Tax 2024: Does Thailand tax the sale of my house in the Netherlands?
When I read internet media I feel like I am in Fableland. I read in the fairy tale book that Thailand levies 35% on the proceeds of your house in the Netherlands! 'Think of your tax credit' also appears, and more strange stories.
What does the 1975 NL-TH treaty say? Sorry, this is of no use to people with a Belgian income; the BE-TH treaty is structured differently. But first: progression reservation. I have used that word more often. What is that? It means that no income tax is due on exempt income, but that it does count towards determining the rate on other income. So you pay more percentages on your regular income that year.
But first things first: is it taxable?
Not everything you bring in 2024 or later is taxable. See this link from the Thai tax authority: https://www.rd.go.th/fileadmin/user_upload/lorkhor/newspr/2024/FOREIGNERS_PAY_TAX2024.pdfAnd certain incomes in the treaty have also been allocated exclusively to the Netherlands.
What does the treaty say about immovable property?
Real estate enjoys special attention in tax treaties; also in 'our' treaty. Of importance here are Article 6, 14 paragraph 1 and 22 paragraph 1. I will deal with them briefly.
Article 6. Income from real estate.
In principle, these may only be taxed in the country where the property (formerly known as real estate) is located. This concerns income from exploitation such as renting and leasing.
Article 14. Capital gains.
Gains from the sale of immovable property, as defined in Article 6, may be taxed in the country in which such property is situated.
Article 22 concerns taxation on assets.
The real estate may only be taxed in the country where the property is located.
In summary: the articles of the treaty just mentioned indicate that money flows concerning real estate may only be taxed in the Netherlands. Keep in mind that YOU must be able to prove that the money comes from the sale of real estate in the Netherlands.
But: Thailand is allowed to eat along with these things!
Take Article 23 of the current 1975 treaty.
The article has seven paragraphs and I will skip the first three because they are about someone in the Netherlands with Thai income. The 'evil' is in paragraph 4 of this article. Here comes the text:
Thailand has the power to levy taxes on its residents in the basis upon which the tax is levied, components of income or capital unless expressly provided otherwise in this Agreement.
Thailand has acquired a claim to virtually all forms of income and capital gains not already exclusively allocated to Thailand in the treaty.
In basis of assessment may everything be included from income and capital gains that we bring into Thailand in any calendar year, unless expressly excluded. Previously, the rule was that the money had to have been earned in the calendar year of bringing it in; ten years ago, that provision disappeared but it was not enforced.
With the new implementation rule as of 1 January 1, this provision will become current and I assume, also given the experiences I have read, that the services in Thailand are aware of this.
The implementation of this is regulated in paragraphs 5, 6 and 7 and takes place in three ways: paragraph 5), exemption with progression reservation, paragraph 6), the reduction method, and paragraph 7), tax credit for substantial interest profit.
This concerns member 5.
Inwhere a resident of Thailand derives income or owns capital which in accordance with the provisions of Articles 6, 7, 10, paragraph 11, 12, paragraph 14, 15, paragraph 16, 17, paragraphs 19 and 22, XNUMX, paragraphs XNUMX and XNUMX, XNUMX, paragraph XNUMX, XNUMX, XNUMX, and XNUMX, paragraphs XNUMX and XNUMX, of this Convention may be taxed in the Netherlands, Thailand exempts those benefits and income or those assets from tax, but may, in calculating the tax on the remaining income or capital of that resident, apply the rate of tax that would have applied if the exempt income or capital had not been exempt.
What exactly does it say in simple language?
If a resident of Thailand books this… and this… income or capital from the Netherlands THEN Thailand exempts it from tax, BUT Thailand may, when calculating tax on other income or capital of that person, apply the tax rate AS IF that exempt income had NOT been exempt.
So, eat along; eat along through what is called table progression, the increase in percentages in the tax brackets. Thailand has eight, from 0 to 35 percent. They run like this:
Up to 150.000 thb: zero percent; next 150k: 5%
Next 200: 10%; next 250: 15%
Next 250: 20%; next million: 25%
Next three million: 30%, and everything else 35%.
This is what you pay on income after deduction of costs, personal exemptions, deductions and the extra 190k deduction if 65 years and older and/or disabled. Everyone knows the most common one.
Do you want to know all the deductions?
https://www.muangthai.co.th/en/article/tax/tax-deduction
But that is not so easy to calculate…
That is custom work and different for everyone. It depends on the income you bring in, your personal deductions, costs and exemptions, and the 'extra money' you want to use for a house, car, etc. I cannot make a calculation on that in this context.
It is clear that this method will put your regular income (pension and such) in a higher bracket and you will therefore pay a higher tax rate. If it concerns large amounts such as 50.000 euros and more, I advise you to consult a Thai tax advisor.
How will that work with the new treaty? No idea, to be honest. Nobody knows what it will contain.
Conclusion
The conclusion is that under the current 1975 treaty Thailand may not levy directly on moneys from real estate in the Netherlands. Thailand may eat along on the basis of article 23 paragraphs 4 and 5. This is called progression reservation.
The above is based on what we now know about the 2024 measures; new legislation known as 'world income' has not been taken into account because that legislation is not yet in place now, October 2024.
The treaty in our language is here: wetten.nl (space) Thailand, and in Thai here: https://www.rd.go.th/fileadmin/download/nation/netherland_t.pdf
Advice
[1] You don't live in Thailand yet.
If you have not yet emigrated to Thailand, but it is in the pipeline, plan your emigration after July of any year. That is a safe margin for most people. You will not get a 180 day or longer stay in Thailand.
In that case you are liable to tax in Thailand but only for your domestic Thai income (such as bank interest in Thailand). It also means that you can book money in.
[2] You already live in Thailand.
If you already live in Thailand, the first advice is to bring in as little regular income as possible that year, if that is allowed by Immigration, because there are branches that want to see monthly income. You could prepare for this by building up a pot for a few years at a low rate.
If it concerns large amounts, my advice is that you consult a Thai tax advisor to discuss this matter. He can accompany you to the tax authorities to explain the text of the treaty. Please note: the large offices often charge Western hourly rates.
[3] Do not leave Thailand for more than six months.
I find that far too risky. Your permanent residence and that of your partner and possibly children, the center of your life, etc., has been Thailand for years and then your fiscal residence is Thailand, all according to article 4 of the treaty. A long vacation does not change your fiscal residence. You will not quickly receive an assessment for less than 180 days, but I would not want to take the risk that the department or the judge will decide otherwise.
SE&O. Subject to future changes and the new NL-TH treaty.
About this blogger
- Built in 1946. Nicknamed 'Running tax almanac' and worked in that profession for 36 years. Moved to Thailand at 55. Disability forced him from his family in Nongkhai to a house with home care and mobility scooter in Súdwest-Fryslân.
Read the latest articles here
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Erik,
Thanks for the tips. I have another question about the concept of “assessable income” and whether you are required to file a tax return.
I will give you three cases of remittance in any tax year:
1) I transfer money from a savings account that was built up before January 1, 2024
2) I transfer money from sold shares on which demonstrable losses have been incurred
3) I only transfer money regarding income that is only taxable in the Netherlands according to the tax treaty, as outlined in your story
My questions:
1) Are these cases considered “assessable income”?
2) Do I have to file a tax return on this foreign income?
Eddy, this article is about real estate; please stick to that. If you want personal advice, consult a tax advisor in Thailand.
If this topic does not interest you or does not apply to your situation,
application, you don't have to read it of course.
However, for many people it is very important to know what is best for them
strategy is to avoid surprises and unnecessary tax burdens
to pay. For a large group this information is very welcome and enlightening.
Peter, thanks for your words. The text of that writer was removed because he played the man.
Question: Does Thailand tax the sale of my house in the Netherlands?
Answer: If you have any doubts about this, simply leave Thailand officially until after you have sold your house in the Netherlands.
After everything has been settled by a notary (with an official home address in the Netherlands), you can simply return to Thailand and apply for a residence permit again.
Right? Just check out and check back in. Simple.
Thank you Eric for your extensive explanation. However, I have a question about the sale of a Dutch home. Then I am not talking about income from the exploitation of a home but from the sale of a home and then sending the proceeds to Thailand. I thought that the sale of a home, to be more precise, the profit you make on the sales price minus the purchase price is not taxed in the Netherlands. Not because you now live in Thailand but simply because that profit is untaxed in the Netherlands. The same applies, I think, in Thailand. If you sell a house or better said a condo in Thailand with a profit, you do not pay tax on it. You do pay wealth tax in the Netherlands and not in Thailand. That is why I think that what you, very creatively and clearly, call “eating along” does not apply here. But I am happy to give my opinion for yours. Thanks
Johnkohchang, you see it right. If you sell a house in NL from box 1, so the house that serves as a main residence, then the profit you make is not taxed in NL. And losses are not deductible anywhere. Even if it concerns a real estate from box 3 if there is normal management, and you have not started a 'trade' in renovating houses...
I explained that Thailand may not directly tax the sale of real estate in the Netherlands. But…! But there is article 23 of the treaty. Read section 4 and then section 5. I have included that text in the advice. A different rate is then calculated on your regular income, your living expenses, and for most emigrants that will be their pension. So that is not tax ON that house but BY that house. I call that eating along.
Now the question: what is profit. That is not stated anywhere. Sale minus purchase? But you have placed a dormer, a new shed, an internal renovation, so tell me: what is the profit? Do you dare to enter into a discussion with a Thai official or with a Thai advisor who guides you? I foresee a discussion about this and in the end you will get a handshake. And that then depends on what amount is levied extra.
I have indicated under [1] [2] [3] what you could do if this happens to you. Be there in time and prepare the declaration well. Yes, an advisor costs money but it is only once…
Erik Kuijpers,
Thanks, agreed
So let's say the 65000 baht of pension alone, then it will be taxed as follows?
And that is in the situation as it is now, only money coming into Thailand
12x 65000 = 780000 baht
Source calculations: https://th.icalculator.com/income-tax-calculator/2024.html
: Income Tax Calculation for the 2024 tax year
฿0.00 – ฿150,000.00 0% ฿0.00
+ ฿150,000.01 – ฿300,000.00 5% ฿7,500.00
+ ฿300,000.01 – ฿500,000.00 10% ฿20,000.00
+ ฿500,000.01 – ฿750,000.00 15% ฿37,500.00
+ ฿750,000.01 – ฿780,000.00 20% ฿6,000.00
= Total Income Tax Due ฿71,000.00
You bring in an extra million: 1,780,000.00 baht
: Income Tax Calculation for the 2024 tax year
฿0.00 – ฿150,000.00 0% ฿0.00
+ ฿150,000.01 – ฿300,000.00 5% ฿7,500.00
+ ฿300,000.01 – ฿500,000.00 10% ฿20,000.00
+ ฿500,000.01 – ฿750,000.00 15% ฿37,500.00
+ ฿750,000.01 – ฿1,000,000.00 20% ฿50,000.00
+ ฿1,000,000.01 – ฿1,780,000.00 25% ฿195,000.00
= Total Income Tax Due ฿309,999.99
It's coming along nicely, tax is already 4,37 times higher.
Fortunately, with a Thai bank account with the required visa amount, this is not yet included.
However, at the next step Thailand, ALL your money is income and you sold your house for 3
11.002.029,27 baht. Total 11.782.029 baht, money and pension.
In calculations, does NOT include the 400 kbaht or 800 kbaht for visa, because that would have to be added as well. So degradation of that fixed amount.
: Income Tax Calculation for the 2024 tax year
฿0.00 – ฿150,000.00 0% ฿0.00
+ ฿150,000.01 – ฿300,000.00 5% ฿7,500.00
+ ฿300,000.01 – ฿500,000.00 10% ฿20,000.00
+ ฿500,000.01 – ฿750,000.00 15% ฿37,500.00
+ ฿750,000.01 – ฿1,000,000.00 20% ฿50,000.00
+ ฿1,000,000.01 – ฿2,000,000.00 25% ฿250,000.00
+ ฿2,000,000.01 – ฿5,000,000.00 30% ฿900,000.00
+ ฿5,000,000.01 and over 35% ฿2,373,710.15
= Total Income Tax Due ฿3,638,710.14
2nd year: 11.782.029 – 3,638,710 = 8143319
Income Tax Calculation for the 2024 tax year
฿0.00 – ฿150,000.00 0% ฿0.00
+ ฿150,000.01 – ฿300,000.00 5% ฿7,500.00
+ ฿300,000.01 – ฿500,000.00 10% ฿20,000.00
+ ฿500,000.01 – ฿750,000.00 15% ฿37,500.00
+ ฿750,000.01 – ฿1,000,000.00 20% ฿50,000.00
+ ฿1,000,000.01 – ฿2,000,000.00 25% ฿250,000.00
+ ฿2,000,000.01 – ฿5,000,000.00 30% ฿900,000.00
+ ฿5,000,000.01 and over 35% ฿1,100,161.65
= Total Income Tax Due ฿2,365,161.64
So in 2 years you spend 6 million in taxes on Thailand?!
The following year, another chunk of what you have left will be taken away and this will continue until all your house earnings are in Thailand's pot?!
Tell me I'm wrong, it must be, it can't be? Because this is even worse than the Netherlands.
I can hardly imagine that things would turn out this way.
Where am I going wrong, or not, Erik?
I was also allowed to understand that it does not matter if you bring in money for e.g. a house and that it would not be taxed or have special treatment. It is just money says Thailand and therefore it is taxed. Read in an article on AN.
So in other words house prices for you in Thailand go up, the tax collects on sale. Take that into account and then haggle the size of taxes on the money?
1 million baht tax 115000, 2 million baht 365000 baht, 3 million baht 665000 baht, 4 million 965000, just some numbers from calculations, which are added to the price.
You buy a house for 3 million, bring money to Thailand and so you pay tax on the 3 million, that is extra price. You only pay it to the tax office, so your Thai house costs 3665000 baht.
But maybe I just have everything wrong and it's not that bad?
Ed, you make mistakes fortunately…. You forget the personal deductions etc, AND the money from the house is not added. It works differently.
But…my eyes are closing, it is now half past 12 and I have been sitting in front of the TV for a long time because of 010 against 020. Tomorrow is another day and then you will get an answer from me. Around 11 o’clock NL time so 17 o’clock Th time.
Ed, let me first assume your 780k income in TH. Before you calculate the income tax there are deductions. For you 60.000 thb, for your married wife if she has no income also 60k, cost deduction pension 50% but max 100k, and if you are 65 or older or disabled then you get a deduction of 190k. Together 410k. There are more possibilities and I have given that link.
Take that 410 off your 780 and you’re left with 370k baht and then take the table; your income tax for a whole year is 14.500 thb. That won’t bankrupt you…
Then you get money from the sale of your house in NL. THAT IS NOT DIRECTLY TAXED IN THAILAND. I really did my best to explain that in the advice. I copied article 23 paragraph 5 of the treaty and explained it in simple language.
But…! The extra money does count to determine the tax rate on your other income, say: your pension. And that is complicated. If you bring in 50k euros, exchange rate 40, then 2 million thb is added to your 780. Then the deductions are subtracted and then 2.370.000 thb remains. Then calculate the income tax: 476.000 thb. Do you have to pay that? No! It is only a unit of account.
Now it gets tricky. The text of paragraph 5 talks about 'the tax rate'. What is that? I have never worked with it, I can't ask Lammert anymore, I consulted a Dutch expert and he doesn't know either. Is that the average percentage of levy? That would be 20,08 percent. Or is it the levy in the highest bracket, in this case 30 percent? Or something else?
Whatever it is, it is the rate that you will pay on your 780 income minus your 410 deductions. If that is 20,08%, then you will pay 74.296 thb income tax instead of 14.500. That is almost 60k baht more according to the rules of the treaty. Waste of money? Yes! But I did not make that treaty, I am just delivering the message.
That is why I advised under [2] to consult a Thai tax advisor. Does that cost money? Yes, but a good advisor will earn back his salary. And he/she can go with you to the tax office to explain the NL-TH treaty because do not count on every civil servant knowing the treaties.
Which advisor? First, search around your place of residence and look in the Friday or Saturday newspaper of the English-language press. Do not expect them to speak Dutch. You can also ask around in the farang community in your area of residence. The conversation will in most cases be in English or Thai.
I hope I've reassured you a little.
Now your last remarks. In AN you read something different; that is possible because they also do not know all tax treaties.
Finally, what if you want to buy a house in TH and the money is not yet in TH. That depends on the source of that money and whether it is from 2024-etc or earlier. Older money is not subject to the levy; I gave that link. When you have questions, you will seek certainty and I advised to do that with a Thai advisor.
ALL my proverbial wooden shoes are broken and rest assured, not really.
You have indeed indicated article 23 paragraph 5, however, under certain conditions other articles apply.
It was a crime to read that treaty.
Then I completely stumbled over article 22 paragraph 4 and 6 paragraph 3 (which in turn refers to 6.1)
“All other elements of property of a resident of one of the States shall be taxable only in that State.”
So it's a super general statement. Thailand can tax wealth via income tax rule?!
As I read it, your house sale, your received price for it, is then capital and therefore taxable. However, not yet entirely and will only really start with Thai global income setting.
However, article 6.3 then:
“The provision of the first paragraph applies to income derived from the direct exploitation, letting or leasing or FROM ANY other form of exploitation of immovable property.”
In that article 6 everything about house is placed with the government, where the house is located and therefore not Thailand, I read from it. Therefore no house wealth taxes in Thailand?
However, it does indeed state on 23.5 that Thailand may count on it and with a house sale of 11 million baht, may tax your pension and other assets by 35%!
Article 6.3 is then essential for NOT taxing? You could then put the money on a "sales account", so that you can show Thailand every time, that it is from a house sale. With papers of money transfers and all that. You may have to declare it with your annual taxes in Thailand.
One thing contradicts the other in what I read, it drives me crazy.
So now it would be purely on assets, transmitted money to Thailand, where you would pay more, unless you indicate that it is home equity?
Incoming money not directly taxed?, but may be used to increase the threshold. Normally you start at 0%, but with a million sent and received money, do you then step in, in a higher scale for your pension tax?
But to which assets does this apply, after all, 6,3 money does not apply?
Strange that the incoming money is not taxed, because that is what I read all the time. Not 6.3 money then, but 22.4 money that can be taxed?!
To be indicated then to whom and when?
There go my clogs again.
The treaty dates from '75, a completely different time with a different approach than today.
The new treaty will be significantly worse, especially for the taxpayer.
I wonder to what extent our government will let the Dutch down again.
However, 6.3 as it is, then no taxes?, Completely free in Thailand?.
Then that will not be included in Article 22.4 and will that only apply to other (savings) assets?
Then show what your savings were for 2024 and your tax will be lower again.
And for the time being, man remains in the dark, as the treaty will change, Thai taxes will change again and also Dutch taxes in 2027.
2027 when many workers retire and of course these must be addressed more.
New rule I believe is that you are still stuck with the tax problems of the Netherlands for 10 years after you emigrated. So there will be some negative things in the pipeline..
Make a possible move to Thailand or another country as unfavorable as possible and Thailand does not like permanent farangs, so it participates fully. Yes. only millionaires, then it is good.
There has been a very strange trend in the world since 2000, at least in my opinion.
AN, was a piece that intrigued me, as Thai tax authorities responded to it.
Not a piece from a reader or anything, but from a story from an official news service.
It's been a few months now, I can't find it anymore.