Thailand tax question: What about the tax we as expats have to pay on our state pension and pension?
Questioner: Martin
The question has probably been asked before. But what about the tax that we as expats have to pay on our state pension and pension?
I read somewhere if you have an annual income of close to or over a million baht, the tax rate is 25 to 30%. You would then have to arrange here at the tax office that the tax paid is settled in the Netherlands. I fear that this will be a challenge and will take a while. Do you have to register yourself at the local tax office?
I also read somewhere that we will first have to wait and see how the discussions between Thailand and the Netherlands proceed regarding the new bilateral tax treaty.
It does make me a little nervous.
Hope for your response and some clarification. Thanks in advance.
Lammert de Haan's response
Hi Martin,
Thailand is one of the few remittance base countries with regard to the levy of income tax. This means that Thailand only taxes your income to the extent that that income has actually been brought into Thailand, as evidenced by the bank's daily statements and also to the extent that Thailand is authorized to levy taxes on that income. If you make debit card payments with your Dutch bank card, this also involves bringing in income in Thailand.
Contrary to what you write, the Thai Tax Authorities do not offset the Dutch tax with the Thai Personal Income Tax (PIT). The wage tax withheld in the Netherlands but not due must be reclaimed on your return (model M return for the year of migration and then model C return), unless you have obtained an exemption from the Tax Authorities/Abroad Office with regard to the withholding of payroll tax.
You must indeed register yourself with your tax office to file a tax return. There are fines for failure to file a tax return on time. There are tax offices that then invite you to file a tax return for later years, but that is not a fixed procedure.
A new Treaty with Thailand is indeed on its way. This Treaty is currently ready for signature at the Dutch embassy in Bangkok. In this new Treaty, the Netherlands has stipulated a source state tax.
After the new Treaty comes into effect, you will only have to deal with Dutch wage/income tax. You are not entitled to tax credits and deductions for personal obligations, which means you owe considerably more tax than would be the case if you lived in the Netherlands.
Special provisions apply to the PIT owed on your AOW benefit. I have provided explanations about this in two articles in Thailandblog. To this end see:
en
The second article also contains an example calculation of the reduction to be granted by Thailand in relation to an AOW benefit. If you are unable to calculate the reduction for yourself, please feel free to contact me at: [email protected].
Lammert de Haan, tax specialist (specialized in international tax law and social insurance).
– Do you have a tax question for Lammert? Only use the contact form! –
I was also nervous about how and how much to pay tax, but that wasn't necessary given the relaxed and friendly way I now have to pay up to two times 0 baht tax at the Chiangmai tax office on the Ping River.
I have my state pension and two pensions transferred to my account in my bank in Belgium and what I need is transferred to my Thai bank account via Wise.
I show my international transfers in my bankbook from the Bangkok bank to the tax officer, whereupon she enters all kinds of information into her computer and rolls out a piece of paper that I have to take to the cashier, expecting that I would still have to pay an amount despite my deductions. .
Both times they gave me a calculation from the computer showing that I have to pay 0 baht in tax.
However, I do have to pay the lady at another counter, who filled out my declaration paper, 35 baht administration costs.
I had it explained to me that people were not interested in what international transfers I had brought into the country because I only have to pay tax on what I earned in Thailand.
Now that must be a misunderstanding that is either due to a communication problem regarding the translation from Thai or to the incompetence of the official or both.
But you will understand that I had no desire to really find out.
But what a difference with dealing with officials from the Dutch tax authorities and the direct handling of your tax return and payment.
Cookies were handed out for the birthday of one of the ladies, after which I had to take a picture together and downstairs there was a stall with fresh fruit where I bought some strawberries and mangoes.
I don't think I will go back to be told that I don't have to pay taxes again, especially once the new tax treaty has entered into force.
And I don't think anyone will blame me for that, right?
Niek, those are sweet cookies that they bake for you at the Thai tax authorities.
And you will be concerned about how they calculate it: the result is zero for some reason and be happy with that. They can't do anything to you anymore because the officials have calculated it this way themselves and as a farang you are not expected to have any knowledge in this area. Well, unless you mess with the numbers you indicated, but you don't. Cherish those civil servants!
I had such an experience at the Korat tax office. With only AOW and pension, the deductible costs are such that virtually no tax will be levied. It was explained to me that “people” would not appreciate a declaration because it was work for nothing. To prove that I had properly reported to my taxes, I was again provided with a TIN number. With a possible new tax treaty between TH-NL, filing tax returns will be a thing of the past. Will life in Thailand become a little easier?
It is correct that the Netherlands levies tax on AOW and pension. After all, all that money comes from the Netherlands and TH has nothing to do with it at all. I bought land and a house with my wife and paid transfer tax to Thailand. I bought a car and paid purchase and road tax (the latter annually recurring), I pay 7% VAT on every purchase, gas, water and electricity are also taxed, if I go to a more renowned restaurant I pay the same VAT, my daily and weekly groceries are also subject to VAT. In other words, my share of TH infrastructure because I use it because I live there is in excellent order. Although I am often surprised at the state of maintenance of all infrastructure.