moving from germany to thailand, online work

[julot]

European citizen married to Thai Wife. Lived in Thailand for 4 years, first as employee later as online "freelancer" (software development) for one US client using off-shore company (no WP). Then wanted to move back closer to family for short-term, ended up in Germany for 2 years and worked as a freelancer (freiberufler) for few clients. Kept off-shore company dormant.

Moved back to Thailand end of last year. Plan is to stay long-term. My wife is starting some home business, I will go back to online services for foreign companies. Deregistered from Germany, notified thai address to german bank. Had to fill with my german tax consultant a limited tax liability form from german authorities, with my thai address and stating I don't have german citizenship, no abode, no intention to return, no assets, no income in germany and what kind of income I will have abroad: I wrote that I will start a thai business and pay myself a salary.

Here's my problem: I would like to consult for my last client in Germany. My german tax consultant said it's fine as long I am not an employee or freelancer and as long as I use a company to company contract. I am planning to use my off-shore company and if possible fixed-price packages to be on the safe side.

I realized setting up a thai company is overkill for me (no plan for employees) so I am looking into 2 options:

a) thai intermediate company to get a WP and monthly salary (not cheap and needs to be trusted, don't want to rush this)

no WP and use remitted offshore income following year.

Maybe I am too paranoid, but my concern is Germany may ask me for further proof of thai company and paying taxes in Thailand.

If I use route I will pay little to no taxes (wife business will not generate much the first years).

Just looking for a clean/legal setup so I don't run into any pb, Does anyone with first hand experience has any tips/suggestions?

Much appreciated!

[NeverSure]

Hi, I don't know the answers to your questions. I just sent a PM with a link to this thread to our member Naam who is German and very knowledgeable. I hope he'll visit the thread and answer your questions.

Cheers.

[Naam]

relax mate! you are neither a German citizen nor a resident of Germany that's why your German tax liabilities are zero. to be on the safe side, avoiding any potential complications (because of your German bank account), bill your German client via your offshore company.

caveat: check with your client whether he accepts to pay for your services billed by a company but transferred to a non-corporate bank account.

but my concern is Germany may ask me for further proof of thai company and paying taxes in Thailand

no German authority has the right to ask for anything!

[julot]

relax mate! you are neither a German citizen nor a resident of Germany that's why your German tax liabilities are zero.

no German authority has the right to ask for anything!

great to hear this makes sense now because people who told me to be careful are german citizens.

to be on the safe side, avoiding any potential complications (because of your German bank account), bill your German client via your offshore company.

caveat: check with your client whether he accepts to pay for your services billed by a company but transferred to a non-corporate bank account.

I am planning to bill via offshore company and receive payment via offshore corporate bank account (same country).

I didn't know it was possible to do a contract via offshore company and use an individual offshore bank account for payment.

Main reason for corporate account was to have in the future a corporate credit card and use it for company expenses and online products sales..

[Naam]

I am planning to bill via offshore company and receive payment via offshore corporate bank account (same country).

perfect!

[frimu]

I guess you speak German?

Then check out this helpful website: http://wirelesslife.de/

[Maestro]

Removed an off-topic post.

[MadMac]

Germany will calculate your last tax liability based on your worldwide income. That's meant to equalize the income you had for the lets say first 6 months in Germany and not to fall under a threshold that you could eventually safe some money.

They did this to me when I moved to Singapore in 2001. Mistake was I arrived at 8 July, that was shortly after passing the 180 days within you would become a foreign tax resident.

So it all depends on the tax year, you said you moved end of last year, that would make 2015 taxable in Germany, but not 2016.

[DUS]

Very interesting questions from the OP! May I add one?

Where would it leave the OP (from a tax liability point of view) if he raised the invoices to the foreign companies as a "sole trader" / "freelancer" using his private Thai address and having the clients pay the money into his private German bank account?

[Paul944]

I doubt a legal construction is possible without a work permit.

From Europe/German perspective you do not have to pay income tax in Germany if you can prove your main residence is outside Germany for more as 183 days a year.

If you do not have a work permit in Thailand you are not allowed to work in Thailand, that includes working for companies in outher countries. However, they have no prove of your work hours. Digi nomads stay under the radar as long they do not rent offices to work from.

I do not know where your offshore company is registered. If it is in Thailand I guess if you have to do one border crossing a year at least. So you can say you make the money billed by your offshore company outside Thailand. If you stay only 1 day outside Thailand they only can say you earn a lot of money for 1 day work.

I am bit jealous because i would love to make my money this way but i am too chicken to try it.

[julot]

Germany will calculate your last tax liability based on your worldwide income.

So it all depends on the tax year, you said you moved end of last year, that would make 2015 taxable in Germany, but not 2016.

You are right, I learned this few weeks ago when doing my german taxes for 2015.

Luckily I moved back late October and didn't generate income for the rest of the calendar year!

[MadMac]

If you do not have a work permit in Thailand you are not allowed to work in Thailand, that includes working for companies in outher countries. However, they have no prove of your work hours. Digi nomads stay under the radar as long they do not rent offices to work from.

That's not exactly correct. You can work abroad and receive money abroad. It becomes only taxable if you bring the foreign sourced income into Thailand. How to prove or disprove this is a different question.

[Naam]

I doubt a legal construction is possible without a work permit.

From Europe/German perspective you do not have to pay income tax in Germany if you can prove your main residence is outside Germany for more as 183 days a year.

If you do not have a work permit in Thailand you are not allowed to work in Thailand, that includes working for companies in outher countries. However, they have no prove of your work hours. Digi nomads stay under the radar as long they do not rent offices to work from.

I do not know where your offshore company is registered. If it is in Thailand I guess if you have to do one border crossing a year at least. So you can say you make the money billed by your offshore company outside Thailand. If you stay only 1 day outside Thailand they only can say you earn a lot of money for 1 day work.

I am bit jealous because i would love to make my money this way but i am too chicken to try it.

beauties like tax-free offshore companies do not exist in Thailand. however, Thailand is an ideal place to carry out IT-work for offhore clients without paying taxes.

please do not ask me why and how

[falang07]

I suppose anyone clever enough to generate substantial offshore income that is worth it can easily deduce why and how, too

Edited March 31, 2016 by falang07

[MadMac]

There are a couple of good, up-to-date and free tax articles online, particularly for Thailand and neighboring/ASEAN countries. Well worth to read.

Not sure if a direct link is allowed, so just search for Lorenz Partners. Google is your friend.

[Naam]

From Europe/German perspective you do not have to pay income tax in Germany if you can prove your main residence is outside Germany for more as 183 days a year.

a myth that cost me (many rainy seasons ago) the princely sum of DM 332,480 (at that time ~USD 220,000).

reason:

German tax liability on worldwide income is not based on residence but on a variety of criteria. even a never used modest rented room is reason enough to cause unrestricted tax liability.

check § 8 Abgabenordnung!

[julot]

From Europe/German perspective you do not have to pay income tax in Germany if you can prove your main residence is outside Germany for more as 183 days a year.

I know Naam will disagree with this since I am not a german citizen and I have already unregistered from Germany and provided my new foreign residential address in Thailand.

I will anyway become tax resident this calendar year after 183 days spent here. What document would prove I am tax resident in Thailand?

If you do not have a work permit in Thailand you are not allowed to work in Thailand, that includes working for companies in other countries. However, they have no prove of your work hours. Digi nomads stay under the radar as long they do not rent offices to work from.

That's not exactly correct. You can work abroad and receive money abroad. It becomes only taxable if you bring the foreign sourced income into Thailand. How to prove or disprove this is a different question.

Paul944 is correct. I am aware of the work permit situation.

"any activity involving exertion of energy or use of knowledge by a foreigner in Thailand requires a work permit regardless of visa/tax residence status

Pb 1: It is so broad that it would even apply to tourists answering work emails, or anyone volunteering or helping out for free.

Pb 2: a work permit contains the physical address of the business and it is expected to always be at that location together with the WP holder in case of control. If I am not wrong, I read there is possibility to add a home office address for meetings outside, but WP holder is expected to be at main address most of the time.

As far as I understood, as long as there is zero interaction with thai businesses/workers and the work is exclusively done from home for foreign client(s) using a offshore entity, the risk is minimal. Many people do this and until now no cases have been reported.

Registering a thai company with home address would solve issue but is overkill for a 1 person company.

Using an intermediate thai company run into pb 2 and would require to spend some time at office location.

Edited March 31, 2016 by julot

[MadMac]

If you work as a consultant/freelancer you can always travel to let's say Hongkong and do a project there. Does not matter if a week or a year, you do not work in Thailand, thus you don't need a work permit here. The income will not go to your Thai account but a Hongkong one, or perhaps better to Singapore, where foreign sourced income such as from Hongkong is tax exempted.

You don't need an offshore company, just use existing laws and regulations. It's fairly easy in Asia.

[Bobotie]

 

Pb 1: It is so broad that it would even apply to tourists answering work emails, or anyone volunteering or helping out for free.

Pb 2: a work permit contains the physical address of the business and it is expected to always be at that location together with the WP holder in case of control. If I am not wrong, I read there is possibility to add a home office address for meetings outside, but WP holder is expected to be at main address most of the time.

"Thai Wife. Lived in Thailand for 4 years, first as employee later as online "freelancer" (software development) for one US client"

Pb 1: your not a tourist and yes volunteering for free requires a WP

[Naam]

If you work as a consultant/freelancer you can always travel to let's say Hongkong and do a project there. Does not matter if a week or a year, you do not work in Thailand, thus you don't need a work permit here. The income will not go to your Thai account but a Hongkong one, or perhaps better to Singapore, where foreign sourced income such as from Hongkong is tax exempted.

You don't need an offshore company, just use existing laws and regulations. It's fairly easy in Asia.

three years ago a German IT-chap living in Pattaya was trapped into German income tax liability because the taxman concluded that his services for a German company who's clients were other German companies warranted the liability.

if he had invoiced via an offshore corporation...

the setup by a reputable service provider and especially the running cost of USD 1,200 p.a. is peanuts compared with potential tax problems.

by the way, Hong Kong is as tax free as Singapore when it concerns offshore companies.

[MadMac]

OP is freelancer/IT consultant/digital nomad. It was clearly said by department of labor that these people can work here without WP (unless they changed that statement of course).

The only question here is tax liability. If OP works in or for HK and gets paid in SG, it will be tax free unless he transfers the money into the kingdom. That's an example, different constructs exist. Get yourself educated if you want to save some money

Edited March 31, 2016 by MadMac

[MadMac]

by the way, Hong Kong is as tax free as Singapore when it concerns offshore companies.

It is not, if you work in Singapore and get paid in Singapore, your income will be taxed. If you work in Hongkong and you will be paid into a Singapore account, it is foreign sourced income and tax free. Not sure if it works the other way around, but that was just an example.

If you get paid into a Thai account tax man will come regardless.

Edited March 31, 2016 by MadMac

[elviajero]

OP is freelancer/IT consultant/digital nomad. It was clearly said by department of labor that these people can work here without WP (unless they changed that statement of course).

The only question here is tax liability. If OP works in or for HK and gets paid in SG, it will be tax free unless he transfers the money into the kingdom. That's an example, different constructs exist. Get yourself educated if you want to save some money

Please quote your source regarding this DOL claim.

Digital Nomads etc. are required, like everyone else, to get permission to carry out their occupation as per the immigration act. There is currently no way for this permission to be granted which means they are working illegally and in breach of their permission to stay.

[MadMac]

I correct myself, was not the DOL but the immigration. At least what was made available online.

https://asiancorrespondent.com/2014/08/thai-immigration-officials-say-digital-nomads-ok-to-work-on-tourist-visas/

I don't know the Thai wording, so please excuse me for that .

It would however not matter, if there is online work done for a, in this example, HK company and payment to a SG account.

Edited March 31, 2016 by MadMac

[RandG]

Might be worth looking at this if you are likely to do work for other EU companies in the long term. They are currently expanding into Asia. https://e-estonia.com/e-residents/about/

[FritsSikkink]

OP is freelancer/IT consultant/digital nomad. It was clearly said by department of labor that these people can work here without WP (unless they changed that statement of course).

The only question here is tax liability. If OP works in or for HK and gets paid in SG, it will be tax free unless he transfers the money into the kingdom. That's an example, different constructs exist. Get yourself educated if you want to save some money

BS, it was said by 1 immigration officer in Chiang Mai who has no saying on this at all

[Naam]

by the way, Hong Kong is as tax free as Singapore when it concerns offshore companies.

It is not, if you work in Singapore and get paid in Singapore, your income will be taxed. If you work in Hongkong and you will be paid into a Singapore account, it is foreign sourced income and tax free. Not sure if it works the other way around, but that was just an example.

If you get paid into a Thai account tax man will come regardless.

little do you know.

[elviajero]

I correct myself, was not the DOL but the immigration. At least what was made available online.

https://asiancorrespondent.com/2014/08/thai-immigration-officials-say-digital-nomads-ok-to-work-on-tourist-visas/

I don't know the Thai wording, so please excuse me for that .

It would however not matter, if there is online work done for a, in this example, HK company and payment to a SG account.

That asiancorrespondent.com article is misquoting the actual chianmaicitylife.com article that quotes an unnamed officer from Chiang Mai Immigration

What if I want to work in Thailand?

If you are a ‘digital nomad’ running your own business on the internet, the immigration office says you can do this on a tourist visa.

http://www.chiangmaicitylife.com/news/new-visa-rules-explained/

There are few important points:-

• They say "tourist visa".
• They don't say it's legal but that you can do it.
• No definition exists as to who immigration qualify as a 'digital nomad'.
• They only represent Chiang Mai Immigration.
• This statement does not change the law.

It is completely reasonable for any nation to allow a tourist to keep up with his work/business whilst on holiday/passing through. As Thailand has no limit to the number of tourist visas one can have, or the length of time one can live here entering as a tourist, they have to treat all 'tourists' the same way. Basically they have to allow all tourist visa holders this pass or prosecute them all, which would be impractical, impossible and not worth the effort.

Any tax liability is of no interest to Immigration or the DOL. The Revenue Department would be interested, but whether or not a tax liability exists has no affect on the legality of the work. Many online workers, that are tax resident, are failing in their duty, when applicable, to submit self assessment tax returns.

The fact that the business is based overseas and receives income overseas is completely irrelevant. If the foreigner is physically in Thailand when they are working at their occupation they require permission.

Just because immigration currently tolerate this kind of work does not make it legal.

[abrahamzvi]

relax mate! you are neither a German citizen nor a resident of Germany that's why your German tax liabilities are zero. to be on the safe side, avoiding any potential complications (because of your German bank account), bill your German client via your offshore company.

caveat: check with your client whether he accepts to pay for your services billed by a company but transferred to a non-corporate bank account.

but my concern is Germany may ask me for further proof of thai company and paying taxes in Thailand

no German authority has the right to ask for anything!

As sorry as I am, you stand to be corrected on one point. Being or not being a German citizen is for taxation purposes completely and utterly immaterial. Important is the proof of non residency. There is no tax liability if there is no residency (deregistration and proof of the fact that the centre of one's life is not in Germany. total stays in Germany can not exceed 180 days in a year, etc.)

[MadMac]

Does not really matter, I stated the facts, if someone local want to dispute, go ahead