Tax (planning) in Thailand and capital gains (from trading shares, dividends and interest) made in E

[JH1967]

If I understand the (relevant) tax rules for residents in Thailand correctly:

- A resident of Thailand is taxed on income earned in Thailand and in income earned offshore which is brought into Thailand in the year the income is earned.

My situation: I will mainly have income from shares and other "financial instruments" but also some interest from my Thai bank accounts. I will have no income from employment, pensions etc.

The tax rate on capital gains i currently pay in Europe is very high and I would therefore prefer to be taxed in Thailand (and be able to prove that this is the case).

I will stay in Thailand all year, except for the occasional holiday abroad, on a ED visa (I guess that will should qualify me for being a resident of Thailand).

I will have very little income in Thailand - likely to be below the 150.000 baht threshold.

I will (hopefully) have significant income from shares, bonds etc earned offshore.

I will have to transfer funds from Europe to Thailand every year to finance my living here.

Now to my questions:

1. My understanding is that if you have income earned offshore, it is not to be taxed in Thailand if you do NOT bring this income into Thailand during the same year as it is earned - is this correct?

2. How do you prove that the money you transfer into Thailand is not earned in the same year? do you set up several bank accounts offshore and transfer funds only from "dormant" accounts (accounts with no movements apart from the transfers to Thailand), the income I would have on shares etc would be entered into other bank accounts?. or is there a better or easier way of doing it? Hmmm I hope you understand my question(s)

3. How easy is it to become a become a tax resident to Thailand and file a tax return - especially if you will not have to pay anything/much

[wordchild]

1) correct

2)you can keep records esp in the first year, after the first year it should be less of an issue as you can argue that you are always spending capital earned in the previous year. i do know one person who used to keep separate accounts but not sure he bothers anymore. I do not know anyone who has ever had any questions raised by the Thai tax authorities regarding this but if you want belt and braces keep records. BTW if you are not employed in Thailand you will not even be on their radar, and they certainly dont seem to care about expat retirees.

3)in theory you are tax resident in Thailand if you are here for 180 days in a calendar (Thai tax) year, there is no automatic need to file however , except where you have relevant income, and even if you have, certain types of income are subject to withholding tax anyway. In general the only people who bother to file are those of us who work here or those for whom there is some advantage in doing so (eg reclaiming withheld tax)

You dont say where you are from but for many countries (eg the UK) you do not need to file a return in say Thailand in order to be treated as non resident for tax purposes in the UK.

Edited October 3, 2013 by wordchild

[fletchsmile]

Wordchild sums it up well.

For point 2) on certain income, I do keep different bank accounts for different years. A good day to transfer in also is first working day of the year, then it's easier to prove on a statement that it came from the prior year, with nothing in between

You mention capital gains. There is generally no tax on capital gains for individuals on stock exchange listed shares or approved mutual funds/ unit trusts, so it may pay you to buy similar investments here. eg I own Aberdeen Emerging Growth Fund here - unit trust - capital gains are tax free. I own the same core fund in the UK, and have to be careful on capital gains tax there. So as well as being more convenient here than dealing in it overseas the tax is simpler.

Cheers

Fletch

[JH1967]

Thanks to wordchild and fletschsmile for their help.

re. 1 - thank you wordsmile for your confirmation

re. 2 I think i will keep records (and separate accounts) to start with, maybe this is just waste of my time, but I prefer to be on the save side.

Thank you to fletschsmile for the excellent idea of making transfers in the begining of January - I will make use of this.

re. 3 I agree that Denmark (I am Danish by the way) should not be all that interested in a tax resident of Thailand, but unfortunately I know better and I want to be able to show them that I indeed have filled in a tax return to Thailand - again maybe not necessary, but if done incorrectly, a lot of money could be at stake.

Fletschsmile - thank you for the advice of investing in shares listed in Thailand, I might move more of my money to Thailand, but I will wait a few years until I am sure (or as sure as one can be) that I will live in Thailand for the rest of my life - I have read that it is not that easy to move money out of Thailand again.

Thanks again to both of you.