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Do you pay Thai income tax on your pension?


Do you pay Thai income tax on your pension?  

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It's commonly said that income brought into Thailand in the same year that it's received is subject to Thai income tax.  I was wondering whether pensioners living here do actually declare the income and pay tax, and whether the Thai taxman ever tries to enforce the rule.

 

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I dont receive a pension (yet) but I am careful to only bring savings to Thailand and never income. I do this by single bank transfer every couple of years or so. As such I have no Thai income to declare, apart from some bank interest income for which I file a return and am refunded the withholding tax paid, and no one has ever queried this though last year they did ask me if I had any pension to which I replied "no".

 

As far as I know there are specific exemptions/allowances for pensions here that do not apply to other sorts of income. If ever I get to age 66 I may learn more about it.

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I went to the Thai tax office and they still have my records from when I worked here years ago. They told me that as I was retired and on a pension from the UK, they were not interested in myself declaring pension income for Thai tax purposes. I pension is no longer taxed by the UK either.

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1 hour ago, BWPattaya said:

My pension is taxed at source in the U.K.  No tax due in Thailand

 Not correct.. If its brought into Thailand the year it is earned.. it IS taxable.. 

 

They clearly list pension income as being taxable if you are here >180 days a year. Its then up to you to sort out your non residence with the UK (which comes with other issues on pension increase freezes). 

 

Pension income remitted to Thailand in the year it is is given is taxable in the Thai tax code. 

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As the UK has a double taxation treaty with Thailand. UK income is taxed by the UK HMRC and therefore tax cannot be taken by the Thai tax office. Equally income earned in Thailand cannot be taxed by HMRC.

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3 minutes ago, Surasak said:

As the UK has a double taxation treaty with Thailand. UK income is taxed by the UK HMRC and therefore tax cannot be taken by the Thai tax office. Equally income earned in Thailand cannot be taxed by HMRC.

If you are inside Thailand for >180 days then you become Thai resident and UK non resident.. This satisfies the double taxation agreement. Its up to you to get the UK to class you as such. 

 

Thailand may not pursue it, but a tax return and tax obligations are in the legal code for people residing in Thailand > 180 days and for any monies remitted to Thailand in the year it is earned. 

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13 minutes ago, LivinLOS said:

They clearly list pension income as being taxable if you are here >180 days a year.

Pension income remitted to Thailand in the year it is is given is taxable in the Thai tax code. 

 

o.k., so someone living 365d in Th. would keep his total 2015 pension payments in his Ireland Bank account until Jan3rd, 2016 and then transfer to Th . - this is tax-free then, innit?

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17 minutes ago, LivinLOS said:

 Not correct.. If its brought into Thailand the year it is earned.. it IS taxable.. 

 

They clearly list pension income as being taxable if you are here >180 days a year. Its then up to you to sort out your non residence with the UK (which comes with other issues on pension increase freezes). 

 

Pension income remitted to Thailand in the year it is is given is taxable in the Thai tax code. 

If you pay tax on a UK income, you cannot, repeat, cannot be taxed on that same income in Thailand. It is against the double taxation treaty between the 2 countries

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1 minute ago, thurien said:

 

o.k., so someone living 365d in Th. would keep his total 2015 pension payments in his Ireland Bank account until Jan3rd, 2016 and then transfer to Th . - this is tax-free then, innit?

This is then savings not income. Thailand does not tax savings correct. 

 

The issue is not one for those with some assets, it is however an issue for those who choose to have pensions remitted directly to Thai bank accounts (monthly) and live hand to mouth off pensions. They are not only running foul of the law but doing so in a very easily verified manner. Anyone using monthly pension payments to qualify for an annual visa extension, instead of 800k in the bank, is basically declaring to the government thier own liability. 

 

Given how the current Junta have blown the reserves and are raising airline tax, alcohol excise tax, and even trying to be tighter on customs for inbound Thais. Its not hard to imagine that this is an easy and politically palatable way to get more revenues. 

 

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2 minutes ago, Surasak said:

If you pay tax on a UK income, you cannot, repeat, cannot be taxed on that same income in Thailand. It is against the double taxation treaty between the 2 countries

My work and companies are cross border labour supply.. Involving 100s of staff.. OECD model convention dual taxation is what I do for a living. 

 

It is entirely possible to have 2 charges of taxation even between double taxation treaty countries, its simply up to the person to claim it back. As a non resident of UK and a resident of Thailand it is up to the individual to claim it back from the UK, where they are not resident. 

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http://www.siam-legal.com/Business-in-Thailand/thailand-income-tax.php

 

 

Quote

 

Tax Is Levied As Follows

  • Wages paid in Thailand or abroad
  • Income earned by a person who resided in Thailand for a total of 180 days
  • Housing and meal allowances or their value
  • School fees for dependents paid for by employer
  • Cost of home leave for taxpayer and dependents
  • Capital gains arising from transfer of assets
  • Pensions and retirement pay brought into Thailand
  • Royalties

 

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Ok. How about we go back to the original question?

 

The question was not should you pay tax? It was do you pay tax?

 

My readings on this topic, independently of this forum, is that we should  pay, despite there  being a double taxation agreement in place. This agreement protects the payer from being over-taxed by allowing him/her to reclaim any tax paid here in Thailand from the home country's tax authority, in my case the UK.

 

It seems to me that most people, me included, rely on the policy of 'ignorance is bliss', both on the part of the pensioner and the Thai tax authorities. I would also hazard that the Thai authorities would be reluctant to pursue this policy for fear of triggering a stampede for the exits by a lucrative and easy income.

 

So, I ask once again on behalf of the OP, Do you pay tax in Thailand on your pension?

 

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2 hours ago, Surasak said:

If you pay tax on a UK income, you cannot, repeat, cannot be taxed on that same income in Thailand. It is against the double taxation treaty between the 2 countries

 

This is wrong.  The taxation treaty does NOT cover UK state pension.  (It does, however, cover government pensions, i.e. pensions paid to former government employees.  As usual, the civil service has put itself ahead of the rest of us.)

 

You can read https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf for the full details.

 

 

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1 hour ago, smudger1951 said:

At what % rate would anyone be taxed if proved to be liable in TH

2016 income tax rates

Taxable Income Band THB National Income Tax Rates
1 - 150,000 0%
150,001 - 300,000 5%
300,001 - 500,000 10%
500,001 - 750,000 15%
750,001 - 1,000,000 20%
1,000,001 - 2,000,000 25%
2,000,001 - 4,000,000 30%
4,000,001 + 35%

 

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5 hours ago, henry15 said:

My country (belgium ) have a taxagreement with Thailand to avoid double tax. So my pensio is taxed in belgium

The same applies to Denmark.

Denmark have a taxagreement with Thailand to avoid double tax. So my pension is taxed in Denmark.

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51 minutes ago, Oxx said:

 

This is wrong.  The taxation treaty does NOT cover UK state pension.  (It does, however, cover government pensions, i.e. pensions paid to former government employees.  As usual, the civil service has put itself ahead of the rest of us.)

 

You can read https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf for the full details.

 

 

Very interesting Oxx. Article 19 in your reference seems to be the operative one.

 

It is not possible to copy and paste it, but I would suggest that UK citizens go and have a look see.

 

My reading of this article indicates that one would only be liable for Thai tax on a UK pension if the recipient were: a) resident in Thailand and b) is a Thai citizen.

 

Read para 2, especially item b. carefully.

 

Would like to hear other opinions.

 

Obviously, I cannot speak for other nationalities, but I would think that these double taxation treaties are broadly similar.

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28 minutes ago, Moonlover said:

Very interesting Oxx. Article 19 in your reference seems to be the operative one.

 

It is not possible to copy and paste it, but I would suggest that UK citizens go and have a look see.

 

My reading of this article indicates that one would only be liable for Thai tax on a UK pension if the recipient were: a) resident in Thailand and b) is a Thai citizen.

 

Read para 2, especially item b. carefully.

 

Would like to hear other opinions.

 

Obviously, I cannot speak for other nationalities, but I would think that these double taxation treaties are broadly similar.

Here we go, I have managed to copy and paste. Item (b) is believe to most relevant to us.

 

(2)  (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.
 

But and it's a BIG but. As Oxx pointed out this statement applies to pensions from State or a political subdivision or a local authority thereof . I very nearly missed it myself.

 

 

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6 hours ago, BWPattaya said:

My pension is taxed at source in the U.K.  No tax due in Thailand

Unless the Thais say so.  If Thailand ever tried to tax my retirement; I would be gone, period.

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7 hours ago, henry15 said:

My country (belgium ) have a taxagreement with Thailand to avoid double tax. So my pensio is taxed in belgium

A taxagreement is only an agreement about how it is organised. In Belgium this means that it is taxed in Belgium. In holland this means that it is, if you do it a well defined way, taxed in thailand.!

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"Anyone using monthly pension payments to qualify for an annual visa extension, instead of 800k in the bank, is basically declaring to the government thier own liability. "

 

Anyone that can't afford to move $27K USD in savings to Thailand probably can't afford to retire.

 

You poor sods ?

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If you are a Thai national and living in Thailand, your pension from the UK can be taxed (even if government pension).

 

Otherwise, it is a bit ambiguous. Civil service pensions are not taxed. State pension - dubious - it may not be for work done for the government - but it might be  - you paid the government for it, so maybe work was done .....   As for Private pensions - probably taxable, but it might have been earned by work done for the government .....

 

I can quite understand why Thailand is not interested in taxing pensions, as nearly impossible to verify if pension is from work done for government, unless you are a civil servant (when definitely not taxed).  

 

But if in doubt, just get paid into a bank in your own country, and then send it to Thailand yourself (now out of savings, and hard to prove it was the exact pound you were paid this year in pension). 

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The current UK/Thailand taxation treaty excludes  most kinds of pension payments. So exactly as Oxx says above, just because the pension income is taxed in the UK it does not mean that it is automatically exempt from being taxed in Thailand also. For someone who is a Thai tax resident there  could, in theory , be a further tax liability  on pension income brought into Thailand, in the year in which it was earned.   However for a retiree with no other Thai income (and therefore off the radar of the Thai tax authorities)  i very much doubt this would ever be an issue.

  

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19 minutes ago, robin hood said:

Why should we pay tax on are pensions anyway? we are taxed on earnings, we save for the future and are taxed again, 

 

In many countries such as the UK, there is tax relief on pension contributions, so if pension income is taxed it is not "taxed again".

 

Other countries don't give tax relief on pension contributions and then allow the pension to be taken tax free.  Again, no double taxation.

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