Reader question: Tax return in Thailand, how much income tax to pay?
Dear readers,
I have extensively and carefully read the tax file, but I am left with some ambiguities. Incidentally, I already have exemptions for income tax on my company pensions from the NL tax authorities.
In the file at the end of “Question 2” the following:
“In this blog: foreigners pay 7 percent tax. That is not stated in the law and it is not in accordance with the treaty: non-discrimination also means no favoritism. The VAT in this country is 7 percent.
CONCLUSION
Pension is taxed in TH.”
I would like to file a declaration with the Thai tax authorities in Pattaya before the end of March 2017. How much income tax will I have to pay on my Dutch company pensions here? Above I read that foreigners have to pay 7%, but also that it is not in the law. Where can I find the most correct percentage in the file, or in which link?
In the link http://www.rd.go.th/publish/6045.0.html3.1 Progressive Tax Rates, there is the table below:
Personal income tax rates applicable to taxable income are as follows
Tax rates of the Personal Income Tax
taxable income
(baht) Tax Rate
(%)
0-150,000 Exempt
more than 150,000 but less than 300,000 5
more than 300,000 but less than 500,000 10
more than 500,000 but less than 750,000 15
more than 750,000 but less than 1,000,000 20
more than 1,000,000 but less than 2,000,000 25
more than 2,000,000 but less than 4,000,000 30
Over 4,000,000 35
To be implemented for the 2013 and 2014 tax years.
My income is about 600.000 Baht per year. This table shows that I then have to pay 15% over 600.000. Maybe the 150.000 exempt should be reduced? To me it's confusing, 7% not legal versus 15% in the PIT table. What should it be?
I also have a second question:
When I file that income tax return in Pattaya next year, I can prove the amount on the basis of my annual statements. But I hear from people here that the tax office does not want to see it, but wants to see the bank book. However, in my bank book(s) you can see how much money I have transferred from my ING account to my Thai Kasikorn account, but that money is the sum of my AOW PLUS company pensions. AOW is already taxed in NL, so how do I show how much PENSION I have received via the bank book? That's impossible? How do I solve that?
Thanks in advance.
Fact tester
There is a double tax treaty between the Netherlands and Thailand which clearly states under Articles 18 and 19 that (state) pensions and other income from former employment are ONLY taxable in the state where the pension or other income from former employment is paid out
So why should you look any further where you can pay taxes?
Dear Fact Tester. Let me first state that VAT 7% has nothing to do with the declaration. You further state that you must therefore pay 15% on B.600000. In my humble opinion that is not correct.
You have a pension, so you must be 65 or older, then you are entitled to B.190.000.– exemption (scheme 0702/3649). This is therefore deducted from that B.600.000.–. What remains is B.410.000. Then there is a Personal allowance of B.30.000, which is also deducted. So that leaves B.380.000.
Then the tax table: 0 – 150000 = NIL remains B. 230000,–
150000 – 300000 = 5 % 5% of 150000 = B.7500
300000 – 500000 = 10% 10% of 80000 = B. 8000
THE Cumulative tax is then B 15500 and that is somewhat less than the 15% on the B.600000.
If the tax specialists among us think otherwise, I'd like to hear about it because I don't have a monopoly on wisdom either.
If you download the tax form, the Thai and English form are exactly the same. No distinction in paying tax whether you are a foreigner or Thai, so no idea what you mean by paying that 7% tax as a foreigner. I don't know what MartinX means either. In the tax treaty between the Netherlands and Thailand, paying tax on AOW and state pensions has been allocated to the Netherlands. If you stay in Thailand for more than 180 days per year and are therefore liable to pay tax here, you will pay tax on other company pensions here.
Here is a summary of Thai tax law.
1. Personal allowance Baht
• Taxpayer: 30,000
• Spouse (if spouse has no income): 30,000
• Taxpayer's children (maximum 3), each: 15,000
• Additional education allowance for each child: 2,000
• Parental care, each: 30,000
• Care of disabled or incapacitated family
members, each: 60,000
• Care of a disabled or an incapacitated person
other than a family member: 60,000
In addition, a Thai resident who is 65 years of age or older is entitled
to personal income tax exemption on income up to an amount not
exceeding Baht 190,000.
So you can deduct from your income 30.000 thb and if you are 65 190.000 thb.
So if I don't make a calculation error and you are 65, 600.000-30.000-190.000=380.000 thb taxable income. This will drop you in three brackets over the first 150.000 0% in the next bracket up to 300.000 thb 5% is 7500 thb and the remaining 80.000 thb at 10% is 8000 thb. So to pay 15500 thb.
I don't know if it's the same everywhere, but on Samui every year the tax authorities help you fill in the forms. You don't even have to go to the tax office for that, but they were first in the Tesco and now in a large shopping center (Central Festival). Bringing your annual income(s) form(s) of your pension is sufficient.
Dear Fact Tester,
You overlook a big problem, to settle in Thailand you must have an income of at least 800.000 Bhat per year.
600.000 Bhat is really too little, unless you have a large reserve of at least 800.000.
Greetings Nico
This is about 600.000 thb pension, the AOW is added to that. That 800.000 can also be a combination of money in the bank and pension. So that doesn't have to be income,
If you live in Thailand, company pension is free of income tax in the Netherlands, but taxed in Thailand insofar as it enters Thailand. State pension is taxed in the Netherlands. AOW is not a pension but a benefit from a social provision and therefore taxed in the Netherlands, so free of tax in Thailand. Incidentally, there are quite a few exemptions in Thailand. Calculation of the amount to be paid according to table. Visit a Thai accountant and have heme file that declaration and settle it with the tax authorities. Costs almost nothing.
William Doeser
Wim Doeser, I have/know an accountant friend who went to the tax office for me, with forms, and came back with the message that I was a tourist and therefore not subject to tax in Thailand. We stay here on a year extension on your non-immigrant visa of 3 months. So tourists. You are only liable for tax if you live and work here, which we do not do. You do not live here and you do not work here, but you are allowed to stay here for 1 year each time, with the permission of the Immigration (note “staying” = not living). That with those 180 days is old cake because the then Prime Minister Anand put an end to it. I then had to go to Sanam Luang BKK Finance Ministry to obtain a Tax Exempt which I had to show at the airport upon departure.
This is the information from the revenue office. (Up to date).
1.Taxable Person
Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand.
So I don't know where you get that you are not a tax resident here if you stay here more than 180 days a year.
Dear Fact Tester,
I assume that those occupational pensions are not taxable in the Netherlands. You can read about which incomes are taxable in the Netherlands and which in Thailand in the treaty to avoid double taxation between Thailand and the Netherlands. For 2016, you have to pay 9,500 Baht Personal Income Tax (PIT). I assume you are unmarried.
The calculation is as follows: 600,000 Baht minus Deduction allowed for the calculation of PIT for Income from Employment 60,000 Baht, minus Allowance single taxpayer 30,000 Baht and minus 190,000 Bahr because you are 65 years or older (see above). The taxable income then becomes 320,000 Baht. On this you pay 150,000% tax on the first bracket of 0 and 150,000% tax (300,000 Baht) on the bracket of 5 – 7,500 Baht and 20,000% tax (10 Baht) on the remaining 2,000 Baht. So in total 9,500 Baht PIT tax.
Know that for the calculation of the taxable income for the year 2017, both the Deduction of 60,000 Baht and the Allowance of 30,000 Baht will be increased.
May I give you a tip to open two Thai salary accounts. You transfer the amounts that are taxed in the Netherlands to the first and you transfer the occupational pensions to the second. With the last booklet you go to the Thai tax authorities, make an appointment for help with completing your tax and submit copies of this booklet. Fact tester is ready!
Success!
Is that deduction correct, income from employment. I translate that as income from work, does pension fall under this.
Yes, pensions fall under “Income derived from employment”:
“Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.
(1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.”
And then it continues with the categories 2 to 8.
The problem for the tax authorities in Thailand is that foreigners live there from a few hundred different countries, who probably have all kinds of different tax treaties for tax purposes.
Most offices cannot keep up with this and they have a simple system.
Everything you bring into the country is taxed.
You should see how much that calculation costs you more than you really should pay.
Since you probably won't be able to convince the Pattaya office, that means you have to present the problem to the tax authorities in Bangkok.
They undoubtedly have the knowledge there.
Then you can consider whether or not you want to make the effort.
Incidentally, the levies as stated in the answers are not according to the treaty.
Thailand could levy more tax, but does not (yet?).
I would like to know where you get the idea that everything you bring into the country is taxed. Thai tax law states that you are obliged to declare income, such as pension. If you transfer savings, this is not taxed and you do not have to file a tax return. Now the tax treaties will not differ much on this point, taxation is assigned to Thailand or to the home country.
I would also like to know what you mean by are the levies as stated in the answers not in accordance with the treaty?
And Thailand could levy more taxes, but is not doing so yet?
If you look at the tax form and a pay slip (from my wife) here, it is simplicity itself.
You are absolutely right in saying that only income is taxed.
Just being right and being right are two different things.
The tax authorities in Thailand will tax any money you bring in, unless you can prove that you do not owe any tax on it (this may vary per office, as can the requirements of the immigration offices).
It is practically impossible for the Thai tax authorities to know where your money comes from and so they place the burden of proof that you do not owe tax on that money on you.
I forgot the article number of the tax treaty, which is somewhere around 19, 20 21.
That article allows Thailand to pay your tax in Thailand, calculated on – for example – your state pension plus your pension insurance.
The tax on your AOW will then be deducted from this.
But that amount that is deducted again, of course also includes your exemptions and lowest tax rate.
So suppose AOW is 1.000 euros per month and pension insurance = 2.000 euros per month.
Then tax is calculated on 3.000 euros.
The tax on 1.000 euros of the AOW is then deducted from this.
The AOW will of course also include your exemptions in Thailand and the low bracket rates.
So that is only a small amount that is deducted from that tax bill.
On balance, the assessment is therefore higher than if you only had 2.000 euros in pension insurance.
I don't quite understand why you have to file a declaration if necessary. You are over 50 and here on a ceremonial visa (I assume). You must submit an income statement every year, which you can do on the basis of the annual statements you receive. If that is enough, see the file, then why bother? Report every 90 days. And that's it. If I were you, I would keep my Dutch bank account and let the money come into it (insofar as that is still possible or partly not possible for the SVB) and transfer money to a Thai bank account as needed. It couldn't be simpler. ([email protected])
In the discussion it is assumed that AOW is taxed in NL. I once again looked at my own AOW and found that SVB does not apply any (!!) deduction. So gross AOW is paid out net.
I never asked SVB for an exemption. I do have a discount on my state pension because I worked abroad for about 5 years and did not pay a premium.
I cannot imagine that SVB only exempts me from any deduction. So the conclusion must be: AOW is also – in principle – taxable here in Thailand.
You cannot get an exemption from AOW because this is always taxed in the Netherlands. So if you receive your state pension untaxed, you still have to pay tax on it in the Netherlands. If you do not do this, you will still receive an additional claim.
I think you should be careful with this. As of 2015, payroll tax for expats has been abolished and the SVB should deduct this. However, that did not happen to me and in June 2015 I asked the SVB to take payroll tax into account. The conclusion is therefore that the SVB does not automatically imply this itself. With my tax return for 2015, the amount still due for the first 6 months immediately appeared.
Also in 2014 no tax was withheld from my AOW (started at the end of 2013). Incidentally, the AOW premiums are not tax-deductible, so you pay tax twice.
I notice. Will check again with the SVB in due course.
Dear Teun, up to and including 2014, the Aow payment was gross/net and I did not pay any tax on it.
Again: this has changed on 01/01/2015. You will undoubtedly receive an additional tax assessment for 2015 in due course. To avoid this in the future, it is best to send an e-mail to the SVB stating that you should take payroll tax into account.
Harry,
I just took a look at my 2014 annual statement from SVB. The explanation on the back reads under the heading “Loonbelastingskorting” (on the front it says that this applies):
“……..Does your annual statement under 'loonbelasting' state E 0,00? Then the tax credits are higher than the payroll tax that you have to pay”.
This seems clear to me. In principle, payroll tax is applied, but this becomes nil due to the applied tax credits.
It may be that in my case (lower AOW benefit because I did not pay a premium for 4-5 years because I worked outside the Netherlands) and therefore a reduction of approximately 10% (5 x 2%).
Anyway, everyone seems to be right. Taxable but no tax due due to higher payroll tax credit.
Still nice to know, isn't it?
Nor is it illogical. Social assistance level is 70% of minimum wage (approx. E 1500 p/m). And that comes out to about E 1.000 p/m. I assume that BV Nederland does not grant assistance in the form of a GROSS amount. But of a net amount. After all, why tax later on a social assistance benefit that you have paid out yourself? That would be occupational therapy.
An AOW of approximately E 1.000 p/m (single person) is therefore comparable to the level of social assistance. And so BV Nederland does not levy any tax, as SVB itself indicates.
If a person (AOW) indicates that they do not invoke the non-application of a tax credit, then AOW is apparently paid out gross = net.
Explanation to my annual overview 2015 gives the same information as about 2014.
As far as I am concerned, this has been clarified by SVB itself.
Whether or not you pay tax in Thailand therefore depends on:
1. which tax office you are subject to and
2. which official you meet at that office.
So that causes the differences.
In practice, the bottom line – mostly – is that the majority of us have no de facto taxable income under Thai schemes.
The key question is then: can NL still levy tax in Thailand if no tax is paid. I don't think so myself. If Thailand apparently applies a 0% rate, the Dutch tax authorities have to accept it.
I can agree with points 1 and 2 that you mention, the lack of knowledge of officials about the rules and then make something of it.
In a response above, it is already indicated that it is easiest to have an account that receives taxable income and one that receives untaxed income (AOW, savings, etc.).
The Dutch tax authorities have nothing to do with how the tax rates, deductions and exemptions are in Thailand. So if the pension is not too high, there is nothing to pay. I don't know if you can file a return if you don't owe anything. If not, then when applying for an exemption, the Dutch tax authorities will have to make do with a completed tax form, which will not be processed.
I'm just responding to Teun's message that no deduction is made from his AOW by the SVB.
That may be correct because it depends on the tax treaty between NL and the country where you last lived. In France, for example, ALL income accrues to France (FR is MUCH stronger in negotiations than NL!) so therefore no deduction was and is not made by the SVB. So it is a matter of time delay.
This does not mean that since you left that country, since you live in Th and another tax treaty is at issue, you have no tax obligation to NL and that the SVB should withhold! You live cheaply but dangerously! Calling the SVB is even more dangerous.
aad,
I actually wonder why SVB (if they should/may) have not withheld any tax from the beginning (end of 2013). Before I moved to Thailand (end of 2008), I used to live in the Netherlands. Am I then obliged to consider and inform SVB that they must do their job properly? And in the future - despite exemptions for my supplementary pension - to file an annual return in the Netherlands?
Was just glad to get rid of that geode.
Just the next. The AOW premiums paid in the past were not tax deductible. So why is the AOW benefit also taxed?
After all, in the case of supplementary (company) pensions, premiums paid were tax deductible, so it is logical that these supplementary pensions are taxed. Living in Thailand, you can therefore request and receive an exemption from the tax authorities in the Netherlands. Exemption from AOW should also be possible in that logic.
There is a curious discrepancy in the AOW system. And if you only live on AOW here in Thailand (you then have TBH 8 tons + in a Thai bank account) you will pay tax in the Netherlands on your AOW, but you will be denied your right to health insurance in the Netherlands!!! And so you have to take out health insurance in Thailand that is 2-3 times as expensive. So for BV Nederland the benefits (ie tax revenue) but not the taxpayer's right to the possibility of a lot of health insurance in the Netherlands (for which he/she has paid premiums all these years!).
Finally: how can a single person in the Netherlands get by with only an AOW benefit of approximately E 1100 p/m gross if he/she also has to pay 18% tax on that? That means net about E 900,- p/m. Especially if that includes E 110 p/m health insurance premium, E 500 rent and E 100 in other fixed costs (furniture, G/W/L, etc.). Then you will definitely receive a rent subsidy. Well, better not tax then I would think.
The AOW is an apportionment system, which means that you use the AOW premium to pay the AOW benefit of someone else in the Netherlands.
In contrast to pension insurance, you do not save for the future.
You cannot therefore compare the AOW with a pension and neither can the rules for it.
You live in Thailand and you spend your state pension in Thailand.
As a result, the Netherlands misses out on all kinds of income, such as VAT, environmental taxes and any income from a pension that is taxed in Thailand, but for which you previously deducted tax in the Netherlands and paid less social security contributions.
You also do not buy your bread in the Netherlands, which in turn is at the expense of employment.
And discrepancies in the system.
I've paid taxes all my life for someone else's children.
For someone else's grandparents.
For special education of others.
For the football club of others.
For a solidarity levy for the health insurance fund.
You choose to live in Thailand, where rents are often cheaper and if you don't have a large air conditioner on the wall, the electricity is cheaper.
And where the Thai food cheap. is.
You choose a total package with all the advantages and disadvantages.
Many elderly people probably wonder how the elderly in the Netherlands can live on such an old-age pension.
However, they receive a tax credit, which you do not get in Thailand.
That hurts again.