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Nearly 70 guests gathered at restaurant Chef Cha on Friday evening for Hans Goudriaan's lecture on the new tax treaty between the Netherlands and Thailand, organized by the Dutch Hua Hin-Cha am Association. That treaty will enter into force in the foreseeable future.
But before that happens, a lot of water still flows through the Rhine and the Chao Phraya. Because apart from the announcement that the Netherlands will levy wage tax on pensions that now (often exempt) flow to Thailand, not much is known yet.
In any case, it is certain that 1 January 2024 is the earliest possible effective date, given the formal process that the treaty must follow in the Netherlands and Thailand. In the event of a delay, it may even become 1 January '25. The fact remains that the taxation will have major consequences for a large number of Dutch people in Thailand. For some with a generous pension, a decline of several tens of thousands of euros is even imminent.
Given the many uncertainties, the introduction will undoubtedly be accompanied by fits and starts.
After Hans Goudriaan's presentation, seven visitors recognized the usefulness of the Dutch association and spontaneously signed up as a member.
Good initiative from this association!
I can hope for the taxpayers and the pension payers and the tax authorities in NL and TH that both countries will tackle it energetically. So don't sign a treaty with an effective date of 1 January sometime in the autumn. Just get that done with software, 'find it out guys', and they will then forget to inform those involved in time.
It would be to the credit of the NL government to post a statement in blogs like this about the consequences if you let the current exemption go through. Because that is bound to happen to some people. It is good that this blog pays ample attention to it, because a letter from the services will not be included…..
As for handing in, you must already have a big pension to hand in tens of thousands of euros; then isn't there enough left for a good life in TH? I am thinking more of the people in TH whose incomes are at the edge of the Immigration requirements and are now threatening to fall under them. Those people were first caught in 2015 due to the expiry of the tax credit and now due to a new treaty.
Oh well, it is partly positive: those who thought they would move to Thailand in the future and thought they would benefit from not paying tax or paying less tax on their company pension, are now having second thoughts. And that is often a good thing because health insurance remains insured under the Dutch system if you do not live full-time in Thailand. And you keep your house, so you are not confronted with the fact that there is no home if you ever want to return after moving to Thailand. And you may also receive healthcare allowance, housing allowance, child benefit plus more thanks to the Dutch welfare state. And you can stay in Thailand for a maximum of 8 months per 12 months. For future retirees, the Netherlands is making a sensible decision regarding the above.
You are absolutely right about that, Ger-Korat: “Look before you leap”. And also bear in mind that, in addition to a new tax treaty, the Netherlands is currently also negotiating with Thailand about the introduction of a “country of residence factor” (currently set at 50%).
I know enough Dutch people living in Thailand who, as a result of the new tax treaty, lose € 25.000 to spend on income, with an outlier of € 90.000, but then again a saving of € 30.000 in Personal Income Tax that is no longer due opposite.
If, for example, you live or stay in Thailand with a WAO or WIA benefit, while the country of residence factor continues, you can forget it: you get a 50% discount on your pants. I do not expect any transitional law for existing cases.
If you still want to enjoy beautiful Thailand, the 8/4 arrangement you have suggested is definitely an option. You retain all your rights, such as tax credits, allowances, deductions for personal obligations and your Dutch health insurance.
Especially in the winter months you stay in Thailand, so you also avoid the sky-high energy bill to a large extent. All advantages!
Hi Lambert,
Could you briefly explain what the country of residence factor (e.g. 50 percent) means and to whom it would apply if it continues? Does this apply to everyone or to people with, for example, a Wia or disability benefit???
For example thanks,
Fred van lamoon
You should think of benefits from the UWV, such as a WAO or WIA benefit and not an AOW benefit or pension, Fred.
The country of residence factor of 50% means that the benefit to which you would normally be entitled is halved
That percentage of 50% is probably the aim of the Dutch government.
But if I understand the scheme a bit from the internet, that percentage seems to depend on the ratio between healthcare costs in Thailand and those in the Netherlands.
That seems difficult to calculate, because Thailand has a number of different health insurance policies.
For the common people and for example for the civil servants.
That 50% seems too high to me, unless you are allowed to use private hospitals such as Bangkok hospital.
Quote: If you live or stay in Thailand with, for example, a WAO or WIA benefit, while the country of residence factor continues, you can forget it: you get a 50% discount on your pants.
The text suggests that your disability benefits will be reduced by 50%, but that is not how I read the text on the internet.
Premium replacement contribution
For that right they pay a PREMIUM REPLACEMENT CONTRIBUTION to the CAK. In the country of residence, however, the care may be of a lower or higher cost level. The country of residence factor is used to compare the contribution with the package of the country of residence. This country of residence factor is published annually in November in the Government Gazette.
Country of residence factor
The treaty contribution is calculated by multiplying the basis of the contribution by a ratio that is calculated from the ratio between the average expenditure for care for a person covered by the social health insurance (healthcare costs) in the country of residence of this person and the average expenditure for care for a person under the Healthcare Insurance Act (Zvw) and the Long-Term Care Act (Wlz) in the Netherlands. This is the country of residence factor.
The country of residence factor is also used to determine the healthcare allowance that treaty beneficiaries can receive as compensation for their treaty contribution. The country of residence factor must be determined annually by ministerial regulation no later than November.
A premium replacement contribution of 50% does not sound like half of your WAO to me.
But I'm not an expert in this field.
The country of residence factor, which I wrote about, is based on the cost of living in Thailand and then applies to specific BENEFITS from the Netherlands.
In addition, you should quickly put the country of residence factor, which applies in the context of healthcare costs and which the CAK uses, out of your mind, Ruud.
When living in Thailand, you have nothing to do with the CAK and the determination of a premium replacement contribution for obtaining a HEALTH COST REIMBURSEMENT, Ruud. Unfortunately, Thailand is not a treaty country with regard to healthcare costs. You therefore do not pay a treaty contribution to the CAK.
It is interesting to mention that the government also has a country of residence factor for posted personnel at the missions. For Thailand, that factor is well above 100%, which means that the Dutch government estimates the cost of living for its own staff to be higher than in the Netherlands.
Dear Ger Korat,
great for people who decide to go to Thailand after the introduction of a new tax treaty and can adhere to the 8/4 rule. But what can people who have lived here for years, who have no family and no home in the Netherlands, do? If you know a solution for this, I'd love to read it. People who have long since left the Netherlands can never ever again realize those 8/4 rules. No more home, no children, etc. where should they stay or go straight to a nursing home? People who have family and children here, who want to spend their last years here and who do not want to/cannot stay in the Netherlands as lonely elderly people?
I really can't understand why you don't take that group here in Thailand into consideration, especially given your name Ger-Korat.
Yes, dear RNo, I am only giving my modest response and realize that the current group affected by the new tax treaty will often be disadvantaged. I or anyone else can't change that. Therefore, in addition to the disadvantages, I would like to point out that there is also something positive to discover for those who have not yet made the move to Thailand.
Of course it just keeps getting crazier. In the 50s, the Dutch were encouraged to emigrate in particular, and now people who want to emigrate and are of age are offered a choice to mainly stay in the Netherlands on benefits, and a load of refugees are also added every year. You will belong to the generation that has to keep all this going and I am thinking especially of the young people.
The middle class has been carefully built up and now serves as a cash cow to solve society's problems. Many are checkmate and have fallen into a trap and will have to meet fate.
I have sent an email to a number of political parties regarding the new agreement with Thailand.
My proposal to get a tax credit on the income tax and not on the national insurance premium component that is embedded in this tax.
To keep it simple, refund of overpaid tax through the tax return.
I have not received a response from any political party, except from Mrs. de Haan in the 2nd chamber who wants to set up a new elderly party.
She would raise this at a committee meeting.
I'm afraid it's hopeless.
Most political parties are no longer interested in the Dutch living abroad.
Peter van S, the more right-wing NL becomes, the more measures you will get. 'Our pennies on your back in the sun' I heard 16 years ago and if that's the mentality, well, then hide.
But people in Thailand forget too quickly; it was the PVV that introduced the scrapping of the tax credit in the Rutte-Verhage cabinet and if you see how the Dutch vote in Thailand then I do not understand the surprise about all those measures, including those Lammert is talking about here: country of residence factor on WAO/ WIA. Hopefully it won't affect many people.
Compared to the total number of Dutch people living in Thailand, it is not too bad. In 2020, 196 Dutch people lived in Thailand with a WAO/WIA benefit. Their average payment amounted to € 18.951 gross. With a halving of this benefit and without a fat bank account, you will no longer make it in Thailand and you can book a single trip to the Netherlands from your savings.
And your carefree life in Thailand is gone!
Back in the Netherlands, as a result of the sky-high inflation and the explosive rise in energy costs, you go to the first garden center and the Attraction. There you can buy a large stock of flower pots resp. tea lights to be able to heat your house (if you are lucky enough to have access to it). Then the Food Bank in your area gains another customer.
That is the situation in the "prosperous" Netherlands in 2022. The top is getting richer and the bottom (including the middle incomes) is increasingly impoverished.
You can live in NL with 19.000 euros gross; no fat pot, but entire tribes have to do with it now. Cheap homes can still be found, but then you have to start looking in Thailand and you need help in NL to arrange the first things. If you have difficulty walking, you depend on others. I went through that process in 2018, although my income is higher than 19 k.
NL will then benefit more from leaving you in the sun; grumpiness also makes you a fat expense for healthcare and later for the WLZ. But tell the politicians? They see you as a freeloader in the sun of their money…..
Dear Lambert,
The figures will be correct, but do not forget that a large part of the current disability benefit is because in the 70s, 80s and 90s the medical examiner gave them the choice to take the disability benefit or to run the risk of getting fired. No myths, but proven with research. Many, older employees, but not really so ill that they could not do their work, opted for the Wao.
In addition, their partner may be working. We pretend here that all Thai women have no income, but that is not the truth.
Then you can still earn a nice income online, either with the sale of stuff or with a youtube or tiktok channel. I know Thai women who rake in about 10.000 to 15.000 baht a month online. The reality is much more colorful than just a pathetic disability benefit.
Dear Chris, you like to see it through rose colored glasses!
In your Bangkok region, ladies with a PC and languages will undoubtedly also be able to handle it, but come to the Isaan? In the village of Khaikai where our house is located, people sometimes don't even speak Thai (let alone English) but a mixture of Isaan and Lao and a computer? They often cannot yet operate a washing machine with more than one button…
The women earn what? With the emphasis on 'what'… Washing and cleaning for others and helping out on the rice field. No, really not 10 to 15 k a month. Most men, working class, don't even earn that.
But back to the topic; the country of residence factor on UWV benefits is going to be a disaster for the lowest incomes. I wonder what the parties that hold socialism in high esteem will say about it. Fear the worst for those roughly 200 Dutch people in Thailand.
In the 80s, 900.000 WAO recipients, indeed most of them were hidden unemployed, who, thanks to the benefit, were guaranteed to receive more and longer than the official unemployed.
But the current 200 WAO'ers in Thailand, which Lammert argues, have another problem, namely they receive WAO in Thailand, which means that they are not registered in the Netherlands and thus miss out on accruing their state pension. Many will then only receive a partial state pension. Plus again because of the WAO and no employment, no accrual of the supplementary pension. At retirement age this can cause a significant fall in income, I personally know 1 who this will happen to.
I don't understand that at all. You will receive the WAO until your death. On top of that AOW, partially. Compared to just WAO (what they have now) it depends a bit on the level of the WAO and the partial state pension whether or not it will get better or worse.
No Chris, WAO/WIA stops at AOW age.
Any benefit will stop when you reach state pension age. If from that moment on you have less than the previously received benefit, you are eligible to apply for a Supplementary Income Provision AOW (AIO) via Social Assistance. There are those who do not (want to) use it for fear that your personal life will be controlled. The Supplementary Affair has made people skittish.
I don't get that either, Chris. You write that you will receive WAO until your death. That may well be the case, namely if you die before reaching the state pension age. It is a misconception that you also receive a partial AOW benefit on top of the WAO benefit.
If you are no longer able to participate in the labor process due to an illness or disability, you are entitled to a benefit from the UWV. If you are entitled to state pension, you are no longer dependent on generating income through the labor process. You then “move” it from the UWV (WAO or WIA benefit) to the SVB (AOW benefit).
Ger-Korat, that was a fixed point: in case of reorganization, 'push into the WAO'! And the trade unions participated wholeheartedly because of the higher security of that benefit.
As far as WAO recipients in Thailand are concerned, they knew that in advance about the lower state pension accrual!
Of course dear Eric, they knew that beforehand.
But of course not being cut by 50%. Not normal, I think.
People in the Netherlands rightly think it is not normal that the energy bill is suddenly so high….
Chris, there is no question of a 50% cut on the AOW! The discount on the state pension due to uninsured years was really known in advance.
It's just robbery. You are going to pay tax for Dutch facilities, but you have no rights. So no health insurance, no tax credit. Dutch taxpayers do have such rights. They are medieval robber barons.
Moreover, you base your decision to move to Thailand on the rules of the game at the time (including expensive health insurance) only to be confronted with a change in the rules years later.
Laws and regulations are constantly changing, also for people living in the Netherlands.
They call it life: everything changes and nothing is permanent.
If you want a payroll tax credit and participation in a Dutch health insurance policy, you will also have to pay a ZVW contribution annually via the tax return. Add to that the premiums for that participation plus the deductible, and you are nothing cheaper.
I read that people can join an association founded by Hans. Can someone tell me how to join it?
Frank, you're going a little too fast. The association referred to in the article is the Dutch Association Hua Hin/Cha am (NVTHC). Although it tries to represent the interests of the Dutch in Thailand, we must realize that the options in terms of taxation are limited. I am secretary/vice-chairman of this association.
Good afternoon Hans,
I understand that, but I would like to join the association and be kept informed.
Is that possible?
Sincerely,
Frank
Frank, register via the website nvthc.org or via email [email protected]