Thailand blog regularly devoted attention to the fact that both the Netherlands and Thailand are allowed to levy income tax on social security benefits obtained from the Netherlands, such as the AOW, WAO and WIA benefits. With a few exceptions, this realization has now reached the regular readers of Thailandblog.
On March 17th, I once again paid extensive attention to this, by placing an article on Thailandblog. New in this was the obligation on the part of the Thai tax authorities to grant a reduction on the Personal Income Tax calculated by it in respect of social security benefits. This reduction is based on Article 23(6) of the Double Taxation Treaty concluded between the Netherlands and Thailand and may even require Thailand to completely refrain from levying social security benefits.
For the article of March 17, see: www.thailandblog.nl/expats-en-pensionado/levy-van-belasting-over-social-security benefits/
Some readers of Thailandblog have asked me afterwards for a calculation of this reduction in order to enter into a discussion with their Revenue Office about applying such a reduction. The annoying thing about this is that the Thai declaration form PND 90 or (and which will be more often applicable) the form PND91 does not contain any room for applying this reduction. I have already answered their questions.
This calculation can also be important for other Dutch people living in Thailand with a social security benefit such as an AOW benefit, which is why I am happy to place it on Thailandblog as a calculation model.
Read Lammert's PDF here: www.thailandblog.nl/wp-content/uploads/Heffing-socsecurity benefits continuation.pdf
Lammert, thank you for a fine piece of work.
On page 2, an amount of thb 653.677 suddenly appears; I can't place that. But it does not interfere with the calculation method.
Erik,
The amount is the gross AOW etc converted to Baht. it is probably useful to state both gross and net state pension, etc. at the start of the calculation, so that this amount does not come out of the blue.
It still seems like a big job to explain this to the Thai tax authorities.
A beautiful piece of work Lammert
Joe, thank you. Just got off the phone with Lammert who said the same thing.
Hi Lammert the slogan “เราไม่สามารถทําให้ม ันสวยงามได้อีก”, is translated by google as “We can't make it. Can be beautiful again”. Don't understand it yet.
Image caption
rao mai saa-maat tham-hai man soewaj-gaam dai iek
we are not able to cause the beautiful-beautiful can/past tense again
What I would translate as: We couldn't make it more beautiful again / again.
Just say 'We couldn't make it much nicer than this'?
Totally right Joe. You can contribute a maximum of your net state pension, etc., in Thailand. That is why I mention “net” behind the relevant payment on sheet 1. I do not mention that after the company pension and the annuity payment. After all, this can be both gross and net, depending on the exemption obtained in the Netherlands.
This net amount of state pension, etc. is included in the calculation of the Personal Income Tax (PIT) due.
However, for the purpose of calculating the reduction under Article 23(6) of the Treaty, the Thai tax authorities must take the wage tax/income tax withheld/levised in the Netherlands and then the gross amount of AOW benefit into account. That is why I indicate “from gross” for the amount of AOW benefit etc. on page 2.
I should note here that a smart guy, with whom I thoroughly chewed through the Excel file, namely WH de Visser (a regular writer in Thailand Blog), drew my attention to the fact that the gross amount of AOW benefit should be used as a basis, etc. for the calculation of payroll tax/income tax (credit where credit is due).
It does indeed seem wise to include the gross amount of AOW benefit, etc. under the key data. At this point I will therefore adjust the file.
You already noticed this, but for an unsuspecting reader, the amount, despite the fact that I indicate that it concerns the gross amount, just falls out of the blue.
To realize this, I have to remove a few or hardly occurring deductions/reductions to make room for this addition. I prefer to leave the structure of the PIT intact across the different discs.
It will certainly be quite a job to get the Thai tax official to actually apply the reduction provision, especially since the declaration forms PND90 and PND91 do not contain any specific space for this. That is why I have also included the English text of Article 23(6) of the Treaty.
I get around this by only transferring my pension monthly and my state pension once in January the following year. Then it is savings and no tax has to be paid on it.
Twice a year I also transfer a lump sum of the saved pension and the AOW. I pay tax in the Netherlands on both sources of income. I understand that I do not have to file a tax return in Thailand and do not have a Thai tax identification number.
Is that okay?
It is very doubtful whether you are acting correctly by not filing a Personal Income Tax return, Taruud. It is not about how often you transfer an amount to Thailand, but whether these transfers relate to income that you actually enjoyed in that year. If not, you can no longer speak of income but of savings.
For example, if you transfer your (company) pension and AOW benefit saved up over the months of January-June to Thailand in July, it will be taxable income. If you transfer the saved amounts for the months of July-December in January, then it is not taxable income, but savings.
You write that you pay tax in the Netherlands on your AOW benefit and your pension. As far as the latter is concerned, I hope for your sake that it concerns a government pension, because otherwise you would be seriously depriving yourself. A company pension is not taxed in the Netherlands, but only in Thailand. You can get a refund of the wage tax withheld on a company pension by filing a tax return.
You are obliged to declare both the AOW benefit and a company pension in Thailand, insofar as these benefits were contributed to Thailand in the year in which they were enjoyed.
In addition to AOW, I have an ABP government pension. I pay tax on both in the Netherlands.
I can also transfer a lump sum in January from my savings from previous years for the expenses of the coming year. “If you transfer the saved amounts for the months JANUARY-December in January THE YEAR AFTER, then it is not taxable income, but savings.” Do I still have to file a tax return in Thailand about the AOW part with more than the right to a reduction to avoid double taxation?
I have been married to a Thai for 30 years.
We have been living in Thailand for two years.
We have a house in my wife's name. She has no income.
Do I have to report to the Thai tax authorities? If so, do I have to report there in person with my wife? Where is that in Udon-Thani province? What is it called in Thai (I've already searched for 3 hours for the Social Security Office: no one knew that name and I didn't know the name in Thai).
Especially the passages about the fines that can be imposed make me very worried. (https://www.thailandblog.nl/expats-en-pensionado/heffing-van-belasting-over-sociale-zekerheidsuitkeringen/ )” A taxpayer on whom an additional assessment is imposed on the grounds that an incorrect return has been filed or who has failed to file a return, will be fined. The penalty rate is 100% in case of an incorrect declaration and 200% for not filing a declaration…. If your Revenue Office is of the opinion that your purpose was to evade tax or commit fraud, an even stricter regime will come into effect, as indicated in Article 37 of the Revenue Code. In that case, in addition to a fine, imprisonment of up to 6 months in the case of evasion or 3 months to 7 years and a fine of up to 200.000 Baht can be imposed in the case of fraud.”
As Jaques says below: “If the Netherlands already withholds tax, then there should be no credit for Thailand and filing a tax return is pointless. So this whole discussion should be pointless.”
By the way, Lammert: I appreciate your commitment and expertise in this area. You can't make it nicer and easier either.
In a post yesterday about how to get a Thai tax number (TIN), a certain Gino suggested having only one expert answer these kinds of questions. He thought of Lammert de Haan. (Also my preference) Questions about tax matters require complicated answers because they have to do with Dutch and Thai treaties. Discussions about the content of those treaties, sometimes in great detail, with many mutual objections, do not make it easy to find out what to do in concrete cases. Taruud just wants clarity because he is dizzy by all the answers and information. So he outlines his living situation and asks very clearly: should I report to the Thai tax authorities? It would be nice of Thailandblog if one person puts down a step-by-step plan, as RobV does with regard to Schengen and RonnyLatYa with regard to Thai Immigration.
I'm in a similar situation to what you're in right now. I don't know any better if it has been said for years that no declaration needs to be made because there is nothing to be gained from me. We have a great treaty and no one. can make us something. Like you, I became a bit worried about the commotion and new insights on this blog. For years I have dyed a Thai lawyer through the wool and I have explained everything to him. Explanation of articles 18, 19, 23 etc. Pension, AOW and according to her it is not necessary in my case to file a tax return. There is nothing to pick and I can show everything that comes in in Thailand and the tax withheld in the Netherlands.
A fraud indication does not play a role in my case. If you know in advance or would know that you owe tax in Thailand and then fail to do so, there is reason to fear. There are examples of Dutch people demonstrating this. The obligation, for every foreigner who stays in Thailand for at least 180 days a year, to file a tax return is apparently one that is not taken seriously. On the other hand, I do understand if you prefer certainty and still file a tax return. Everyone has to make this decision for themselves.
Taruud, I am happy with your addition in time for retirement. I already wrote in my first response that I hoped it was a government pension for you. You confirm that now.
For you there is no dirt in the air. You may transfer an amount to Thailand every week (although I advise against this because of the costs).
Your government pension is only taxed in the Netherlands. Both the Netherlands and Thailand are allowed to levy taxes on your AOW benefit. But most likely, after the deductions and reductions, there will be no amount to be taxed for the Personal Income Tax. You may even have the double deduction of 190.000 THB for 65 years and older and probably also the double deduction of 60.000, namely for 2 people (for yourself and for your wife). If there is still an amount to be taxed, which is possible with an AOW benefit and an AOW partner allowance, you will first of all also have to deal with the tax-free sum of 0% on the first 150.000 THB and then with the set-off provision under Article 23(6) of the Treaty.
Because the Dutch wage tax on your AOW benefit will be a lot higher than the possible Personal Income Tax, there is no room left for Thailand to also levy tax on your AOW benefit.
Registering with your Revenue Office does not make any sense. You therefore do not have to worry about the fines and punishments that I have previously posted in Thailand Blog and which you quote in your response.
@Lammert,
Isn't it better to give advice to file a return with a zero payment as a result, because then no one can hurt you anymore? Legally it may be correct, but it is a small effort and it prevents a lot of nagging to get you right when they confront you about it. In addition, you never know what the visa rules will do and then at least the tax papers are in order.
Johnny BG,
What you describe as a small effort turns out to be an almost impassable road in many cases. Not infrequently, filing a tax return is refused by the Thai tax official
For example, a Thai client of mine, with a "quite nice" pension as a former director of one of the largest Dutch multinationals, took two years (and then also by engaging a Thai lawyer) to file a declaration. may” do!
With the help of the calculation example I posted, you can quickly determine whether and to what extent there is a possible payment obligation after filing a tax return. Also take into account the equalization provision pursuant to Article 23, paragraph 6, of the Treaty in time for an AOW benefit
The major problem that arises when filing a tax return is: how do you explain to the Thai tax official the operation of this equalization provision. The declaration forms PND90 and PND91 contained no space for declaring this reduction.
Now I have given a few pointers, such as the calculation of the reduction and the English text of Article 23(6), but do realize that this matter is also new to them.
You write about avoiding a lot of nagging afterwards to get you right.
I predict a lot of nagging in advance, namely when you file a report. The latter is almost a certainty, while the former remains to be seen.
Thai tax officials are often not too keen on another pale face who wants to file a tax return if necessary. :
I know several Dutch people who, like me, reside in Thailand as a former civil servant and who have been to the tax office. They were not helped there, because it was not necessary and nothing was recorded.
I have been advised by my Thai lawyer not to file a report and to listen carefully to the immigration police, which they considered desirable with regard to the income problem. They are aware of the income through the income statement or through bank book details, provided with the annual renewals. There is indeed consultation and contact between the Thai Revenue Office and the immigration police in this regard. As long as there are no complaints from the Immigration Police and the Revenue Office, we who are concerned can breathe easy in our old age.
Dear Lammers. Thanks for this info. I am indeed retired and now 73. Quite reassuring. And my wife immediately said: "I told you that too!"
Nevertheless, I support the idea of making a concise summary for the most common situations, with a recommendation for whether or not to report for a declaration in Thailand, both countries, only the Netherlands, etc. And the potential risk of going to jail.
I continue to find it incomprehensible that a treaty has been drawn up and signed by both countries that stipulates that income tax is not collected twice. If the Netherlands already withholds tax, there should be no credit for Thailand and making a declaration of this is nonsensical. So this whole discussion should be pointless. But apparently it was not properly arranged and we are now faced with this hassle. As far as I am concerned, the homework can be done over again, by those responsible and now good so that it is not left to clarity for everyone.
I think it is well arranged, namely that if you also have to pay tax in Thailand because you live there, you live there, you can get back the tax paid in the Netherlands, yes you can even submit a request for a number of years of the NL tax authorities. Beautiful right?
That does not apply to former civil servants, who continue to pay full price. Still for me a difference of about 5000 euros on an annual basis. In addition, we do pay taxes in Thailand anyway on all goods you purchase and there is quite a bit more to think of. .
There's something I do not understand.
I have state pension on which I pay tax in the Netherlands.
I have two pensions for which I have been granted an exemption from wage tax and national insurance contributions, including that of the ABP.
Reason: I have (still) been working in Thailand for 14 years and pay income tax on my salary and of course also have a Thai tax number all these years.
My Dutch pension (as a former civil servant) is always taxed in the Netherlands, I do not have to pay tax on it in Thailand. I think once is enough or actually too much because I no longer live there. Not to mention other relevant arguments.
The AOW is also taxed in the Netherlands. Previously, you could still choose between having a reduction applied to one of the two. I thought after 2015 this is no longer possible. So in both cases collection in the Netherlands and therefore with the great treaty on our lap and in accordance with Article 23 paragraph 6 there is no credit to be gained for the Thai authority on my state pension in this case either. The tax that I do pay again can be found, among other things, in buying goods and groceries and eating out and the theme parks in Thailand, etc., because tax is also paid there.
Chris, Thailand is also allowed to levy taxes on your state pension. Subsequently, it must apply an equalization pursuant to Article 23(6) of the Double Taxation Convention concluded between the Netherlands and Thailand. This equalization/reduction amounts to the lower of the following amounts:
a. the tax included in the Personal Income Tax on your AOW benefit;
b. the wage tax/income tax withheld/due on your AOW benefit.
Contrary to what I read in a number of responses, on balance you only pay income tax on your state pension in one country.
I read that you are also exempt from wage tax on your ABP pension. This would indicate that you enjoy a private pension from the ABP. All too often I read in Thailand Blog (even from tax specialists) that an ABP pension is taxed in the Netherlands. But there are countless private institutions with ABP as pension administrator. These are the old so-called B-3 settings. In particular, you should think of all private educational institutions, such as schools for special education, private healthcare institutions and government companies, such as municipal transport companies. And maybe you can remember that: in the past, every municipality also had its own smelly gas factory (it was also a government company and therefore private)!
You write that you also work in Thailand and that you pay Personal Income Tax on your salary. But in your declaration form PND91 you must also include your AOW benefit and your private pensions under question A-1. You then have to calculate the reduction to be applied by Thailand under Article 23, paragraph 6, of the Treaty and tzv your AOW benefit, as I have indicated in the example calculation.
Thanks Lambert.
I give everything neatly to the Thai tax authorities, so they also levy on my state pension. Next year I will deduct what I already pay in the Netherlands.
Now the papers are filled in digitally by Human Resources at the university where I work and they certainly don't know that either.
I did indeed work for a Christian university in the Netherlands, a foundation.
Chris, I estimate that you have a decent taxable income in Thailand. In that case, there is a good chance that the reduction to be granted by Thailand will be limited to the Dutch wage tax/income tax and Thailand will therefore still have tax scope for the AOW component.
However, should the AOW component in the calculated Personal Income Tax (PIT) turn out to be lower than the tax owed in the Netherlands, the reduction to be granted by Thailand will be limited to the calculated PIT in respect of the AOW component, as being the lower of these two. amounts.
In addition to the example calculation, also save the English text of Article 23(6) of the Treaty to your computer (see the posted article). The Human Resources department can also be of service to you.
They can also consult the English version of the Convention with the following link:
http://download.rd.go.th/fileadmin/download/nation/netherland_e.pdf
Jacques, we are talking about an ancient treaty from 1975. Other times, other treaties!
Negotiations on a new treaty have, as far as I know, already started and also briefly stopped immediately after the coup of Prayuth in 2014, but would have been restarted. So there will be another treaty in the foreseeable future with provisions that do more justice to this time. So please be patient!
Jaques, how do you see that there is double taxation of social security benefits, such as an old-age pension?
With my contribution now posted, but also with my contribution posted on 17 March last, I show that this is in fact not the case.
For the article of March 17, see:
http://www.thailandblog.nl/expats-en-pensionado/heffing-van-belasting-over-sociale-zekerheidsuitkeringen/
Because the Treaty for the avoidance of double taxation concluded between the Netherlands and Thailand does not contain any provision regarding these benefits, national legislation applies to both countries. The Netherlands may levy as source country and Thailand as country of residence.
Subsequently, under Article 23(6) of the Convention, Thailand is required to grant a reduction in the amount of:
a) the wage tax/income tax withheld/levied by the Netherlands if the AOW component of the Personal Income Tax is higher than the Dutch tax;
b) the AOW component included in the Personal Income Tax if that amount is lower than the Dutch tax.
In other words, the reduction to be granted by Thailand is the lowest of the following amounts:
a) the amount equal to the tax levied in the Netherlands;
b) the amount of that part of Thai tax attributable to the state pension component.
In that case you cannot speak of double taxation.
Gentlemen, for the sake of clarity, this tax hassle only applies to Dutch people who live permanently in Thailand and not to Dutch people who stay in Thailand for a maximum of 8 months per year??
Another complicating factor in all the discussion, but anyway: anyone who stays in Thailand for more than 180 days is also liable to tax in Thailand!
Jaap, “this tax hassle” can certainly also apply to someone who stays in Thailand for 8 months and in the Netherlands for 4 months.
If you intend to live or stay outside the Netherlands for more than 12 months during 8 months, you are obliged to deregister from the Municipal Personal Records Database (BRP). I always call this the “departure arrangement”. These 8 months do not have to be consecutive.
But now for someone who lives or stays in Thailand for 8 months or less. He or she can also deregister from the BRP and emigrate to Thailand. After 8 months or less, he can safely return to the Netherlands for a holiday, a family visit or to undergo an operation. After your holiday etc. you intend to return to Thailand. I call this the 'temporary return scheme'.
Everything depends on whether you can be regarded as a tax resident of Thailand. To this end, Article 4 of the Double Taxation Treaty concluded between the Netherlands and Thailand contains the following provisions (where relevant):
“Article 4. Fiscal residence
• 1 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 similar circumstance.
• 3 If a natural person is a resident of both States pursuant to the provision of paragraph XNUMX, the following rules shall apply:
oa) he is deemed to be a resident of the State where he has a permanent home available to him. If he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closest (center of vital interests);
(ob) if the State in which he has his center of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident of the State in which he habitually resides;
Article 4, paragraph 1 – You live in Thailand for more than 180 days and therefore become taxable in Thailand.
Subsequently, the so-called tie breaker provisions of Article 4(3) are discussed.
Article 4, paragraph 3, under a – You have sold your Amsterdam canal house and your yacht is no longer moored there either. You also sold your Ferrari. In Thailand you have a sustainable home at your disposal and you drive around in a second-hand car (it takes some getting used to).
During your stay in the Netherlands, you can move in with family or rent a house in Egmond aan Zee or on the Veluwe. But if your family is fed up with you (which can happen in my case) you will be out on the street in no time (sustainability gone). You must leave the house in Egmond aan Zee or on the Veluwe clean before 10 a.m. on Saturday (also no sustainability).
If you are married and you also have school-going children, you must also bring them (whether they want to or not) to Thailand: your personal interests lie in Thailand.
When living in the Netherlands you had an “Appie” on the corner of the street. Do not come back to this "Appie" for your weekly groceries, but do them in Thailand: your economic interests are also located in Thailand.
You can no longer get to Article 4(3)(b).
In other words: you are a tax resident of Thailand and not of the Netherlands.
But do it right. For example, if you keep your house in Amsterdam, where your wife and children left behind in the Netherlands live, then there is too much ties with the Netherlands and you will soon be regarded as a tax resident of the Netherlands. According to settled case law, the ties with the Netherlands need not be stronger than those with other countries. So be careful and get everything right.
Incidentally, most Dutch people who make use of the 8/4 scheme do not deregister from the Netherlands. After all, this means they keep their Dutch health insurance. But the choice is yours.
However, you should not think that your Dutch health insurance is considerably cheaper than a (foreign or foreign) health insurance to be taken out in Thailand. In addition to the monthly premium to be paid to the insurer and the personal contribution, in the Netherlands you also have to deal with the Long-Term Care Act premium and the income-related contribution under the Healthcare Insurance Act, which may even cost you more in the Netherlands. The big advantage, however, is the acceptance obligation for insurers in the Netherlands with regard to basic insurance.