Declaring OS income whilst a retiree in Thailand

[Bazle]

10 minutes ago, 503726 said:

 

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

 

Under the their respective domestic laws, yes you can be resident in two (indeed, more) countries.

 

However, if you need to refer to a relevant tax treaty, you can be resident in only one for the purposes of the treaty: the treaty will set out the rules to determine which one.

[503726]

I don't know about Thai tests but from the hazy memories of exam on UK tax along time ago. The questions were often about the super rich globe trotting to minimise tax armed with cunning advice from  accountants to join in local life. The answers involved day counting, home ownership & what the tax payer actually did in the countries they claimed to be resident in.  

 

Residence seems still to be a factual test of where a person was and what they did there without few options to elect.

 

I'll upload the guide published this year with a decision tree of tests. The Revenue also has a tool to help.

  

UK tax residence tests.pdf

[503726]

Sorry, just seen Bazle's excellent replies on the subject.

 

Thanks

[tgeezer]

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.

That looks as though it might be interesting. Is tme Thai Military Bank? and 'dire tors' I presume is 'director's'. If so there are probably many of us whose banks take tax on interest and if there is the chance of a refund would be glad to know how to go about getting it. Can you explain?


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[tgeezer]

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?

Q. Why does Thailand allow pensioners to retire to Thailand?
A. So that Thailand can tax their pensions.

An unlikely policy for a government to pursue, the initial bad publicity might easily scupper the evil plan!



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[BritTim]

1 hour ago, tgeezer said:

That looks as though it might be interesting. Is tme Thai Military Bank? and 'dire tors' I presume is 'director's'. If so there are probably many of us whose banks take tax on interest and if there is the chance of a refund would be glad to know how to go about getting it. Can you explain?

I assumed "tme" was a typo for "the", but I do not think it matters as far as the substance of the post is concerned.

The critical point is that the bank interest refund was for a US citizen and justified under the treaties between the US and Thailand to avoid double taxation. The agreements most other countries have with Thailand are different. Unless you are both (i) liable for tax on the bank interest earned in Thailand in another country, and (ii) there is a treaty to avoid double taxation between that country and Thailand, then the bank interest earned in Thailand is taxable here and no refund applies.

[KhonKaenKowboy]

Tim, it was refundable only because it was less the personal exemption....and solely based on my income in Thailand.    Had I made 500k as a teacher, I would have likely been in the 15% bracket and not gotten a dime back...and if the school had not withheld, I would have owed an extra 40k+.   

Edited March 11, 2017 by KhonKaenKowboy

[BritTim]

35 minutes ago, KhonKaenKowboy said:

Tim, it was refundable only because it was less the personal exemption....and solely based on my income in Thailand.    Had I made 500k as a teacher, I would have likely been in the 15% bracket and not gotten a dime back...and if the school had not withheld, I would have owed an extra 40k+.   

Interesting. Did you declare the income in your US tax return? You know more about the current US rules than I do, but I thought US citizens were essentially taxable on all worldwide income with very few exceptions.

[KhonKaenKowboy]

I will, but you get a free ride on a very substantial amount earned abroad...like 70k USD....you also get a credit for foreign taxes paid...like the 26.375% the Germans taxed my Allianz Stock dividends.

Edited March 11, 2017 by KhonKaenKowboy

[mahjongguy]

Just to clarify for others:

 

"... you get a free ride on a very substantial amount earned abroad...like 70k USD...."

 

That allowance only applies to earned income, e.g. wages. Not applicable to unearned income like bank interest.

 

"...you also get a credit for foreign taxes paid...like the 26.375% the Germans taxed my Allianz Stock dividends."

 

You are only allowed to take a credit for foreign taxes paid if you are unable to recover the amount withheld. For fixed account bank interest earned in Thailand, the correct process as you say is to get a Thai tax ID, file for a refund, and then claim the entire amount of interest on your U.S. texes.

[Felt 35]

Double Tax Agreement

 

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

Edited March 11, 2017 by Felt 35

[503726]

I looked at the UK Double Tax Treaty.  Are dividends received from a UK company particularly sensitive for tax in Thailand?

 

Article 11 says dividends are taxed in Thailand and a claim can be made for exemption to tax in the UK up to the Thai rate. Remittance is not mentioned. I presume tax is due on payment whether remitted to Thailand adding a complication to a UK tax declaration. Perhaps I have misunderstood the requirement.

 

Can someone also confirm what the year end Thailand uses for tax, is it 31 Dec?

 

Many thanks

 

 

Article 11 - dividend taxation agreement btwn UK and Thailand.docx

[Bazle]

42 minutes ago, 503726 said:

I looked at the UK Double Tax Treaty.  Are dividends received from a UK company particularly sensitive for tax in Thailand?

 

Article 11 says dividends are taxed in Thailand and a claim can be made for exemption to tax in the UK up to the Thai rate. Remittance is not mentioned. I presume tax is due on payment whether remitted to Thailand adding a complication to a UK tax declaration. Perhaps I have misunderstood the requirement.

 

Can someone also confirm what the year end Thailand uses for tax, is it 31 Dec?

 

Many thanks

 

 

Article 11 - dividend taxation agreement btwn UK and Thailand.docx

I don't read Article 11 as saying that. In fact, it is a fundamental principle that a double taxation agreement cannot itself impose a tax, only relieve it.

 

Could you quote the exact paragraph and sub-paragraph which you are reading, please?

 

Also, could you confirm that the circumstances you have in mind are of someone who

- is a resident of Thailand under Thai law, and

- is not a resident of the UK under UK law, and

- is remitting a dividend derived from a UK company to Thailand?

 

As to the Thai tax year end, everything I have read says it is 31 December.

[503726]

Hi

 

Thanks for looking, I'm not the best at reading this sort of document & language.

 

I saw Article 11 1(c) and 2  - copies below (with luck)

 

The tax payer is resident of both UK and Thailand (unfortunately) by 

- failing to be non resident in the UK under HMRC automatic tests in YE 5 Apr 2017

- being resident in Thailand more than 183 in YE 31 Dec 2017

The company is resident in the UK. Dividend paid Feb 17.

 

Thanks once again

 

 

 

[BritTim]

4 hours ago, 503726 said:

Hi

 

Thanks for looking, I'm not the best at reading this sort of document & language.

 

I saw Article 11 1(c) and 2  - copies below (with luck)

 

The tax payer is resident of both UK and Thailand (unfortunately) by 

- failing to be non resident in the UK under HMRC automatic tests in YE 5 Apr 2017

- being resident in Thailand more than 183 in YE 31 Dec 2017

The company is resident in the UK. Dividend paid Feb 17.

 

Thanks once again

I am not an expert, but I believe is there are two important cases where dividends earned in the UK would not be liable for Thai tax:

• one is not a resident of Thailand (in that case only income earned in Thailand is taxable in Thailand); or
• the dividend received is not transferred into Thailand in the same year it is paid.

Your earlier post suggests that UK dividend income would become liable to tax when it is paid. This is incorrect. If liable for tax at all, overseas income only becomes liable at the time it is remitted to Thailand, and not then if the income was received in earlier years.

[Bazle]

12 hours ago, 503726 said:

Hi

 

Thanks for looking, I'm not the best at reading this sort of document & language.

 

I saw Article 11 1(c) and 2  - copies below (with luck)

 

The tax payer is resident of both UK and Thailand (unfortunately) by 

- failing to be non resident in the UK under HMRC automatic tests in YE 5 Apr 2017

- being resident in Thailand more than 183 in YE 31 Dec 2017

The company is resident in the UK. Dividend paid Feb 17.

 

Thanks once again

 

Although resident of both countries under their respective domestic laws, an individual cannot be resident in both for the purposes of the treaty. You need to look at Article 4 to determine in which the individual is treaty resident.

 

If resident in Thailand, the treaty says that Thailand can tax the dividend (Art 11 (1)(a)). 

 

Article 1 (c) goes on to exempt the individual from tax in the UK. However, there is a proviso found in Article 6: exemption will not apply to any amount not remitted (and, by implication, taxed) in Thailand. 

 

If resident in the UK under the treaty, Thailand will not tax but the UK will.

 

I'm assuming you are referring to "normal" dividends and there is no "unusual" relationship between the company paying the dividend and the shareholder.

 

(As tax credits have been abolished for 2016/17 et seq, you can ignore references to them in the treaty.)

 

http://download.rd.go.th/fileadmin/download/nation/english_e.pdf

[503726]

Thanks 

[gk10002000]

On 3/7/2017 at 2:25 AM, CharlieH said:

Dont shoot the messenger.

You are classed as "resident" for tax purposes,  if more than 180 days in any tax year (irrespective of visa etc). Income received from outside if not already taxed is taxable.

 

To use your example of "tourist" it is unlikely they would have a residence nor bank account nor be receiving regular "income" from overseas if on tourist visas and not many spend over 6 months "on holiday" (there are exception to everything but generally speaking.)

 

Big difference in "resident" and "resident for tax purposes" thats the key here. If your overseas pension isnt taxed at source and is paid regularly into a Thai account and you spend more than 180 days in any tax year here then technically you are liable for tax on that income.

 

But as we all know TIT and not all rules/laws etc are enforced but that doesnt mean they are not there should someone choose to enforce them.

And if the income is Non taxable in the home country, say tax free municipal bonds, is that liable for Thai taxation?  In the USA some states tax tax free income on municipal bonds based in other states.  Or is this a moot point since Thailnd and the USA have a mutual tax agreement