Tax on foreign income remitted into Thailand...

[Wazza1]

On 03/11/2016 at 1:52 AM, FlyingMoose said:

So if I earn $100,000 from the US (while living in Thailand), and pay 0% tax (because of the Foreign Earned Income Exemption), how much tax do I need to pay in Thailand?  That was my original question.

 

You said "won't be taxed on money you have already paid tax on", and then gave an example based on "will be given credit for the amount of tax already paid", which are completely different things.

 

Same with you, you say your earn $100k from the U?s then say you qualify for the Foreign Earned Income Exemption,  how is that possible if you earned it in the U.S?

[chiang mai]

On 03/11/2016 at 0:52 AM, FlyingMoose said:

So if I earn $100,000 from the US (while living in Thailand), and pay 0% tax (because of the Foreign Earned Income Exemption), how much tax do I need to pay in Thailand?  That was my original question.

 

You said "won't be taxed on money you have already paid tax on", and then gave an example based on "will be given credit for the amount of tax already paid", which are completely different things.

 

IF you earn 100k from the US, and

IF you remit that money to Thailand in the year it is earned, and

IF you also happen to be resident in Thailand in that particular year, and

IF you file a Thai tax return for that year and also declare the 100k, and

IF US tax was paid on the 100k, then:

 

the US tax paid can be offset against the Thai tax demand.

 

 

 

[FlyingMoose]

6 hours ago, Wazza1 said:

 

Same with you, you say your earn $100k from the U?s then say you qualify for the Foreign Earned Income Exemption,  how is that possible if you earned it in the U.S?

It works as long as you meet the requirements (in another country for 330/365 days or establish a bona fide residence for the full year).  It does not matter if the money is paid from a US company into a US account.

 

"Source of Earned Income

The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for performing personal services in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in France is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City."

 

from: https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-what-is-foreign-earned-income

 

Also see form 2555 or 2555-EZ.

Edited November 8, 2016 by FlyingMoose
adding form number

[FlyingMoose]

5 hours ago, chiang mai said:

IF you remit that money to Thailand in the year it is earned, and

 

This is the part I'm having a problem with.  Since money is fungible, I'm trying to figure out the standard of what they consider "that" money to be.

 

Say I start with a balance of $200k in a US bank account.  In that year, I earn $100k.  In that year, I also transfer $100k to Thailand.  Was the $100k I transferred to Thailand the money I earned, or the money I already had in the account?

[JimGant]

Quote

It does not matter if the money is paid from a US company into a US account.

 

Yes, but you need to be working for that US company in a foreign country.

 

[chiang mai]

17 minutes ago, FlyingMoose said:

 

This is the part I'm having a problem with.  Since money is fungible, I'm trying to figure out the standard of what they consider "that" money to be.

 

Say I start with a balance of $200k in a US bank account.  In that year, I earn $100k.  In that year, I also transfer $100k to Thailand.  Was the $100k I transferred to Thailand the money I earned, or the money I already had in the account?

 

You need to adopt and declare an accounting standard, I suggest FIFO, First in First Out, that means your most recent income is taken only after the previous years income is taken, just make sure it doesn't all happen in the same year.

[JimGant]

Quote

Say I start with a balance of $200k in a US bank account.  In that year, I earn $100k.  In that year, I also transfer $100k to Thailand.  Was the $100k I transferred to Thailand the money I earned, or the money I already had in the account?

 

You pretty much answered your own question when you used the term fungible. As long as you co-mingle last years money with this year's money, you've got the perfect (and entirely legal) alibi, should they ever ask, which they won't. The only folks who might have to worry about Thai tax authorities are those receiving a direct deposit of their non-government pensions directly into Thailand. And even here, I doubt Thai tax authorities would be drawn to such situations. (Nevertheless, I certainly wouldn't do a direct deposit of funds that, under tax treaties, can be subject to Thai taxation.)

[FlyingMoose]

10 hours ago, JimGant said:

 

Yes, but you need to be working for that US company in a foreign country.

 

I'm not sure I understand your objection.  That pretty much describes a "digital nomad".

[FlyingMoose]

10 hours ago, JimGant said:

As long as you co-mingle last years money with this year's money, you've got the perfect (and entirely legal) alibi

 

Do you know where I could find a citation for this in the Thai tax code?

[JimGant]

Quote

I'm not sure I understand your objection.  That pretty much describes a "digital nomad".

 

Ok, if you've got the days/bonafide residency, then, yes, working for a US company as a digital nomad should qualify you for the FEIE. But, if living in Thailand, you're subject to their taxes, of course. But you knew that.

[FlyingMoose]

7 minutes ago, JimGant said:

if living in Thailand, you're subject to their taxes, of course. But you knew that.

No, I don't know that.  That's what I'm here to try to find out.  Apparently only on income "remitted" into Thailand the same year it's earned.  I'm just trying to narrow down what the Thai tax authorities count as being remitted in the same year it's earned.

[JimGant]

Quote

Do you know where I could find a citation for this in the Thai tax code?

 

There's no citation for this. Just common sense tells you that if Thai authorities asked you to prove your money sent to Thailand represents previous years' income, having a bank account with a balance on Dec 31st greater than all remittances the next year is enough to show this year's income need not be involved. Heck, don't even co-mingle if you're worried -- just have last years account, from which to send money, and this year's account, which remains untouched. Relax. Thai authorities are not stupid enough to waste resources identifying what year money coming into Thailand was earned.

 

[JimGant]

Quote

No, I don't know that.  That's what I'm here to try to find out.  Apparently only on income "remitted" into Thailand the same year it's earned.  I'm just trying to narrow down what the Thai tax authorities count as being remitted in the same year it's earned.

 

We're talking two different scenarios here. If you're working as a digital nomad for a US company while a resident of Thailand, those are current year's earnings -- by definition -- subject to Thai income taxes. And also eligible for exclusion (up to the cap) from US taxes per FEIE. Whether such earnings are directly deposited in a US account, and never remitted to Thailand, makes no difference: Pay Thai tax on these earnings.

 

Remittance rules for Thai taxes cover income coming into Thailand that would not otherwise be subject to Thai taxation. Thus, the income in above paragraph is not subject to the remittance rules. Sorry, you can't earn your digital nomad earnings, paid into your US account, and escape Thai taxes.

[FlyingMoose]

4 hours ago, JimGant said:

 

We're talking two different scenarios here. If you're working as a digital nomad for a US company while a resident of Thailand, those are current year's earnings -- by definition -- subject to Thai income taxes. And also eligible for exclusion (up to the cap) from US taxes per FEIE. Whether such earnings are directly deposited in a US account, and never remitted to Thailand, makes no difference: Pay Thai tax on these earnings.

 

Remittance rules for Thai taxes cover income coming into Thailand that would not otherwise be subject to Thai taxation. Thus, the income in above paragraph is not subject to the remittance rules. Sorry, you can't earn your digital nomad earnings, paid into your US account, and escape Thai taxes.

The sources I'm seeing aren't that specific.  May I ask where you got that information?

 

See: http://www.rd.go.th/publish/6045.0.html

"A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand."

 

See: https://www.aesinternational.com/education-centre/taxes-for-expats/thailand

"A Thai resident is also subject to PIT [personal income tax] on self-employment and business income from sources overseas if the income is remitted to Thailand."

 

See: https://www.sunzu.com/articles/guide-to-expatriate-taxation-in-thailand-164338/

"A resident is liable to tax ... on income from foreign sources that is remitted into Thailand in the year in which it is earned."

Edited November 8, 2016 by FlyingMoose
added additional source

[chiang mai]

5 hours ago, JimGant said:

 

We're talking two different scenarios here. If you're working as a digital nomad for a US company while a resident of Thailand, those are current year's earnings -- by definition -- subject to Thai income taxes. And also eligible for exclusion (up to the cap) from US taxes per FEIE. Whether such earnings are directly deposited in a US account, and never remitted to Thailand, makes no difference: Pay Thai tax on these earnings.

 

Remittance rules for Thai taxes cover income coming into Thailand that would not otherwise be subject to Thai taxation. Thus, the income in above paragraph is not subject to the remittance rules. Sorry, you can't earn your digital nomad earnings, paid into your US account, and escape Thai taxes.

 

That's simply wrong, there is no Thai income tax due on earnings not remitted here, end of.

[Wazza1]

5 hours ago, chiang mai said:

 

That's simply wrong, there is no Thai income tax due on earnings not remitted here, end of.

 

But anybody living in Thailand either earns money in Thailand or remits it there to buy their beer.

 

are you aware of the saying about Death & Taxes, you can't escape either.

Edited November 9, 2016 by Wazza1

[FlyingMoose]

4 minutes ago, Wazza1 said:

 

But anybody living in Thailand either earns money in Thailand or remits it there to buy their beer.

 

are you aware of the saying about Death & Taxes, you can't escape either.

But the key is that it's only taxable if it's remitted *in the same year*.

[chiang mai]

14 minutes ago, FlyingMoose said:

But the key is that it's only taxable if it's remitted *in the same year*.

 

Exactly!

[JimGant]

Quote

Taxpayers are classified into "resident" and "non-resident".  "Resident" means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand.  A non-resident is, however, subject to tax only on income from sources in Thailand. http://www.thailaws.com/information/thai_legal_info_06.htm

 

The OP is going to declare the FEIE. Therefore, he's declaring he has foreign earned income, which, in this case, means "income from sources in Thailand," which means he's liable for Thai income taxes, irregardless that it is paid into his US account and never remitted to Thailand. Full stop. Only "foreign sourced income" is subject to the remittance criteria. See also:

https://www.google.co.th/url?sa=t&rct=j&q=&esrc=s&source=web&cd=22&ved=0ahUKEwiyuv6juJrQAhVIq48KHapjDjEQFgiwATAV&url=http%3A%2F%2Fwww.bangkokbank.com%2FBangkokBankThai%2FDocuments%2FSite%20Documents%2FExpat%20Articles%2FThaitax.pdf&usg=AFQjCNGOcXjij21EnZHBURD_MpMDEXz4ng&sig2=MIkIx-sF6j16jdrEalwMfA

Now, working as a digital nomad may have more serious problems than taxes, like, work permits:

http://www.thaivisa.com/forum/topic/569318-working-for-us-company-remotely-in-thailand-work-permit/?page=1

So, does working on your computer at Soi Cowboy, as a blog honcho for a US company, comprise earning "income from sources in Thailand?" That you're working from Thailand says "yes." But what if you can't get a work permit? Oh well, a subject for another thread.

 

Bottom line: Income earned in Thailand, but paid into a US bank account and never remitted, is still subject to Thai income tax, end of.

[FlyingMoose]

19 hours ago, JimGant said:

he's declaring he has foreign earned income, which, in this case, means "income from sources in Thailand," which means he's liable for Thai income taxes, irregardless that it is paid into his US account and never remitted to Thailand. Full stop.

No, to use the FEIE, you just need to meet the requirements.  The IRS doesn't say anything about the "source" of the income.  These are US laws, and don't have anything to do with Thailand.  It's certainly possible for two different governments to classify something differently.  For example, the Philippines doesn't tax income remitted from outside the country, no matter when or where you earned it or whether you claim the FEIE.

 

I'm not saying you're wrong in your conclusion; I've been reading the thread about work permits.

[JimGant]

Quote

No, to use the FEIE, you just need to meet the requirements. The IRS doesn't say anything about the "source" of the income

Which means:

1. Your tax home is in Thailand  (Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Pub 54)

2. You have earned income sourced from Thailand (The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for working in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in [Thailand] is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Pub 54)

3. You meet the time in country/presence test. Which is well over the 180 days that Thailand says makes you a Thai resident for tax purposes.

 

Not sure where you're heading with your working plans here in Thailand...... If you plan to work legally, you'll be subject to Thai personal income tax (and, if you plan to work illegally, you're still subject to Thai tax -- as well as  free room and board from the government). In the latter case, suggest you don't claim the FEIE, as the Thai and US tax authorities chat it up a lot more since FATCA. Also, besides checking up on work permits, suggest you check up on the self-employment tax, if you're to be an independent digital nomad.

 

Just to reiterate, your Thai earned income is subject to Thai tax, even if paid directly into your US bank account (which then makes moot for tax purposes whether or not it is ever remitted).

 

"Taxpayers are classified into "resident" and "non-resident".  "Resident" means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand.  A non-resident is, however, subject to tax only on income from sources in Thailand."

 

Don't believe some of what your read otherwise:

 

"Thailand-source income even if from self-employment or business is considered part of the PIT if it is sent into the Kingdom in the year earned"  https://www.taxsamaritan.com/expat-tax-in-thailand/

Bad info. Only foreign sourced income (i.e., non Thai) is subject to the remittance test.

 

 

[FlyingMoose]

9 hours ago, JimGant said:

Which means:

1. Your tax home is in Thailand  (Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Pub 54)

2. You have earned income sourced from Thailand (The source of your earned income is the place where you perform the services for which you received the income. Foreign earned income is income you receive for working in a foreign country. Where or how you are paid has no effect on the source of the income. For example, income you receive for work done in [Thailand] is income from a foreign source even if the income is paid directly to your bank account in the United States and your employer is located in New York City. Pub 54)

3. You meet the time in country/presence test. Which is well over the 180 days that Thailand says makes you a Thai resident for tax purposes.

 

Not sure where you're heading with your working plans here in Thailand...... If you plan to work legally, you'll be subject to Thai personal income tax (and, if you plan to work illegally, you're still subject to Thai tax -- as well as  free room and board from the government). In the latter case, suggest you don't claim the FEIE, as the Thai and US tax authorities chat it up a lot more since FATCA. Also, besides checking up on work permits, suggest you check up on the self-employment tax, if you're to be an independent digital nomad.

 

Just to reiterate, your Thai earned income is subject to Thai tax, even if paid directly into your US bank account (which then makes moot for tax purposes whether or not it is ever remitted).

 

"Taxpayers are classified into "resident" and "non-resident".  "Resident" means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand.  A non-resident is, however, subject to tax only on income from sources in Thailand."

 

Don't believe some of what your read otherwise:

 

"Thailand-source income even if from self-employment or business is considered part of the PIT if it is sent into the Kingdom in the year earned"  https://www.taxsamaritan.com/expat-tax-in-thailand/

Bad info. Only foreign sourced income (i.e., non Thai) is subject to the remittance test.

 

 

Thanks for your help.  I'll consider this when deciding which country to reside in.

[FlyingMoose]

JimGant,

 

It seems that I should be considering countries that have "territorial taxation", where only income from sources within the country is taxed.  (Googling Territorial Taxation returns various lists of these countries, such as the Philippines, Hong Kong, Singapore, Costa Rica, Panama, and a bunch I wouldn't consider.)

 

I'm just curious where you're getting your information, because I'd like to see how other countries categorize it.

 

In your point 1 and 2 above, you're using the US IRS's definition of the "source" of income.  Then later you use the Thailand Revenue Department's definition of the "source" of income.  Since they are different governments with different tax codes, these are not necessarily the same.

 

It doesn't seem like it would even be possible for me to do this legally in the first place (because it is not possible to get a work permit for online work), so I assume that if I did pay tax, it would tip them off that I was doing this without a work permit.  Basically, if I want to follow the law, Thailand is saying they don't want me there, even assuming I can get the proper visa.

 

I've been trying to find more in-depth information but not having much luck.

 

Thanks for all your help.

[JimGant]

Quote

In your point 1 and 2 above, you're using the US IRS's definition of the "source" of income.  Then later you use the Thailand Revenue Department's definition of the "source" of income.  Since they are different governments with different tax codes, these are not necessarily the same.

 

Give it a rest. You're going to be hard pressed to find a country that won't tax your work efforts -- if such efforts are performed (sourced, if you will) in their country -- and if such a country has an income tax. Yes , there are exceptions, if that country needs skills badly enough to provide a tax incentive. Digital nomads, however, need not apply. Do you really think that the digits you produce in Thailand, that result in a product in the US, really mean, then, that your income source is from the US? If you do, fine. Then don't file a Thai income tax return -- but also don't claim the FEIE -- because the IRS says you need to have Thailand earned income sourced from Thailand. That you maintain this isn't the situation might be arguable (unlikely). But you need to be consistent in the filing (or non filing) of both Thai and US tax returns, as you can't define source differently for each situation. Sorry, there's no free lunch -- either you pay Thai taxes, and get a $100k pass from the IRS. Or you don't pay Thai taxes -- but, instead, pay US tax.

 

 

[Guderian]

American BM's will be familiar with FATCA.

 

Non-US BM's should be aware of a similar OECD initiative called GATCA, or CRS (Comprehensive Reporting System). This starts taking effect in 2017 or 2018, depending on where your bank account is held and whether that country is a signatory to CRS.

 

http://www.oecd.org/tax/transparency/AEOI-commitments.pdf

 

Basically your financial details such as annual income into your bank account will automatically be passed on to the tax authorities of any signatory country where you are tax resident and you will then have to settle the tax bill there. Over 100 countries have so far signed up to this, including most of the well-established tax havens like Jersey, the Isle of Man, Gibraltar, the Bahamas, Panama, Dubai, Switzerland, and so on.

 

Happily, Thailand has not signed up to it so we are safe for the time being, but it's worth watching or you might be caught unawares if the situation changes in future.

[free123]

On 11/1/2016 at 10:55 PM, SantiSuk said:

I was investigated by Thai Revenue Regional Tax Investigation Office in Sisaket (Isaan) when I made a claim for a significant refund of tax on Thai bank interest last year. They invited me in to discuss 'my tax refund claim', but on arrival I realised this was not the normal tax office and that they were keen to find out more about my finances.

 

But when it came to foreign source income they asked me if I was working abroad. I said no I'm retired and volunteered that I had pension income and interest/dividend income arising in the UK. I volunteered that I had a good level of net wealth and that I used none of my income to bring to Thailand in the year in which it was earned. They accepted my oral representation without checking any documentation, but they did ask what job and position I had held to have sufficient savings to live off prior year earnings. I'm guessing that if they did not get comfortable on the basis of straight forward discussion and ones apparent openness in discussion then they might ask to see documentary evidence

 

As it happens I do make sure that all my pension income goes into one dedicated account (and is left there until the new year) and that any remittances to Thailand are made out of another account. It's just a convenience though - if you have net assets at they year end that are greater than the sum total of remittances you have made it is clear that you have not needed to rely on current year foreign income to support your life in Thailand. Might be a little more convoluted to demonstrate though if you were asked to provide documentary evidence which is why I adopt the dedicated bank account approach.

 

I do not believe you have to maintain strict isolation of the actual amounts - ie co-mingling should not be a problem but it does make demonstrated documentation more complex. My dividend income is reinvested for instanmce, but I would be able to show that it is still extant and unspent at any tax year end if I had to.

 

Saw another member's reply while posting this. As you probably know you are liable to be subject to Thai taxation if you are resident for tax purposes in a particular year - and "an individual is regarded as tax resident if he/she resides in Thailand at one or more times for an aggregate period of 180 days or more in any tax year"*. Your immigration status (nature of visa) is irrelevant.

 

 

 

* Source - tax booklet of a leading global tax/accounting/consulting firm with a significant presence in Thailand (booklet attached)

PWC tax booklet 2015.pdf

look this is easy a no brainer...if you transfer all / or part of the income into thailand that u earned a year before u dont pay any tax here regardless the amount....

[free123]

On 12/25/2016 at 12:29 PM, Guderian said:

American BM's will be familiar with FATCA.

 

Non-US BM's should be aware of a similar OECD initiative called GATCA, or CRS (Comprehensive Reporting System). This starts taking effect in 2017 or 2018, depending on where your bank account is held and whether that country is a signatory to CRS.

 

http://www.oecd.org/tax/transparency/AEOI-commitments.pdf

 

Basically your financial details such as annual income into your bank account will automatically be passed on to the tax authorities of any signatory country where you are tax resident and you will then have to settle the tax bill there. Over 100 countries have so far signed up to this, including most of the well-established tax havens like Jersey, the Isle of Man, Gibraltar, the Bahamas, Panama, Dubai, Switzerland, and so on.

 

Happily, Thailand has not signed up to it so we are safe for the time being, but it's worth watching or you might be caught unawares if the situation changes in future.

one more reason to love thailand they avoid all the int. bs

[Naam]

17 hours ago, free123 said:

look this is easy a no brainer...if you transfer all / or part of the income into thailand that u earned a year before u dont pay any tax here regardless the amount....

it's a no-brainer without secure foundation because it is common practice not to levy income tax. but the official tax laws do not contain the clause "if not transferred the same year it was earned".

[free123]

1 hour ago, Naam said:

it's a no-brainer without secure foundation because it is common practice not to levy income tax. but the official tax laws do not contain the clause "if not transferred the same year it was earned".

thanks for reply but check here...

https://www.interactivethailand.com/accounting/personal-income-tax-on-thai-vs-foreign-income/

[Naam]

3 hours ago, free123 said:

4 hours ago, Naam said:

it's a no-brainer without secure foundation because it is common practice not to levy income tax. but the official tax laws do not contain the clause "if not transferred the same year it was earned".

thanks for reply but check here...

https://www.interactivethailand.com/accounting/personal-income-tax-on-thai-vs-foreign-income/

no need to check anything. as i said it is common practice and accepted by the tax departments to use the loophole "transferred not same year". but the fact is that Thai Tax Law does not mention anything about it and insists "tax on foereign income if/when transferred" (no matter when transferred)."