Avoid taxes in Thailand and live tax-free in Thailand: Is that still possible?
If you want to live tax-free in Thailand, you should read the following lines a little more carefully. Thailand also has its own tax system, which is relatively easy to understand.
Taxes in Thailand as a foreigner are mainly payable if you generate income or profits in Thailand from Thai sources. Regardless of how long you stay in the country.
means income in Thailand from Thai sources:
- Running a business in Thailand
- To carry out work in Thailand
- Being employed by an employer in Thailand
- Owning and renting or selling real estate in Thailand
The situation is different for income from foreign sources in Thailand!
Tax-free in Thailand for profits from abroad?
In Thailand, the principle of residence taxation applies without foreign tax laws. In fact, you could almost say that a mixture of residence, territorial taxation and non-dom system applies here. Here you can find out more about the 5 tax systems worldwide.
If you live in Thailand, you do not have to pay trade tax or similar for a foreign company. Only income or profits from abroad that are imported or transferred into the country must be taxed directly in Thailand. The tax rate ranges from 5% to 37%.
The prerequisite for this is that you are a “Thai resident”, i.e. you have lived in Thailand for at least 180 days. No distinction is made between foreigners and Thai citizens.
Attention: Special tax regulations in Thailand!
Since 2024, all income earned from 2024 onwards AND remitted to Thailand is subject to Thai taxation if the person resident in Thailand is liable to pay tax, e.g. because they have been in the country for more than 180 days.
Profits, income and dividends transferred to Thailand from 2024 are taxable in Thailand!
Please note: According to an official statement by a colleague from a higher position in the Thai Revenue Department, only the amounts of money that are transferred to a Thai bank account are taxable in TH. Any withdrawals from a Thai ATM are not taken into account for taxation purposes.
This would make taxation in Thailand equivalent to taxation under non-dom status! Exception: If the country of origin has a DTA with Thailand, income does not have to be taxed again in Thailand. However, the question arises as to how Thailand wants to establish that you have already paid tax on amounts transferred in your home country. Older tax returns from the home country could help here!
Two ways to live (almost) tax-free in Thailand!
Option for entrepreneurs (without tax): You leave your income outside Thailand in a bank account and only withdraw money from an ATM within Thailand when you need it! Disadvantage: You pay 220 THB per withdrawal at the ATM, not to mention any fees at your local bank. If you have a foreign debit or credit card, you can, for example, pay for flight and hotel bookings by card WITHOUT having to import the money into Thailand in advance.
Option for entrepreneurs (with tax payment): You transfer the capital you need to live in Thailand directly from your business account to your private bank account in Thailand. The money received then serves as proof for the “Revenue Department” (tax office) in Thailand, for example.
If you only transfer the bare minimum to Thailand, the tax burden may not even be that high. Example: If you transfer e.g. 500,000 THB to Thailand, you may only pay around 10,000 THB after deducting all allowances. Converted into euros, a transfer of approx. 13,500 euros means that only 270 euros in taxes are due.
Advantage: You have a Thai tax ID, receive a tax certificate (which can be used as proof for all sorts of things, e.g. the German tax office) and thus prove to German authorities, for example, that you have a tax residence in Thailand. Topic: Avoidance of the “extended limited tax liability” for income without a permanent establishment is thus solved!
For pensioners (without tax): If the German state transfers a pension to Thailand, this is actually regarded as income. Until now, however, Thailand has mostly tolerated this and has not pursued it much, as pensioners living in Thailand spend their money in the same country anyway (indirect taxation). If you want to be on the safe side, you can ask the German pension insurance company whether they will transfer the pension tax-free to a German bank account so that you can withdraw this income tax-free at a Thai ATM (220,- THB ATM fee). If you have a foreign debit or credit card, you can, for example, pay for flight and hotel bookings as well as other purchases in shopping centers by card WITHOUT having to import the money into Thailand in advance.
For pensioners (with tax contribution): It is also important to ensure that you only transfer the amount of money to TH that you actually need each year. You can then submit your tax return in TH and may be taxed at a very low rate.
