Have expats experienced double taxation in Thailand despite the DTA?

@Suki *****

you cannot find anyone with experience about 2024 tax changes because they won't be filing their taxes until next year.

@Suki *****

read all comments, saw no evidence of anyone being double taxed in this thread, maybe I missed it? 🤷‍♂️

CPAs and tax attorneys are not the same people.

I understand looking for advice.

But please keep in perspective you’re walking around a dark room looking for a light switch.

Until absolutes are defined AND enforceable my advice would be keep as much of your money in your home country as possible.

Thailand talks a lot before anything really happens has been my experience.

@Edward ********

there's a difference between owing taxes and the requirement to file a tax return. As I said above if you want to claim exemptions provided for in a DTA you do so via a Thai tax return

@John *********

no you are avoiding the question, as an example = if you spend $50 via credit card purchase at Big C, is that considered “income”? What about a cash withdrawal? Do you really have all the answers?

@Christopher *****

I did not ignore the question "no matter how you bring income into Thailand". All of the methods you wrote about are covered.

@John *********

I believe the big question is what Thailand considers income. Just bringing money into Thailand does not mean it is income. I have a substantial post tax savings that I use for most my living expenses. Since it has already been taxed in prior years it is not considered income for US tax purposes. Not sure how Thailand will consider it.

@Wylie ******

Are you referring to money in Roth IRA, and hence it doesn’t count as “income“ when you withdraw it?

@Justine ********

no. I make references to two accounts. However neither are a roth IRA. The one I am saying gets the entire withdrawal taxed is a traditional IRA.

The one I say does not tax withdrawals is just a normal post tax funded brokerage account. Any gains from sales for the entire account are taxed and considered income, regardlesss of being withdrawn or not. The benefit is that there is no age limit on withdrawals that IRAs have.

A roth IRA is different in that it does not tax the gains like the brokerage account does. They also penalize any withdrawals prior to being 59 a 10% penalty. However, you can avoid early withdrawal penalties by taking advantage of a rarely used tax code (72t) by withdrawing substantially equal periodic payments. Which I do on my traditional IRA.

@Wylie ******

if the money was accumulated prior to /2024 Thailand treats as savings. If you only bring such savings into Thailand you have zero liability to thai tax and don't need to file a tax return. But you should be able to show proof just in case you get a question from the revenue department

@John *********

but I'm in a scenario where maybe about half the money I spend is taxable income according to the US and the other half is already post tax savings which is not considered income. I have expenses both in the US and in Thailand. In this scenario how will one prove which money it is that I bring into Thailand? The taxable income or the non-taxable savings? I think its hard to prove either way, so will Thailand just assume the money I bring into Thailand is taxable? I feel many people are likely in a similar situation.

I suppose even if they assume the money I bring in is the taxable income I should only be subjected to the difference in tax between US and thailand.Thailand.

Just one more reason why I try to withdraw money direct from the US at an ATM or put larger expenses on a US credit card and only bring in the requirement for the visa.

@Wylie ******

only savings accumulated prior to /2024 will be exempt so you should be able to capture that from statements or whatever. Any savings accumulated after that must have come from somewhere so will have at least an element of income. So you then show what "pot" the money comes from. It's obviously easier if the savings from pre /2024 are in their own pot

@John *********

unfortunately both the savings and taxable income go into the same account before being spent. At that point there is no way to determine whether the taxable income is used for my US expenses or is the money I bring into Thailand. This is where it becomes a bit ambiguous as to how Thailand will treat the money I do bring in. I guess I'll just have to wait and see, then make any adjustments into how I move my money around.

@Wylie ******

savings must already exist, so they must already be in the pot. They can't go into the pot. If you mean you have money in investments or property or similar that then pay you money regularly I don't think that counts as savings, only money in the bank

@John *********

well its technically not savings, but easily could be. I have two different "pots". One is tax a deferred IRA (retirement account) where all withdrawals tax the entire amount at the federal rate. The other pot is an investment account that was funded with post tax dollars. The entire account (not the withdrawals) gets the capital gains taxed each year. I withdraw money from both of these accounts (which have vastly different taxable income) into a third "pot". It's this third pot that all my expenses are paid from. If this ends up causing an issue with how much money being brought into Thailand is taxed I'll have to look into how I move my money around so it's more clear and I'm taxed as little as possible.

@Wylie ******

neither of these qualify as savings as I understand the meaning in the thai tax regulations so you would be transferring income. As an aside Thailand also treats capital gains simply as income.

@John *********

correct. It is not technically savings, but easily could be. The point is these two accounts have a signicant difference in how and what is taxed, and at what rate. The IRA only taxes withdrawals at the standard federal rate. The other account only taxes capital gains, not the principle, but does so on the entire account. Not just what is withdrawn. My financial advisor also manages it in a way to minimize taxes.

At the end of the year when I file the US taxes pretty much the only thing that falls under taxable income is what is withdrawn from my IRA. I end up paying virtually zero in taxes on the other account for the reasons mentioned above, despite the fact I withdraw and spend close to the same amount as I do from the IRA.

@Wylie ******

as far as I can see the only way it could become savings is if you withdrew from those investments and stuck the money in a bank account. Even then you would have missed out on the amnesty period in question and so the money would be income and taxed as such other than the initial principal

@John *********

as far as the US tax code is concerned it is not considered income since the principle investment was taxed when it was earned years ago. Whether you call it savings or not or whether I invest it or not makes no difference. They only consider the profits made on the investment as income, and therefore taxable.

The way this account is then managed in terms of trades, in order to offset gains, further reduces the tax burden on any money withdrawn. These two things results in virtually none of the money withdrawn being viewed as income. Whether it is considered savings or not makes no difference, what's withdrawn is not considered taxable income.

@Wylie ******

But that's irrelevant from a Thai tax perspective. It's what they consider income and what they consider savings that matters. And payments from investments are considered income

@John *********

so lets say I took post tax money from a true "savings", say $1000, and put that in an investment. After 1 year that investment neither gained or lost value. It was still worth exactly $1,000. What you are saying is if I then withdraw that money that the full $1000 would be taxed? From everything I have found that is incorrect. Thailand, just like the US, only taxes income from investments. Which is interest, dividends, and other investment income.

"Investment income - Interest, dividends and other investment income are subject to PIT at the applicable rates."

And

"Gains derived from sales of shares are generally subject to PIT."

Notice how they only say investment "income" and "gains" from investments. What matters is what is gained or lost in the investment. Not the principle that was used to purchase the initial investment. As long as the initial/principle used to purchase the investment was already taxed at some point.

This is no different than how the US does it and I am saying that that money is NOT considered taxable income in the US and apparently is not in thailand either.

Perhaps you are confusing the need to report it on taxes vs it actually counting as taxable income.

%20gains,property%20are%20subject%20to%20PIT.

@Wylie ******

no. I didn't say that at all. The principal remains the principal. But if you're investment distributes money, whether by dividend, interest, capital gain or whatever, then that distribution is income.

@John *********

ok. So we are in agreement. As I stated several times though, because of how my account is being managed they offset any gains and dividends for the year with other trades. This results in little to no taxable income on the money I withdraw. This is despite me withdrawing 5-10% or more a year with the account value remaining the same.

This is what I have been saying and is my point. I have two accounts, one with withdrawals that are considered taxable income and one that is not. That is what matters. NOT whether it is a "savings" account or not, which is what you were saying. It's not as simple as that. Even the little interest earned on some true "savings" accounts is taxable.

@Wylie ******

your story seems very flexible, not to say confusing. What does "other trades" mean. To me that just sounds like a normal managed account, but the 10% you take every year sounds like income to me. I don't know enough about your situation to comment further other than repeating that your tax situation in the US is irrelevant to your tax situation in Thailand. It sounds to me like you needs professional advice from an accountant in Thailand that also understands the US situation

@John *********

it seems you may not know much about how capital gains are calculated at the end of the year then. You summarize ALL trades. Some make money, some lose money. You add that together for the total account, not just what is withdrawn from the account. My financial advising institution will look at how much I withdraw per year and make sure there are trades at a loss that will offset any gains on that amount. They then reinvest those loses either in a better investment or similar. Even if that investment then goes back up it is not considered a gain until it that new investment is sold.

I don't need professional advice to understand this. I know exactly how it works in the US and according to the link I provided in another comment it is the same in Thailand. Whether or not my withdrawals from that account will be deemed taxable income is not the question I was asking. It is not. My tax documents for these accounts are provided by Schwab, who I think may know a thing or two on what is considered taxable income and what is not. And again, thailand views it the same way.

My point was that I have a third account that gets funded with money that is taxable income and money that is NOT taxable income. Since the account mixes these two and is the account I use to bring money into thailand it is impossible to prove one way or the other if that money came from the taxable portion or the non-taxable portion of the account.

If they default to it being from the taxable portion, since I can't prove one way or the other, and the tax rate is higher than the US tax rate (it would be in my case) then I would owe the difference. Where as if i make sure the account i use to bring money into thailand is funded ONLY with the non-taxable funds (from that investment account) it would not be. I didn't think it was all that confusing.

@Wylie ******

but that's what I've been trying to say, income is income. It doesn't matter whether that income is taxable in the US or not, all income remitted to Thailand becomes assessable for Thai tax. You apply the various allowances available to you in Thailand then apply any credit etc available to you via the DTA in your thai tax return and the result is the tax you are due in Thailand

@John *********

yes, assessable. Like I said though, you are confusing the need to report it on taxes and it being taxed. Those are not the same thing, as you seem to understand and state as well.

The part you can't quite seem to understand is that Thailand, exactly the same as the US, only taxes investment income (gains, dividends, etc).

Just like in the US I would show that the net result of all the trades that occured in that account did not result in any realized gains. Therefore the money I withdraw from it does NOT come from investment income. It is essentially the initial, already taxed principle that is getting withdrawn. Any account gains are still not realized because they are still invested. Whether it's the US or Thailand, there are no gains or dividends to be taxed.

@Wylie ******

good luck trying to show that. You called it income. What does the fund paperwork show it as? I'm betting it won't show it as withdrawal from savings.

@John *********

You're so stuck on it being called savings. It's clear Thailand only taxes gains and dividends on investments, the same as the US. Whether an account is called savings or not has no bearing on it. And yes, the paperwork I get from Schwab 100% shows that there were no realized gains for the year. If there are no realized gains then there are no gains to be taxed. It's really quite simple.

@Wylie ******

then why do you refer to it as income? If there are no gains, no dividends, no interest, it doesn't sound like income. Having said that you are still going to have to show it's not income somehow. That's going to be your issue.

@John *********

I haven't. I incorrectly called it savings, which you then got too hung up on despite me explaining several times that it has no bearing. From my very first post I said it is NOT considered income. You are the one that keeps trying to say it is income simply because it is not labeled "savings" or from a "savings" account. I have continued to tell you that it is NOT taxable income.

@Wylie ******

and I'm continuing to tell you that just because it's not considered taxable income in the US is irrelevant. If you remit that money to Thailand it's how the thai revenue department considers it. That's why I suggest you consult with a Thai tax accountant

@John *********

and I have shown you and explained to you several times that Thailand views it the same as the US. They ONLY tax the gains and there are no gains to be taxed.

@Wylie ******

so can you please explain how you are able to withdraw 5-10% per annum without that coming from the original principal? Where does this come from? If you have a magic money tree I'm sure we'd all like to know.

@John *********

the end result is that my withdrawals are essentially coming from the original principle, which I have stated several times. It's my account value that roughly remains the same despite me withdrawing 5-10% each year. The account value is the remaining principle plus the unrealized gains. Gains that have not been realized yet because those investments have not been sold. I explained this already. There's even more to it than that, but I am only explaining the simplified version because you're having trouble grasping even that.

@Wylie ******

my problem is you skirt round things so it's impossible to grasp the actual reality with statements like "essentially coming from the original principle". That's only good if your original principle is reducing by the full amount withdrawn every year which isn't particularly sustainable. Like I said previously its impossible to comment further without detailed knowledge

@John *********

it's not my fault you can't grasp it. Like I said, there's a bit more detail to it than that, some of which i have explained, but if you can't understand the over simplified version after it being explained several times then I'm certainly not going to waste my time getting into the finer details of it. I say "essentially" because investment and tax statements don't list out which parts of an investment or dispersals are principle and which parts are gains.

They simply list all sales for the year. Gains and losses are then summed up for the year and then you only owe taxes if the net result is a gain. I stated this in one of my previous comments, which of course you either didn't understand or were still too hung up on it needing to be called "savings" for it to have registered. Since you couldn't understand this extemely basic investing 101 concept I then explained saying that it is "essentially" the same as only withdrawing the original principle. Which it is "essentially" equivalent to in regards to tax liability.

The only thing that may be different with thailand is whether or not they allow capital losses to offset capital gains in a given tax year. That however has not been discussed here and does not impact your lack of understanding it.

All of this back and forth for something you clearly don't understand and actaully has absolutely nothing to do with my original question, which was bringing money into thailand from an account that mixed funds from two other accounts with drastically different tax liabilities. Because of this the paper trail to determine which money is spent in the US and which is brought into thailand is lost. This matters because how much I would owe in additional Thailand taxes will vary greatly depending on which source it is from.

How they have different tax liabilities does not change the question, answer, or solution to resolve it.

I tried saving all this back and forth by saying just think as one of the accounts as savings, since that was the only way you could understand it having no tax liability. I thought this would result in you focusing on the actual question, but again you are just too hung up on how there is no tax liability for the account in a given year. You are however the last person that should be trying to answer or give advice on anything investment or tax related.

@Wylie ******

I'm not trying to give any advice other than include prior to /2024 being exempt which means you start with a clean slate at that point. I guess it's going to be between you and the Thai Revenue Department how you calculate assessable income from that point forward. While I understand exactly what you are saying what I have difficulty with is how you can take up to 10% out of the fund every year without fairly quickly running the fund down unless there are gains in the fund which you claim there are not

@John *********

Of course there are gains, unrealized gains because those investments have not been sold. I have also explained how this is managed so there can be unrealized gains for the total account and still not be liable for taxes on withdrawals.

For simplification purposes lets say this account starts with $100,000 of principle in it. I then buy $10,000 dollars worth of 10 different stocks, mutual funds, ETFs, etc with it. At some point during the year I sell one that has gained $1000 and is worth $11,000 at the time of sale. At another point in the year I sell one that lost $1000 and is only worth $9,000 at the time of sale. The net gain/loss for those two sales is zero therefore I owe no taxes on those sales according to US tax codes.

I now withdraw $10,000 of the $20,000 total in sales. The other $10,000 gets reinvested. At the end of the year all the investments still in the account are now back to being worth $100,000. But because I have not sold those investments there are no additional sales to be taxed beyond the two mentioned above, which resulted in a net gain/loss of zero. The net value of the account remains unchanged for the year despite withdrawing 10% of it.

Another way to look at it is simply kicking the capital gains taxes down the road to future tax years once those investments are sold. However as I've stated its a bit more complicated than that simplified version but should be more than sufficient to understand the concept.

I've also stated that thailand, like the US only taxes the gains on investments. What may possibly be different is it appears they do not allow you to offset gains of one investment with losses from another as the US does. I need to do more research to confirm this. Even if that is the case though it has zero impact on my original question.

In this scenario I am taking that $10,000 I withdrew from this account, of which it appears $1,000 of it would be taxable in Thailand, and combining it with another $10,000 from an account where the full $10,000 is taxable. I'm then taking $10,000 from this combined account and transfering it to Thailand. The other $10,000 I am using to pay bills in the US. I've now lost the ability to prove which source the money brought into thailand came from, and which source was used to pay bills in the US. This makes a difference because one would result in only the $1000 in gains being subjected to thailand taxes and the other the full $ would be subjected to thailand taxes.

The simple solution, depending on how Thailand will treat this, is to stop combining these to sources of money and simply transfer directly from the account that has the lower tax liability.

@Wylie ******

ah OK I think I now understand. It's not an investment fund but rather a number of independent investments (albeit perhaps managed on your behalf). But I still struggle with the maths somewhat

10 × 10,000 = 100,000

Sales 11,000+9,000 = 20,000

100,000-20,000 = 80,000

80,000+10,000 = 90,000

So I guess that means you have 10,000 of gains across the remaining 8 investments in the year?

I think the confusion arose around the terminology investment account, for me at least, as I understood that it was something akin to a UK OEIC, or an open ended mutual fund in the US.

But that's irrelevant from a Thai tax perspective. It's what they consider income and what they consider savings that matters. And payments from investments are considered income

@Christopher *****

if Thailand goes through with their proposal to tax worldwide income if you're a tax resident, the point is moot anyways

@Brandon ***********

it’s already law as shown on the Thailand Revenue Service website. All monies brought into Thailand are regarded as income

@Michael **********

I didn't say money brought into Thailand, I said worldwide income. That's the new proposal. Tax money even if it's not brought into Thailand.