The Tax and Customs Administration requires (contrary to the treaty) tax registration in Thailand
Are they coincidences or is it a calculated attack on the tax exemption of Dutch citizens in Thailand? Reports are increasingly appearing that the Dutch tax authorities are ignoring the 1975 treaty with Thailand to prevent double taxation.
This mainly concerns the Foreign Department of the service in Heerlen. Some officials there strongly state that no exemption from income tax and social security contributions is granted if the person concerned cannot provide proof that he or she is a tax resident of Thailand and has been deregistered from the Netherlands. Heerlen is increasingly dissatisfied with the mere fact that according to the treaty 'the center of vital interests' is grounds for exemption from tax in the Netherlands.
Dutch people in Thailand are also sometimes told that exemption is only granted on condition that funds are transferred directly to a Thai bank account. A nonsensical thing…
Tax treaty with Thailand
It now appears from sources at the Tax Authorities in The Hague that the current treaty with Thailand has long been a thorn in the side of the Dutch government. Exempt persons receive their money net from the Netherlands, while the Thai government does not or hardly tax it. The Netherlands would like to keep the tax money in its own pocket through a withholding tax. However, amending the treaty to prevent double taxation is a complicated and time-consuming matter, while the Thai government prefers that the expats spend the money here than that it disappears into the Dutch treasury.
Take the request from K. from Chumpon. After a fierce letter and peppery telephone conversation on his part, people in Heerlen bluntly adhere to the (new) requirement of providing proof of being registered in the Thai tax system. In desperation, he went to the local Revenue Department office in Chumpon. He is now registered and has a Thai tax ID.
He was immediately assessed for 2014, to be paid: 0 baht. Probably because only the amount that is actually transferred to Thailand is taxed and he had stated an idiotic low amount (120.000B) for this. That was not checked now, but that could of course be different next year. In a letter to be sent to 'Heerlen' he stated:
….”Apparently, in your current opinion, it is no longer significant that both the Netherlands-Thailand Treaty and Thai law designate me de facto and de jure as Fiscal Resident of Thailand”….
Rejection from Heerlen
Peter N. very recently also received a rejection from Heerlen of his request for tax exemption. That was already the second time, because the civil servant was not satisfied with the first request. He took the trouble to communicate the decision by telephone. The fact that the Thai tax authorities usually do not issue a tax number did not interest him. If Peter somehow managed to obtain a tax registration, the exemption would soon be a fact. That's the game, that's the rules and that's how it should be played. To become discouraged.
It is remarkable that the Heerlen service knocker turned out to be unwilling to issue a decision open to objection. Peter can only protest once his pension fund has withheld tax for the first time. A strange and totally unacceptable thing.
The question is starting to arise whether the officials of the tax authorities (and not only in Heerlen) know what they are doing. One will not receive an exemption, another for three, ten years, or without an end date.
Letter of objection
From the letter of another Dutchman who objected to the rejection of the requested tax exemption. Which was promptly granted.
In your letter you request, among other things, recent proof showing that I am regarded as a tax resident in my country of residence. Pursuant to the treaty between the Netherlands and Thailand (www.jongbloed-fiscaaljuristen.nl/files/belastingbelastingen_09/thailand.pdf) one is always regarded as a tax resident in the country of residence. In my opinion this is therefore an irrelevant question. You also state that one must be deregistered from the Netherlands in order to be eligible for the exemption. This is also not mentioned in the treaty and is therefore also incorrect. A deregistration can also determine in which country one resides and only serves as additional evidence. Mere deregistration in itself is not sufficient reason to determine the country of residence.
In the remainder of this letter I will demonstrate to you on the basis of the treaty between the Netherlands and Thailand why my tax residence is in Thailand. In Article 4. Tax residence, paragraph 1, the following is stated:
“For the purposes of this Agreement, the term 'resident of one of the States' means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other circumstance of a similar nature.” . For a natural person, the State of Residence is therefore deemed to be that State where the center of his vital interests are located.
The fact that the center of my vital interests has moved from the Netherlands to Thailand can be seen from the following (a list of supporting documents follows).
In view of the foregoing, it should be clear that I have left the Netherlands for quite some time now, and that the center of my life interests is in Thailand. In view of the provisions of Article 4 of the treaty between the Netherlands and Thailand, I am therefore regarded as a “resident of Thailand and under the laws of Thailand I am subject to tax there on the basis of my domicile, residence and other relevant data, which indicate that the center of my vital interests is in Thailand. In other words: “I am liable to pay tax in my country of residence (Thailand)” under the treaty. Therefore, under Article 18 of this treaty, my income is only taxable in one state, namely Thailand.
Perhaps unnecessarily, I would like to note the following:
It often happens that people confuse “taxable” with “subject to tax” which means the same as “taxable”. With regard to residence, the treaty does not mention being liable to pay tax. Article 4 speaks of “subject to tax” and Article 18 speaks of “taxable in that State”.
It is therefore immaterial whether one actually pays tax in Thailand on any income for which taxing power has been assigned to Thailand under this treaty! This opinion is shared by your tax authorities, which may be apparent from what is stated in the LBB20 form under general information, in which it states “that one is also free to provide supporting documents, etc., etc.”.
In view of the foregoing, as well as on the basis of the enclosed documents, I believe that I have demonstrated that my residence for tax purposes is in Thailand and I still request that you grant my request for exemption from the withholding of payroll taxes.
A very good defence. I recommend everyone to keep this. In case of! You never know.
Incidentally, I had to prove 10 years ago by means of that card that I was a tax resident.
No point. 200 baht and 10 minutes later I had it
If Thailand does not provide a tax number and does not levy taxes, the Dutch state is still not allowed to levy taxes, see Article 1-2-4-27, and the Netherlands itself has signed this as a model treaty with the OECD - so people can simply submit a notice of objection.
I have submitted a notice of objection to the Central Appeals Board in Utrecht and hope that many will follow me and if it is rejected again, simply appeal again until the tax authorities themselves will no longer see the trees of the forest
I have already become accustomed to this and have also submitted an objection to the SVB regarding AOW, etc.
I recently submitted a notice of objection similar to the Dutchman above who was promptly granted an exemption. I also received an exemption, but with the nonsensical condition that the pension is transferred directly to Thailand by the pension fund.
There is no way to measure or are they just bullying us?
The core of the problem is that some petty minds in Heerlen cannot accept that pensioners in Thailand do not pay taxes because of jealousy, because the Thai government is not interested in this. There is now an official complaint (submitted by me) which will undoubtedly have a follow-up with the National Ombudsman. The court will also be asked to rule on this in due course. But hopefully before that the Ombudsman will put an end to the shocking anarchy of some jealous civil servants in Heerlen.
I fully agree with what has been said in the article regarding the aspects of the treaty. It concerns the subjection to theoretical taxation, because one is resident in Thailand and not whether one actually pays tax there.
Incidentally, it is recommended to deregister from the Netherlands, in order to demonstrate that one has left the Netherlands “with terwoon” (even though this is not a requirement of the treaty).
He who demands, proves.
You claim to be resident in Thailand and subject to tax there, because THAT is the rule. The fact that the tax levied is ZERO is beside the point. incidentally, exactly the same as if you reside in another zero-tax country.
Sorry, but I think it is only normal that proof of registration, in this case Thailand, is submitted. Was with me in 1994, too, when I claimed tax exemption from my brought money, earned in TH and SE Asia.
And then the NL levy was: NIUL.
It is a thorn in my side that most Dutch ex-residents seek refuge with their benefits and/or pension and/or AOW. Simply pay taxes in the Netherlands if you have a Dutch passport or if you are naturalized as a Thai or whatever country you live in. Perhaps short-sighted, but that's how it should be regulated globally as far as I'm concerned.
Sorry, Willem, unfortunately for you things are arranged differently worldwide at the moment. It is an internationally accepted principle that you pay tax in your country of residence, i.e. the country where you reside more than 182 times a year.
It is also the intention that NL emigrants pay taxes in Thailand. Only the circumstance arises that the Thai government is not interested in this.
William P.
I still live in the Netherlands and pay a lot of tax here. That has a reason, of course.
The main function of tax is the budgetary function. This means that the proceeds of the levy are intended to finance public goods and services that are politically determined to be generally accessible. Examples include matters such as defence, the police, the administration of justice, the road network, social security, assistance, healthcare, subsidies, art and culture.
Anyone who no longer lives in the Netherlands. His residence elsewhere will no longer make use of the collective goods and services described above. That is why I think it is entirely right that people who live abroad are subject to tax there. Sometimes that is more and sometimes that is less than in the Netherlands.
Let's not let envy be a reason to criticize completely justified legal treaties.
The, as you call them, ex-residents have paid their entire working life in the Netherlands for their taxes and contributions and now no longer use any provision at all.
Gr.
Willem
The Dutch Tax and Customs Administration spares no effort to be able to collect money everywhere. And all that effort is accompanied by high costs.
If one no longer wants to comply with the tax amount with Thailand, the government must first reach agreement with the Thai government.
When I announced at the time that I was moving to Thailand, I was told in black and white that Thailand could then tax me with an exception for the AOW benefit.
Have little idea of taxes, but look at it from a pragmatic point of view, because if no proof can be provided, it is not surprising that no exemption from income and social security contributions has been granted for the time being.
Provided that the Tax and Customs Administration will certainly make mistakes in this respect, but often the fault also lies with the submitter.
Incidentally, you have heard from 'sources' at the Tax and Customs Administration that the current treaty is a thorn in the side of the Dutch government, that will probably be the case, but please also name those sources, otherwise it can only be interpreted as pent-up frustration on those the same Dutch government or tax authorities.
Pragmatics are out of the question here!
We are dealing with tax treaties between two countries and the NL tax authorities must implement them. If evidence is provided by the petitioner in accordance with the tax treaty, an exemption must be granted.
The circumstance now arises that the NL tax authorities are asking for all kinds of evidence that, in accordance with the treaty, would not have to be provided. In short, the tax authorities are out of line.
Dear William. Exemption from tax can be a thorn in your side, but this is simply arranged in treaties by mutual governments.
In addition, naturalization to Thai is in principle impossible. And what about the premiums that someone has paid all his life in the belief that his old age is insured.
However, when push comes to shove and tax has to be paid on all funds from the Netherlands, the obligations also include the rights, such as health insurance. The government cannot measure with double standards and eat it both ways.
I had been waiting for a while to see if there would be another Dutch person who believes that taxes should always be paid everywhere in the Netherlands and yes, there is one again. I advise this gentleman to carefully read the other and previous messages regarding the treaty between the Netherlands and Thailand. It is very clear and not that difficult to grasp. The tax authorities in the Netherlands are being pathetic on certain points and are not respecting the deadline. Arrogance at its finest. Moreover, retired civil servants who reside in Thailand for a long time are also discriminated against, because they have to pay taxes in the Netherlands. This group therefore does not receive gross, net payments. In this respect, this is regulated by law and some people must have fallen asleep during the consultation years ago. I have already raised this matter with my union representatives and it is a topic of discussion again. It is still unclear whether a lawsuit will be turned into a lawsuit because it is sensitive, because a lot of money must of course be found and the mandatory contributions from ex-civil servants are certainly important in order to be able to pay and pay for all (lucky and justified) asylum seekers. yes, they are common in the Netherlands.
There seems to be uncertainty about the tax treaty, or better said, the double taxation treaty. This amount does not mean that there is no longer a tax liability, but that the amount of income that is taxed in one country may not be taxed again in the other country. If you stay in Thailand for more than 180 days, you will be liable to pay tax in Thailand. Tax liability does not necessarily mean that tax must actually be paid. That is up to the authority of the country where tax is payable. However, if no tax has been paid on (part of) the income in one country, the other country has the right to still tax that (part of the) income.
There is no automatic tax liability after a 180-day stay in Thailand. You must first be deregistered from the Dutch population register. Many stay in Thailand for up to 8 months a year and officially live entirely in the Netherlands.
The 180 days refers to so-called 'tax residence', not to be confused with the official place of residence.
The tax reduction (exemption) is only granted on the amount that is actually transferred to Thailand. This is stated in the treaty in Article 27: Limitation of Tax Reduction.
The Tax and Customs Administration of Heerlen applies the rules purely arbitrarily.
Some retirees are granted an exemption for 3 years, others for 5 or 10 years.
I know one who has even been granted an unlimited exemption as long as he lives in Thailand.
Some receive an immediate exemption upon application without any problems, others must provide numerous proofs that they are a tax resident before the exemption is granted.
With my first application (in 2005) after I was deregistered in the Netherlands, I immediately received an exemption for 3 years, by enclosing a “Certificate of Residence” from immigration with proof that I am a tax resident.
In 2008, I again applied for a 3-year exemption with the same Certificate and received it without any problems.
With my next application in 2011, I received a message that a Certificate of Recidence was not proof that I was regarded as a tax resident of Thailand.
After various exchanges of letters and telephone conversations, the civil servant in question (was a lady) remained firm; so no more tax exemption.
(The previous two applications I had to do with male civil servants).
In desperation, I decided to take steps to pay tax here, in order to prove that I was a tax resident.
(Thailand tax rates are a pittance, by the way!)
Well that was a problem in itself to get that done.
Firstly, they sent me from one tax office to another, always from a higher level.
When I was at the right office, it turned out that I could only start paying tax after 6 months and therefore only then could I get a proof of tax residence.
I then informed Heerlen by telephone that I could only provide proof of “tax resident” after 6 months.
The same lady told me she would take my file.
Who can describe my surprise when I was told that I no longer had to make any effort because,
(you won't believe it)……..MY TAX EXEMPTION HAS ALREADY BEEN GRANTED AND FOR 5 YEARS.
The confirmation was already on its way.
So next year I have to apply again.
I now have the "yellow house book", I think I'll send that along as proof.
It seems that there are retirees who have success with that.
Indeed, you are only a tax resident if you stay for at least 180 per tax year.
@ Joop, as you can read I have had an exemption for 10 years, but all my income (pension and state pension) is transferred to my Dutch bank.
If the tax authorities demand, as I did recently, that the income must be transferred to Thailand, then Heerlen has the right to do so and simply executes the treaty.
Article 27, it really is.
As a tax advisor in the Netherlands, I want to get involved in at least one thing, the deductions from the Aow are always assigned to the Netherlands, no matter where you are registered. For the other benefits, various provisions regarding whether or not payroll tax in the Netherlands are important and can only be viewed personally.
Dear LeoBosch,
You outline well what the "policy" is at the Tax Authorities. Randomness!
When asked why this time 5 years then 3 years again, while I always send the same data including the yellow booklet, you invariably get the answer “that is our policy”.
I also have my pensions transferred to a Dutch bank, because paying taxes from Thailand to the Netherlands is also very difficult. I have had an exemption for 14 years, but I notice from various publications that that exemption is being challenged. It could just be different in 2 years.
This is the latest news I received on tax news.
Taxes.
All Dutch people living in Thailand have their AOW allocated to the Netherlands. They will also pay 2016% tax on the AOW from 10 because tax credits, etc. will no longer apply from 2016. People who have been civil servants or government employees in the Netherlands always remain liable to pay tax in the Netherlands.
Sincerely,
Lodewijk
Ask Leo:
I know the Certificate of Residence as the document issued by the Thai tax authorities after you have paid taxes.
Do you mean this document?
Or do you mean the document that the Immigration Office issues to confirm your home address?
Dear Richard, the treaty states that taxation is allocated to the “State of Residence”. If you are still registered in the Netherlands, that is your country of residence. If you have been deregistered and live in Thailand, you must submit that proof to Heerlen and that is the Certificate of Residence that you can obtain from Immigration, provided you meet the conditions. All kinds of documents from the Thai tax authorities are not involved. The treaty only mentions “Residence”.
Dear Richard,
Just as in the Netherlands there is proof of deregistration via the municipality, so in Thailand there is proof of registration with a home address, with 2 Thai witnesses, the so-called Certificate of residence.
The Thai call service does not interfere with that.
Immigration checks the home address every 90 days.
Sincerely,
Lodewijk
Someone who has earned his money in the Netherlands and receives his money from the Netherlands should pay tax wherever he lives in the Netherlands.
Of course why should you as a country have to abide by the law you signed yourself (meaning sarcastically). Jan have you just not read the pieces before? A tax treaty has been signed by the Netherlands. It doesn't matter whether you agree or not afterwards. This does not make the law less effective. And certainly the government (ie tax authorities) has to comply with that law. If they don't then they need to be corrected. It is well known that the Dutch government wants to spend as much money as possible everywhere, but this is no excuse for breaking the law.
I look with interest at the legal process that I understand has been initiated and am curious to see what the national ombudsman will do with this.
John, I think you misunderstood. If your statement were true, then you should also be able to take out health insurance in the Netherlands. And that's just the problem. In NL you are simply obliged to be in the country for a minimum time. If not, you will be unsubscribed. And your health insurance will expire. But then tax?
I have had 3 exemptions. The first 2 went relatively easy. Problems arose with the third. I received a letter from Heerlen at my address in Thailand, requesting proof that I live in Thailand….. After a lot of back and forth calling/corresponding, the third exemption for 5 years (!!!???) was granted , while the earlier 2 apply as long as I live in Thailand.
The Hague wants to eat both ways. No vision / sense of reality.
That problem will also play a role for me next year.
Then an annuity policy will pay out.
I no longer have to pay tax in the Netherlands from Heerlen,
I have also received a refund from the tax authorities as a non-resident taxpayer.
For that annuity, however, I must apply for an exemption and for that I must have a registration with the Thai tax authorities, which have already refused twice.
I actually miss it all a bit.
I will call again soon.
I also need to make sure that the Netherlands will not tax that annuity itself.
There is another story going around that the annuity is at the expense of the insurer's profit and that it is then taxed in the Netherlands.
I pay taxes to the country I get my money from. So in this case my country the Netherlands. The AOW is taxed in and by the Netherlands anyway and I pay tax to the Netherlands from my pension. This is Dutch money earned in the Netherlands and in my opinion Thailand has no right to it.
@RichardJ
I thought I had clearly written in my response that I had sent a Certificate 0f Residence from immigration with my application for tax exemption.
Unfortunately, I have to conclude that the term Certificate of Residence is used incorrectly.
The Certificate of Residence is the document issued by the Thai tax authorities.
The document issued by Thai Immigration is a Certificate of Address.
See also: the tax file for post-actives.
In a matter like this, all sorts of considerations come into play that obscure a proper view of the matter. There, for example, is the question of whether a pensioner in TH would be exempt from NL taxation because he is a tax resident of TH. One then refers to the NL-TH tax treaty. The TH Fiscus would also not be interested in a pensioner.
But in the end it comes down to a third consideration: if you combine the first (namely, if you live in TH then you are subject to TH for tax purposes), with the second (thus: the TH Fiscus is not interested in a pensioner), then you have the chance to pay no taxes at all, so that your NL income remains almost 100%. Apart from the state pension, that is, because it is always (!) subject to the Dutch tax system. I would like to add a 4th recital. See further.
Consideration 1: if one is deregistered from the municipal offices in NL, and lives fully in TH, one is considered to be liable for tax in TH. In any case, no social insurance premiums are paid. You don't have to do anything for this. It is possible that premiums are still deducted in the first year, but this is fully rectified in the following year via the tax return/assessment. Income tax is withheld, even if one is liable to pay tax in TH. One must demonstrate that they actually pay tax in TH. The Tax Treaty says it is confusing about how to do that, so there is a difference in the interpretation, and this leads to (heated) discussions with the NL Tax and Customs Administration.
Why are there these discussions? Because if you don't pay tax in NL, you are expected to do so in TH. That fact is also in the spirit of the treaty. One must therefore prove that one pays tax in TH. But for many people it is precisely about avoiding paying taxes to TH! Because that's the point! Tax exemption in NL, no tax payment in TH.
Consideration 2: The TH Tax and Customs Administration does not pursue an active policy regarding the payment of tax by, among others, NL pensioners. People do not actively look for those who reside in TH on a permanent basis, and can therefore be regarded as taxable persons. One could easily do that through the Immigration computers. After 2 x 90-day reports, it can be demonstrated that someone has been living in TH for 180 days and can therefore be registered and credited for tax purposes. As far as I know retirees are just small fish. Suppose someone contributes a pension of 1500 euros per month, then after all kinds of exemptions, he comes to approximately 1.300 baht tax levy per month, which is 15,5 thousand baht per year. They don't turn the knob for that in TH. If that person also pays TH health insurance premiums for his TH wife and children, he comes out at 0 baht. Both per month and per year.
But if someone nevertheless wants to be registered, he is very welcome at the desk. But if you don't (!) show up at the counter, that's fine too!
Consideration 3: Suppose you have a TH tax registration and you want NL tax exemption, then it would be nice if the NL Tax Authorities consider that registration more than sufficient, in addition to the fact that you are a resident of TH, to grant you that exemption . Then consider that the TH Tax Authorities are not chasing you, then this issue becomes very lucrative if your income is not 1500 euros p. months, but several factors higher. And that's what I'm constantly reading between the lines in many postings and responses over the past few years. But what's the matter? If, as mentioned above, you have a pension of 18 euros, you will pay an assessment of approximately 2016 baht in 16, which is 425 euros. In the Netherlands you would, for convenience, pay 1625 euros. The entire maneuver will save you barely 1200 euros p. year, being 100 euros per month. NL amounts calculated optimistically. But hey, what do you do when you're in a pinch???? It therefore becomes interesting if the income is significantly higher, and significantly more tax payments are also made in the Netherlands. Not so in TH. See the gist of the discussion here.
New consideration 4: In NL we paid taxes because they finance health care, education, infrastructure, police, judiciary, defence, among other things. Now it is the case that I no longer use it, and rely on the collective institutions of TH. But I do not appeal to the health insurance fund because I am extremely well insured abroad, I no longer enjoy education, I think infrastructure is just so-so, I have my doubts about the police and judiciary, and a good word for defense. In short: I think that I contribute sufficiently to TH habitat with my expenditures in TH, incl. indirect taxes including VAT, and with my investments in home and hearth. Although I am in the favorable circumstance of having more than just a pension, outside of Aow, I nevertheless believe that everyone with an income should still pay tax according to means. But I grant this to NL: firstly, I don't pay that much more than if I were still living in NL, and secondly: I owe NL a lot, so much so that I can now enjoy a good total income in TH, even though my TH wife and I worked hard for it for years. Because I also owe that to NL. Because: no matter how you look at it: NL is not that bad. Just look around you!
TH is fine, you won't hear me say anything about that, but I owe it to NL.
Dear Richard J
The form with which you request confirmation of your residential address in Thailand at immigration is entitled:
“APPLICATION FORM FOR RESIDENCE CERTIFICATE IN THAILAND”.
@l.lagemaat
The proof that you are registered with the municipal administration is the so-called “yellow house book”.
According to the official English translation titled : “HOUSE REGISTRATION Thor.Ror.13”.