. It also contradicts other things i have read on the matter incl from the Thai revenue department.

This is what PWC say in their latest Thai tax guide http://www.pwc.com/en_TH/th/tax/assets/2012/thai-tax-2012-booklet.pdf. The relevant section is the list of assessable income in the personal taxation chapter, dividends are clearly included here and also PWC do not seem to make any differentiation as to the type of overseas income brought in to Thailand.

in any event, you are certainly not liable to any tax on overseas income as long as you dont bring it in to country in the year in which it was earned so that is the safest thing to do.

Edited April 21, 2013 by wordchild

[Arkady]

If the dividend income from overseas has already been taxed by that jurisdiction which has a double taxation treaty with Thailand, it would not be liable to Thai tax even if remitted to Thailand within 12 months of arising. But why would you want to go through all this hassle? Just have the dividends paid into an account offshore and remit them to your account in the LoS as and when you need them with no questions asked since it is a transfer from your own account. Use the 400k lump sum for visa purposes, as suggested by others. Problem solved.

[rwdrwdrwd]

If the dividend income from overseas has already been taxed by that jurisdiction which has a double taxation treaty with Thailand, it would not be liable to Thai tax even if remitted to Thailand within 12 months of arising. But why would you want to go through all this hassle? Just have the dividends paid into an account offshore and remit them to your account in the LoS as and when you need them with no questions asked since it is a transfer from your own account. Use the 400k lump sum for visa purposes, as suggested by others. Problem solved.

This certainly seems like the best approach, I was considering bringing a portion direct in order to obtain tax history in Thailand but it seems like this has no real benefit anyway without a work permit - I'll most likely be taking the route suggested.

There is a further question I have, we may want to obtain a mortgage in the next year or two (I'm perfectly happy to put it wholly in her name rather than jump through hoops, 30 year leases etc - end of the day may as well have an asset than rent whatever happens in the future)

At present my wife is not working, but theoretically she could be employed directly by an offshore company and have her salary paid and taxed in Thailand, alternatively she could start a business here (no shares held by me) and invoice the offshore company monthly and pay herself a salary from a Thai co - does anybody do something similar and can anyone recommend a good approach? Further to this what sort of salary would be necessary for a sole earner to obtain a mortgage on a 4.5 - 5m property with 25% deposit?

Edited April 22, 2013 by rwdrwdrwd