Declaring OS income whilst a retiree in Thailand

[tgeezer]

This thread reminds me of the relationship between UK and the EU which is blissfully signing off on rules. Most countries are able to bend them but not the U.K. Always assiduously trying to be legal, peering in every nook and cranny of the long and complicated text to see how we can adhere to them. I don't believe Thailand offered retirement to over fifties so that they could tax their income because a retiree lives here for 365 days a year, has an income of 65000Bt per month and is not taxed. I don't think that people who go out of their way to punish themselves should be admired.


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[BritTim]

38 minutes ago, al007 said:

I am talking about a thai wife resident in thailand, and the income would be defined as widows pension

 

I have a better tax knowledge than most as a simple retired Chartered Accountant

 

But to get a definitive answer I probably need a local thai tax expert

My understanding is that your widow, like yourself now, would only be liable for tax on overseas income brought into Thailand in the year it is earned. As a Thai national, she can legally avoid tax on overseas income by carefully separating savings from current year income, and only bringing in money from the former. This is an obvious gaping loophole, but others who claim too many wealthy Thais use it for it ever to be closed, may well be correct.

[mngmn]

48 minutes ago, al007 said:

I am talking about a thai wife resident in thailand, and the income would be defined as widows pension

 

I have a better tax knowledge than most as a simple retired Chartered Accountant

 

But to get a definitive answer I probably need a local thai tax expert

And if the income from that pension was totally tax free in the country where the pension income is derived then she would only have to worry about Thai tax.

[mngmn]

35 minutes ago, tgeezer said:

This thread reminds me of the relationship between UK and the EU which is blissfully signing off on rules. Most countries are able to bend them but not the U.K. Always assiduously trying to be legal, peering in every nook and cranny of the long and complicated text to see how we can adhere to them. I don't believe Thailand offered retirement to over fifties so that they could tax their income because a retiree lives here for 365 days a year, has an income of 65000Bt per month and is not taxed. I don't think that people who go out of their way to punish themselves should be admired.


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Sort of agree with you.  This is a non-issue for the moment because of the rule that says income must be derived in the year it is brought into Thailand.  In its present form this would be a nightmare to enforce and in any case it applies to Thais as well so there would be significant resistance to changes. 

 

Simple answer is breath deep and relax...  More complex answer is that governments are always on the look out for new sources of income :)

[tgeezer]

Sort of agree with you.  This is a non-issue for the moment because of the rule that says income must be derived in the year it is brought into Thailand.  In its present form this would be a nightmare to enforce and in any case it applies to Thais as well so there would be significant resistance to changes. 
 
Simple answer is breath deep and relax...  More complex answer is that governments are always on the look out for new sources of income :)

This is a non issue full stop. The authorities know that we are here as retirees, how much money we have and they don't ask us to pay tax.


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[maprao]

Don't worry you have now given enough information for the Thai tax system to change so it can tax your retirement.

How else do you think they clamped down on the dodgy visa status of people....by reading these forums[emoji3][emoji23][emoji38]

Time for the tin foil hat!

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[jayboy]

Best answer.

Yes it is admirably clear and accurate.But the question remains at least in my mind - are residents under the 180 day + rule required to submit a Thai tax return even if this is no more than a nil tax payable submission? I'm guessing that it's a theoretical requirement which all sides ignore.

But I wouldn't be entirely surprised if at some future point this tax aspect wasn't taken into account.


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[BritTim]

36 minutes ago, jayboy said:

 

Yes it is admirably clear and accurate.But the question remains at least in my mind - are residents under the 180 day + rule required to submit a Thai tax return even if this is no more than a nil tax payable submission? I'm guessing that it's a theoretical requirement which all sides ignore.

But I wouldn't be entirely surprised if at some future point this tax aspect wasn't taken into account.

 

At one time, any foreigner who spent more than (if I remember correctly) 90 days in Thailand during the year was obliged to get a tax clearance on every occasion before leaving the country. It was a nightmare. The best Prime Minister Thailand ever had (Anand) earned my eternal gratitude for abolishing this. If it ever came back, I would probably never spend significant time in Thailand again.

Edited March 7, 2017 by BritTim

[al007]

13 minutes ago, BritTim said:

At one time, any foreigner who spent more than (if I remember correctly) 90 days in Thailand during the year was obliged to get a tax clearance on every occasion before leaving the country. It was a nightmare. The best Prime Minister Thailand ever had (Anand) earned my eternal gratitude for abolishing this. If it ever came back, I would probably never spend significant time in Thailand again.

Yes not  uncommon, around 1970 I was working for PriceWaterhouse in Jamaica and to go to even Miami for a week end you needed a tax clearance letter

 

that was when I started t learn to type after the  secretaries had gone home, bad man that I am the easy way was to type my own and sign them, never had a problem, and incidentally I also paid all the taxes I owed in that country

[BritTim]

3 minutes ago, al007 said:

Yes not  uncommon, around 1970 I was working for PriceWaterhouse in Jamaica and to go to even Miami for a week end you needed a tax clearance letter

 

that was when I started t learn to type after the  secretaries had gone home, bad man that I am the easy way was to type my own and sign them, never had a problem, and incidentally I also paid all the taxes I owed in that country

In Thailand, it was not so simple. The tax clearance had to be issued by the regional tax office. It tended to take about half a day and needed to be done in person. If you needed to travel urgently, and the tax office was closed, officially it was simply impossible.

[dabhand]

20 minutes ago, BritTim said:

At one time, any foreigner who spent more than (if I remember correctly) 90 days in Thailand during the year was obliged to get a tax clearance on every occasion before leaving the country. It was a nightmare. The best Prime Minister Thailand ever had (Anand) earned my eternal gratitude for abolishing this. If it ever came back, I would probably never spend significant time in Thailand again.

Indeed, I recall being in Thailand for an extended period in 1990 and I was advised to obtain a tax clearance certificate prior to departing, despite not undertaking any work activity in Thailand. Can't recall the cost, but it was obtained, on my behalf, by a travel agent, So, no doubt, there was a healthy fee element included. No TVF to consult at that time!!

 

I believe this requirement lapsed in May 1991 (correctly noted as being during Anand's tenure as PM) as indicated in this tax website:

 http://www.rd.go.th/publish/23518.0.html

In addition the Revenue Department issued the Notification of the Director-General of the Revenue Department on 7 May 1991 stipulating that foreigners departing Thailand do not have to apply for a Tax Clearance Certificate except for the above three cases in 2.

[jayboy]

38 minutes ago, BritTim said:

At one time, any foreigner who spent more than (if I remember correctly) 90 days in Thailand during the year was obliged to get a tax clearance on every occasion before leaving the country. It was a nightmare. The best Prime Minister Thailand ever had (Anand) earned my eternal gratitude for abolishing this. If it ever came back, I would probably never spend significant time in Thailand again.

Wasn't that tax clearance requirement just for those with work permits? It's a reminder of course that in the 1970's and 1980's there were only a tiny number of retirees (mostly those who had previously worked in Thailand).

[MyFriend You]

14 hours ago, ubonjoe said:

From the Thai revenue department website: http://www.rd.go.th/publish/6045.0.html

 

 

As much as I don't like it, this is how I have been advised by my Lawyer - tricky part for Thailand is determining when the money was placed in your account abroad before you import it to your Thai Bank account - its damned near impossible, so they don't even bother.  My Thai Lottery winnings were taxed when I collected, (Big Baht - six zeros)I have a form signed to that effect - so they can't tax my Bangkok account any more than what was already taken out............why worry about it??  If you are not in business in Thailand, there's no worry,   as for the Scandanavian fella - Glegolo  -  if what you say is half true??  You are blessed, but as we say in America - "I am from Missouri, the "Show Me State"    I'd like to see this 'Charter'  or 'Agreement' (Reciprocity) between your countries and Thailand in writing.  If not forthcoming, I log your comments in the category of the Americans that say - "I live overseas, I don't have to pay US taxes"  they are surprised when they go home and are locked up for income tax evasion..........you're under no obligation of course - but show your money where your mouth is and I will shut mine.   BTW I am a Certified Income Tax  advisor.......but non-practicing any longer .

[nrasmussen]

I'd like to see this 'Charter'  or 'Agreement' (Reciprocity) between your countries and Thailand in writing.

http://www.rd.go.th/publish/766.0.html

[al007]

There is a lot of talk here about double taxation agreements DTAs. 

 

Remember a DTA does not cover reciprocal agreements for the likes of healthcare and government paid pensions, the UK has a DTA with Thailand but no reciprocal pensions and healthcare agreement, hence no indexation of Uk pensions to people living here

 

The Philippines on the other hand has a reciprocal agreement for pensions and healthcare, and if you lived there you would get your indexation of pension each year

 

And yes it all takes a lot of understanding

[Xobtsiwt]

17 hours ago, BritTim said:

At one time, any foreigner who spent more than (if I remember correctly) 90 days in Thailand during the year was obliged to get a tax clearance on every occasion before leaving the country. It was a nightmare. The best Prime Minister Thailand ever had (Anand) earned my eternal gratitude for abolishing this. If it ever came back, I would probably never spend significant time in Thailand again.

That's correct, but I think it was 180 days, not 90. I remember the shlap down to the tax office in Banglampoo once a year in the late '80s/early '90s.

 

I echo your sentiments about Khun Anand Banyarachun, best Thai PM since I became resident.

Edited March 8, 2017 by Xobtsiwt

[jayboy]

2 hours ago, Xobtsiwt said:

 

 

I echo your sentiments about Khun Anand Banyarachun, best Thai PM since I became resident.

I agree though to be best in this category isn't exactly a stretch given the collection of ignoramuses, crooks, hypocrites and military thugs in competition..A key point was that he was very well aware had no mandate and fulfilled his promise to restore democracy within a year - through fair elections under a non partisan constitution.

 

[503726]

Does the visa requirement for retirement of income of 40,000 Bhat per month or 400,000 in savings stipulate that the 40,000 has to be remitted into a Thai bank each month or can income be demonstrated in another currency outside Thailand? 

 

It would seem wiser to apply on the basis of savings if possible so tax does not arise as a consideration and remit funds when necessary mixed with other cash.  

[BritTim]

1 hour ago, 503726 said:

Does the visa requirement for retirement of income of 40,000 Bhat per month or 400,000 in savings stipulate that the 40,000 has to be remitted into a Thai bank each month or can income be demonstrated in another currency outside Thailand? 

 

It would seem wiser to apply on the basis of savings if possible so tax does not arise as a consideration and remit funds when necessary mixed with other cash.  

The retirement income must be 65,000 baht a month. It can be in any currency (exchange rate calculated on the day of application for the visa or extension). There is no requirement to actually bring the money into Thailand. Whether you are liable for tax is not necessarily a function of whether you bring money into Thailand. Other factors also apply as explained earlier in this thread.

[overherebc]

On 07/03/2017 at 1:06 PM, phuketjock said:

As far as I am aware if you are staying in Thailand on a retirement extension then you are

not resident, merely on an extension of permission of temporary stay in Thailand and

therefore not liable for Thai tax. Similar, but I am sure not exactly the same, as a tourist.

The UK tax authorities accepted this when I put it to them when they sent me forms

regarding reciprocal tax agreements between UK and THailand.

I am no expert and am open to correction if wrong? 

I agree, as I got the same answer.

I would love to hear the 'lawyer speak' answer on the fact that my Gov' pension and other two I stopped paying into many years ago. This I can interpret as follows, The money I get from them now comes from interest earned years ago. They stopped earning interest when I started getting payments, so, money brought to Thailand today was earned years ago, not just one year ago.

??

[Bazle]

On 3/7/2017 at 11:07 AM, overherebc said:

UK taxes my pensions so Thailand does not require me to pay any tax here. If I changed my UK status for tax then I would be liable to pay tax on the money if it arrives in Thailand in the same year it's paid in UK.

 

 

Suffice to say, you have an incorrect understanding of how the two tax systems inter-relate.

[KhonKaenKowboy]

tme refund in the mail yesterday for every THB withheld from fixed deposit interest.  I spent 15 minutes in the dire tors office when I filed...told tthem I had investments in America that I managed and filed re....no problem.

[overherebc]

7 hours ago, Bazle said:

 

Suffice to say, you have an incorrect understanding of how the two tax systems inter-relate.

Enlighten me.

[Bazle]

1 hour ago, overherebc said:

Enlighten me.

 

You said: "UK taxes my pensions so Thailand does not require me to pay any tax here. If I changed my UK status for tax then I would be liable to pay tax on the money if it arrives in Thailand in the same year it's paid in UK. "

 

Firstly, the use of the word "so". Just because the UK taxes something does not necessarily mean that Thailand will not also want to tax it. If both countries wanted to tax a source of income, it would be necessary to look to see what the UK/Thailand tax treaty said (if anything) about it.

 

Then the words "if I changed my UK tax status". That implies your tax status is something you elect for. Your tax status might change, but that would be as a result of a change in your circumstances.

 

As  a matter of interest, this is what I wrote on another forum over 12 years ago, and I have no reason to think that anything has changed:

 

Quote

 

One of the fundamental rules of tax is that income is taxed in the country in which it arises. A second rule is that anything agreed by two countries and embodied in a tax treaty overrides the domestic laws of those countries.

 

With regard to an employment pension from a UK source paid to someone resident outside the UK, the UK's right to tax it is usually overridden by the tax treaty between the UK and the country in which the pensioner is resident. Most double tax treaties give taxing rights to the country of the pensioner's residence, and thus take them away from the country of source of the pension.

 

However, the tax treaty between the UK and Thailand is very unusual. Not only is there no mention of the taxation of pensions but also there is no "other income" article. There is usually a "sweeping up" article which says that if anything hasn't been specifically mentioned in the treaty, then it is taxable only in the country of the individual's residence.

 

The consequence of all of this is that a UK pension paid to a Thailand resident is taxable in the UK. Furthermore, it MIGHT also be taxable in Thailand. It is my understanding that Thailand taxes non-Thailand income arising to a Thailand resident on a "remittance basis“ i.e. it is taxed only to the extent it is taken into Thailand. Therefore, if the UK pension is taken into Thailand, it will be taxed there. However, the Thai tax authorities are almost certain to permit a credit against the Thailand liability for UK tax suffered on the pension remitted. It would probably be best to keep life simple and not remit the pension.

 

 

[Evilbaz]

Can anyone post a factual case where the Thai Revenue office taxed the 880k coming in or the 65k per month from a Government Pensioner?

[jayboy]

14 minutes ago, Evilbaz said:

Can anyone post a factual case where the Thai Revenue office taxed the 880k coming in or the 65k per month from a Government Pensioner?

I doubt it but I'm not sure that's the main point.Bazle has just posted a clear summary of the tax implications of remitting pension income into Thailand.Nevertheless I doubt whether many if any pensioners (with no Thailand generated taxable income) have submitted a tax return to the Thai authorities even if mainly resident in the country.I would be quite interested to know whether foreign pensioners are legally/theoretically required to submit a Thai tax return (even if there is no tax to pay which would almost always be the case) but I have never received a sensible answer to this question.I am quite sure that most don't and I'm almost equally sure the Thai tax authorities don't expect them to.

Edited March 11, 2017 by jayboy

[ubonjoe]

14 minutes ago, Evilbaz said:

Can anyone post a factual case where the Thai Revenue office taxed the 880k coming in or the 65k per month from a Government Pensioner?

I don't think there is one that can be posted. I have never seen one.

[overherebc]

59 minutes ago, Bazle said:

 

You said: "UK taxes my pensions so Thailand does not require me to pay any tax here. If I changed my UK status for tax then I would be liable to pay tax on the money if it arrives in Thailand in the same year it's paid in UK. "

 

Firstly, the use of the word "so". Just because the UK taxes something does not necessarily mean that Thailand will not also want to tax it. If both countries wanted to tax a source of income, it would be necessary to look to see what the UK/Thailand tax treaty said (if anything) about it.

 

Then the words "if I changed my UK tax status". That implies your tax status is something you elect for. Your tax status might change, but that would be as a result of a change in your circumstances.

 

As  a matter of interest, this is what I wrote on another forum over 12 years ago, and I have no reason to think that anything has changed:

 

 

 

It's my understanding, from a few years ago, that in UK you could elect to be non-resident for tax purposes if you spent more than xxx days per year outside of the UK.

Income then earned overseas would be taxed where earned. I am unsure if that can still be done.

[503726]

 

Can a person be resident for tax in two countries in a year?

 

I have read the Thai test of residency is based on time spent in the country. Is that right & what is the Thai tax year?

 

I came to Thailand in September from the UK. The HMRC decision tree of (UK) Statutory Tests of Residence seems to pull tax payers into residency as default. I was in the UK under just 183 days but fail the automatic tests for NON residency so I am resident in the UK for tax 2016/17. I wonder whether I might be resident in Thailand based on being in the country over 183 days in their tax year.

 

No problem if the question is too obscure to tangle with, I'm just curious if the answer is easy. I'm steering well clear of remitting income from the UK and Thai income for the time being so I hope the question is academic.

[Bazle]

8 minutes ago, overherebc said:

 

It's my understanding, from a few years ago, that in UK you could elect to be non-resident for tax purposes if you spent more than xxx days per year outside of the UK.

Income then earned overseas would be taxed where earned. I am unsure if that can still be done.

Residence status is not electable, and never has been. It is a matter of fact. 

 

Prior to 2013/14, it was decided based on some statute law but mainly on case law.

 

Now it is based on a statutory residence test - https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt