Tax residency in Thailand and taxing overseas income

[Hahuahin]

Expert from Thai Revenue Department to speak about rules on foreign income at Hua Hin event
https://www.huahintoday.com/hua-hin-new ... hin-event/

[Dannie Boy]

Sounds interesting - I’m away on the 6th May but hopefully at least one Hua Hin Forum member will be able to attend and pick up anything important to share on the Forum.

[caller]

Having checked the UK's double taxation agreement with Thailand, and as all of my income comes from the UK, I am really not bothered about this new taxation. All I am waiting for is if I am required to report details of my UK income, where and how do I do so?

[Big Boy]

I agree, that's where I'm standing at the moment also.

I can see there will be a lot of people from the UK who will fall into grey areas though. I did consider going to the talk, but decided there were others whose need to know would be far greater than mine. With the limited audience capacity, best I let others go instead.

I'm sure that those of us paying tax already will be told soon enough what proof we need to provide.

[404cameljockey]

Having checked the UK's double taxation agreement with Thailand, and as all of my income comes from the UK, I am really not bothered about this new taxation. All I am waiting for is if I am required to report details of my UK income, where and how do I do so?

I agree. I only have UK income, and that falls below the UK tax threshold, so I was asked a few years ago not to bother filing a tax return so I don't. I just need to know how Thailand will handle this; what proof they will ask that I am 'taxable but not needing to pay' in the UK as I have no proof. It looks as though my combined income plus state pension would attract some small tax payment in Thailand.

It might mean the minor pain of filing a UK tax return again in future, which I was glad to be free of, or some small 'creative account reporting'. We'll see, I don't want to up stumps and move to to the Philippines!

[Dannie Boy]

Having checked the UK's double taxation agreement with Thailand, and as all of my income comes from the UK, I am really not bothered about this new taxation. All I am waiting for is if I am required to report details of my UK income, where and how do I do so?

I agree. I only have UK income, and that falls below the UK tax threshold, so I was asked a few years ago not to bother filing a tax return so I don't. I just need to know how Thailand will handle this; what proof they will ask that I am 'taxable but not needing to pay' in the UK as I have no proof. It looks as though my combined income plus state pension would attract some small tax payment in Thailand.

It might mean the minor pain of filing a UK tax return again in future, which I was glad to be free of, or some small 'creative account reporting'. We'll see, I don't want to up stumps and move to to the Philippines!

Do you get a P60 from your pension provider showing your income (and any tax paid)?

[Big Boy]

I think what you are hinting at is the 'grey area'. If your P60 e.g. shows you earn/pay tax on £10K, but you are bringing £16K in to Thailand each year, the additional £6K hasn't been taxed in year, so will be liable for Thai taxation.

Maybe I'm over-simplifying, or crediting Thai revenue with too much ability. I think if they are saying wait until July to hear the truth, then we should wait. 2nd guessing until any official announcement will only cause unnecessary stress. Scare mongers will revel in it. I used to get stressed by these things, but the solutions to date have always been fair/reasonable.

[Hahuahin]

Anyone who went to the info event 6. May and could shed some light on the new Thai tax strategy?
hahuahin

[Ratsima]

I've read a bunch and am still a bit baffled.

Here's portion of the text of the US agreement:

1. Subject to the provisions of paragraph 2 of Article 21 (Government Service), pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, social security benefits and other similar public pensions paid by a Contracting State to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.

.
So, the US retained taxation over Social Security benefits no matter where the recipient resides. I interpret that to mean that as long as I transfer less than my yearly total Social Security I will owe no Thai tax. If I transfer more than my SS annual total, only the excess would be taxable by Thailand. Am I missing something?

AFAIK, the Thai government intends to tax only that portion of a pension that is actually transferred to Thailand. And, only the state where the recipient resides has taxation authority over that income.

So, if my pension is US$50K and I only transfer US$20K to Thailand, the remaining US$30K is taxable by neither Thailand or the US? That seems to be an interesting loophole.

[Big Boy]

Yes, I think that is my understanding. The only grey area for me is if I were to transfer the remaining 30K in year 2, together with year 2's 50K. I am assuming the 30K from year 1 would be taxable in year 2.

[Ratsima]

Yes, I think that is my understanding. The only grey area for me is if I were to transfer the remaining 30K in year 2, together with year 2's 50K. I am assuming the 30K from year 1 would be taxable in year 2.

That's the way I see it.

In any event, it seems that it will be somewhat of a nightmare to administer.

In my experience, Revenue seems to be one of the few agencies that has its act together. It will be interesting to see how they do with this.

[Big Boy]

I have received my P60 (UK End of Year Tax Paid Certificate) this morning. I'd never noticed before, but this certificate does not mention my Government Pension, which is taxed at source. I'm thinking it may be difficult proving that this additional income from the UK has been subjected to UK tax.

Does anybody have any thoughts on this please?

[Dannie Boy]

Are you saying that you’ve transferred more money to Thailand than your P60 says you’ve earned? If you haven’t then I don’t think it will be a problem.


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[Big Boy]

I may have answered the question myself. It looks as though my taxation code has been adjusted to cater for the amount of tax paid by my regular pension provided. So this does open a very grey area - although I am paying tax on my State Pension by stealth through my tax code, my State Pension is not being taxed directly.

Although tax isn’t deducted from the State Pension, it will still use up some of your tax-free personal allowance. In 2024/25 the standard tax-free personal allowance is £12,570, which means that if you receive the full new State Pension, you will have £1,067.60 (£12,570 less £11,502.40) of your personal allowance remaining for other taxable income streams, such as employment or a private or occupational pension.

[caller]

It looks as though my taxation code has been adjusted to cater for the amount of tax paid by my regular pension provided. So this does open a very grey area - although I am paying tax on my State Pension by stealth through my tax code, my State Pension is not being taxed directly.

Do you complete an annual tax return?