Is there a double UK/Thai taxation agreement that means anything?

[Godders]

I have been advised that although there have been several double taxation agreements between the UK and Thai tax authorities, UK subjects resident for tax purposes in Thailand are liable for Thai tax on their their pension income remitted from the UK to Thailand, EVEN IF IT HAS ALREADY BEEN TAXED AT SOURCE IN THE UK.

The reason I was given for what appears to be an anomalous situation is that none of the double tax agreements actually covers State or private pensions, though I have not able to confirm this.

Veterans on the scene tell me that the Thai tax authorities "don't bother" taking their (additional) pound of tax flesh and that some UK tax residents who have attempted to interest tax offices in their liability have been shooed away.

However, the law is one thing and the way it is administered another. . . Don't want it to make me an ass. Any sage advice/information will be gratefully received and digested.

[CharlieH]

Moving to "Money matters"

[gerry123]

uk state oap pension alone is not taxable but can be added to other income which may then take it over the personal allowance

as far as any liaison between UK and Thai unless its big baht probably doesn't even come into to the scheme over half of issan don't even know what tax is

[Soutpeel]

http://www.hmrc.gov.uk/taxtreaties/in-force/t.htm

knock yourself out the agreement is in the pdf on the wed site

my reading of this, but I am not a tax expert is that if your pension is taxed at source you are ok, no tax payable in Thailand

BTW who told you it was taxable in the Thailand, tell me it wasnt some "financial adviser" peddling some retirement "product"

Edited February 24, 2015 by Soutpeel

[JimGant]

Veterans on the scene tell me that the Thai tax authorities "don't bother" taking their (additional) pound of tax flesh and that some UK tax residents who have attempted to interest tax offices in their liability have been shooed away

Yeah, Thai tax authorities don't go after any income generated outside Thailand, because of their tax law that excludes foreign earnings brought into Thailand in a later year. And because of the fungibility of money, they don't waste any resources trying to differentiate money brought into Thailand as 'this year's earnings, or last year's earnings." Or not even taxable earnings at all, just drawing down of a savings account, whatever.

And this from the UK-Thailand tax treaty:

(a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

(b However, such pension shall be taxable only in the other contracting State if the recipient is a national of and a resident of that State.

So, at least for State pensions, it sounds like pensions would only be taxable in Thailand for Thai nationals living in Thailand. But "taxable only in the Thailand if..." is confusing. Does that mean a Thai national only has to file a Thai tax return, but not a UK tax return? Or the "only" is just meant to differentiate Thai nationals (who might then have to file a UK tax return, and take a credit for Thai taxes paid). And, of course, the Thai national could also not bring his pension into Thailand until a later year. (Although, if he then has to pay UK taxes without any offsetting credit, not sure of the advantage.....) Oh well, not too many Thai nationals with British pensions are probably reading this.

Private pensions for Brits/dual citizens? Dunno. As a Yank, Uncle Sugar's got me coming and going for all flavors of pensions.

Edited February 24, 2015 by JimGant

[JimGant]

So, at least for State pensions, it sounds like

My apologies for being ignorant. UK "state" pensions are the equivalent of the US's social security pension, thus "state" does not equate to "government" pension, as had been my thinking. So the treaty language quote above is for government pensions for services rendered, not the "state" pension. And there doesn't appear to be any language in the treaty that directly addresses state and private pensions -- which is curious.

[taxout]

But under Article 23(3), you should be able to credit any UK tax paid on your UK pension against any Thai tax assessed against the pension. If that fails for some technical reason, then you can also try the Mutual Assistance route.

[Time Traveller]

Income is income. What is strange is that some people on this forum claim that if it's your own income from your private sources you pay tax on it in Thailand. But if your income was stolen from taxpayers and handed to you by a government that you somehow don't have to pay tax on it because it's excluded.

I doubt the Thai Revenue department will see it that way.

[topt]

Income is income. What is strange is that some people on this forum claim that if it's your own income from your private sources you pay tax on it in Thailand. But if your income was stolen from taxpayers and handed to you by a government that you somehow don't have to pay tax on it because it's excluded.

I doubt the Thai Revenue department will see it that way.

Like Soutpeel I would be interested to hear who gave the OP the information.

My prior understanding was if taxed in the UK already then that is it - Thai revenue dept. not interested and or no legitimate claim.

Whilst I can also understand the wish to be above board I still find it hard to comprehend the number of people who seem to want to invite extra tax/attention when it seems almost completely unnecessary......

[fletchsmile]

So, at least for State pensions, it sounds like

My apologies for being ignorant. UK "state" pensions are the equivalent of the US's social security pension, thus "state" does not equate to "government" pension, as had been my thinking. So the treaty language quote above is for government pensions for services rendered, not the "state" pension. And there doesn't appear to be any language in the treaty that directly addresses state and private pensions -- which is curious.

Just to clear up this part.

The UK Thailand DTA which Southpeel posted doesn't include an article dealing with non-government pensions. So non govt pensions are not covered by the treaty. Also no relief is given for the State pension.

State pensions are not government pensions for this purpose.

For government pensions full tax relief can be claimed. They are referred to in article 19 of the DTA.

There is another doc that is useful to refer to called the

"Digest of Double Taxation Treaties"

This summarises what I just posted for the above as well as for all the other counyries with UK DTAs

Cheers

Fletch

[fletchsmile]

Here's the link to the digest I mentioned, they update it now and again as it's a summary of key points, this one's from 2013,...

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/356800/Digest_of_Double_Taxation_Treaties.pdf

So that confirms for OP the situation that the DTA doesn't cover state pensions or private pensions. Of course the UK government has done what it does best and looked after their own by ensuring they are covered by the DTA for their government pensions even if the rest of us aren't.

So basically Thai tax rules apply for 99%+ of people, and you can't claim UK double tax relief on your pension. I've never seen any Thai tax regulations that relate specifically to this area of foreign pensions, so my assumption has always been it's just treated with the same principles as other similar foreign income is in Thailand.

Personally, I've never come across anyone who's actually paid Thai tax on their UK pension income, and I suspect it's just one of those things they just don't bother chasing/ enforcing. For individuals it seems a case of various parties being ignorant of the rules, people just not declaring it, Thailand not bothering as it's not worth the hassle etc etc. Could also be because I don't have much to do with pensioners' Thai affairs and tax authorities.

On the other hand I have come across these sort of of cross border issues which do happen for individuals from time to time on other income, and for employees it's also a bit more common. Just never heard of pensions.

Also for larger company's I've come across situations where the Thai tax authorities have looked at whether income is subject to their tax or not. Here it isn't a good defence to claim that income is "fungible", and decent tax lawyers will warn of the need to avoid "tainting" income. So while lay people start with a view that "it's fungible and how can you prove otherwise", the Thai tax authorities if they decide they want to pursue it, will start from the position that you have to prove it isn't tainted. So if you start mixing together things with different tax treatments under the claim it's fungible you run into problems. When it comes to Thai tax authorities wanting to be difficult they can be extremely stubborn, and make life difficult for you, so often you'll end up with some form of a compromise/ payment to get them off your back regardless of whether you're "right" or "wrong". I'd stress that's companies though, and they can and do seem to apply various cross tax border rules, for companies.

Cheers

Fletch

Edited March 2, 2015 by fletchsmile

[ukrules]

Interesting, they weren't interested before - but now they are.....

[Robin]

AS a UK citizen, receiving a state pension, I can confirm that it is paid into my UK bank, or any bank I specify, gross, and hast to be included on my annual UK Tax Return, where is is assessed as 'unearned income'.  This is information from my UK Accountant who prepares my annual Ta x return..

Since many UK retirees do not have any additional income, except their state pension, this could be below the threshold where they have o pay UK income tax, and could appear to be 'non-taxable.'

I have no idea what the situation is for pensioners of other nations.