About gifts and gift tax in Thailand
Giving something away in Thailand? How many times has it been written about? House, car, water buffalo, money or bling bling. This article is about asking for/recovering gifts when the relationship has soured or when the giver has simply been duped.
Lend money
Make sure it's on paper. A verbal agreement is more difficult to prove. A written record offers certainty to both parties, even if the lender's family asks questions later.
Put the conditions in writing and make sure to record at least interest (maximum 5% per annum in Thailand) and the day of repayment. Make the agreement in Thai and English and have it signed by all parties and an independent witness. Withholding tax may be required on interest payments!
The law in Thailand
Donations are governed by the Civil and Commercial Code. What is a donation? A gift is a thing or money that is given voluntarily to a person without expecting anything in return. This does not include the dowry; you cannot ask for it back.
You can reclaim a gift if the recipient commits a serious crime against the donor, if the recipient seriously insults the donor or seriously undermined his reputation (defamation), and if the recipient refuses to provide the donor with the necessary assistance in the event of danger to his life .
You must submit a claim in this regard within six months of becoming aware of the incident. There is also a statute of limitations.
When to withdraw?
Theft, fraud and an attack on the donor himself can be a reason to revoke a donation. If it concerns defamation and insult, it must be serious matters. A wrong word in the family atmosphere can be too little; you have to think of public statements that seriously discredit the donor.
It is best to consult a good lawyer immediately if you want to revoke a donation and remember the term!
How does Thailand tax donations?
A donation is personal income. There are exemptions from resp. 10 and 20 million baht (depending on the relationship between donor and recipient) and you can choose to have the excess taxed as regular income (at the bracket rate) or at a flat rate of five percent. This applies to Thai, farang and legal entities.
Exempt from gift tax are, among other things, donations for the preservation of cultural heritage. Advice from a tax advisor may be necessary.
Source: Internet. Edited by Erik Kuijpers.
It seems to me that you give a gift with your right mind and it is pretty sad if you start demanding it back in lesser times, even if you have been cheated. Everything has a reason and everything up to and including finishing certainties is not a hobby for many people. Take the loss or give nothing. Life is no different than buying a lottery ticket.
Donating, giving and then asking back is not possible. If you donate large amounts you are out of your mind because you don't do that in the Netherlands either.
In Thailand, lending someone something is often the same as giving, you often don't get it back anyway because what do they have to pay back.
Many Thais live far above their means or start living above their means as soon as a white nose comes into the family and I speak from my own experience.
Nothing but good otherwise
Martin, maybe you can read the Thai Civil and Commercial code, articles 526 to 532. Particularly 531.
You may pay the foreigners who have a house built on the grounds of the Thai partner without establishing rights to the chanote as rent, building rights or usufruct. The construction costs of that house are then a gift to the owner of the subsoil. The fact that those people are 'misguided' indicates how you feel about this, but luckily everyone decides according to their own feelings.
Giving and borrowing means in Thailand that it is seen as a gift.
A kind of tamboon, for which one is rewarded as a giver in a next life.
If one really wanted to give a loan, as the bank does, I would record it in writing, possibly with collateral.
With more favorable conditions than the bank does.
Perhaps without paying interest.
Of course most farangs are not going to do this out of social sense.
In recent years we have spent 60.000 Euros on improving the living conditions of the family.
With little effect I must say.
It is difficult to change a certain way of life with just giving money.
“In recent years we have spent 60.000 euros on improving the living conditions of the family.
With little effect I must say.
It is difficult to change a certain way of life simply by giving money.”
Therein lies the whole problem of wanting to do good. It is of little use if help comes from above if it falls into the lap of the receiving party. Then you get a kind of father and toddler relationship in which the latter has no idea what it is about. It is not for nothing that a bank sets requirements for a loan because it is an adult-to-adult agreement and some common sense may be expected. It is therefore not for nothing that many people do not even turn to a bank.
I appreciate,
In your further useful contribution there is an error (you) regarding the maximum interest to be calculated per year for a loan.
Because I found a maximum interest of 5% per year, especially for the Thai practice, very low, I looked up the relevant articles of law. It is a pity that you did not add links to the relevant articles of law in your contribution.
https://library.siam-legal.com/thai-law/civil-and-commercial-code-loans-section-650-656/
Section 653: A loan of money in excess of XNUMX baht in capital cannot be enforced unless there is written evidence of the loan signed by the borrower.
The repayment of a money loan cannot be proved by written proof unless there is a written proof signed by the lender or the document showing that the loan has been handed over to the borrower or canceled.
Section 654: Interest shall not exceed 15% per annum; when a higher interest rate is set in the contract, it is reduced to 15% per annum.
These articles apparently do not prevent many private borrowers from charging interest rates of 20% per month (this is not a typing error!), if the borrower cannot give anything as collateral.
TheoB, the source says 5%, in numbers. But that would be a typo...
In hindsight, it's a good thing you didn't mention your source. Because with those kinds of sources…
TheoB, the source is a well known name in Thailand. That company also publishes on international sites. That reinforces my opinion that it is an ordinary typing error, all the more so now that the percentage has been published in figures. Sloppy, poorly controlled, nothing more. But I don't make a big deal out of it; even the best knitter sometimes drops a stitch….
The following are the factors that need to be considered and classified as a gift subject to tax:
Income from inheritances of more than THB 100 million under Section 12 of the Inheritance Tax Act.
Immovable property or rights of occupation of the immovable property. This does not include property given to son or daughter without any return. In addition, it should be less 20M THB.
Stock, cash and property are considered a gift. Some of the exemptions are:
Gifts received from a descendant or elderly relative or spouse. The gift must be worth less than THB 20 million.
Gift from a person who is not a family member but obtained during the ceremony. The value of the gift cannot exceed 10 million Thai baht per year.
Income that is planned for public spending, educational or religious purposes.
Tax amount
The gift rate for the unrelated recipients is 10% while it is 5% for descendants or ancestors. For those who are eligible to pay 10% gift tax, the option is offered to pay 5% gift tax. This is only under certain circumstances. They pay 5% of the gift tax and deduct the amount from taxable income at the end of the fiscal year. The gift tax is levied on the same day as the inheritance tax.
Imposition of gift tax
The gift tax is levied on natural persons and legal entities. Along with it is levied on the non-Thai nationals who are resident in Thailand. The non-Thai nationals must be accepted as residents under Thai Immigration Law.
Source https://bit.ly/3RsUm7J