How does the DTV1 Workcation visa affect taxation and social security for a German expat in Thailand?

Oct 31, 2024
2 months ago
Situation:

Visa: DTV1 Workcation (remote worker)

Home country Germany with double taxation agreement

Centre of life Thailand (significantly more than 180 days per year)

According to the double taxation agreement, Thailand is entitled to income tax. However, in practice, the employer in my home country pays income tax as if I were staying in my home country, right? If I file my tax return in Thailand, I only pay the tax difference, right?

What about social security contributions? In my opinion, there is no longer an obligation to pay social security contributions (statement valid for Germany), so no such contributions are paid. At the same time, of course, I take out health insurance and pension policies myself on a private basis.

Everything correct or any objections?
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TLDR : Answer Summary
The conversation discusses the taxation and social security obligations for a German expat residing in Thailand under the DTV1 Workcation visa. Key points include the implications of the double taxation agreement between Germany and Thailand, filing taxes in Thailand based on income earned abroad, and the potential exemption from social security contributions in Germany. Participants suggest consulting a tax expert for detailed advice and share insights on how to establish work relationships while on the visa.
John **********
I know nothing about the situation with German tax but the broad principle is that if you are a Thai tax resident and bring income into Thailand then you are liable to pay Thai tax on that income. If the country the income comes from has a dual tax treaty with Thailand then you can claim a pro rata tax credit against any tax already paid on that income
Sefton ********
You need professional advice.. It is likely far cheaper to sign out of germany, and become a non resident for taxation, and invoice for your work as an overseas contractor. This should break the connection and it stops being domestic source income in Germany. The self employment tests (multiple clients, responsibility for work etc) stop being an active test as you are no longer under German rules.

At that point you will only pay income tax on the funds you remit to Thailand.
Anonymous *************
ORIGINAL POSTER
@Sefton *******
If I work in Thailand and invoice clients for my work, am I not considered to be working commercially or self-employed in Thailand?

Additionally I also need some of the money I earn in this way to live on in Thailand.
Sefton ********
Anonymous participant You can work for non Thai companies and clients from Thailand under the DTV.

You cannot do that legally on a tourist or non imm (but many do).
Anonymous *************
ORIGINAL POSTER
@Sefton *******
But for the DTV I need an employment contract, i.e. an employee relationship. I need something that justifies the DTV variant 'workcation'.
Sefton ********
I would get the DTV first.. Once issued you can change jobs or way pof being paid. Your still meeting the requirements if asked.
Anonymous *************
ORIGINAL POSTER
@Sefton *******
is agree, but what documents do I enclose with the visa application if there is no employment contract and no business registration?
Sefton ********
Anonymous participant apply now employed..

Once you have it.. Look at how to legally minimize your taxation
Sefton ********
Anonymous participant No.. You can be a freelancer just as easily on a DTV.

Also you dont have to do this in advance of getting the DTV, the visa and tax offices are not linked to check those elements its about you getting your tax affairs efficiently set up as possible over the long term.
Anonymous *************
ORIGINAL POSTER
@Sefton *******
Yes, I understood that. But what do I use as proof of employment or proof of work permit when applying for the DTV? A letter of authorisation to myself?
Greg ********
Anonymous participant An employment contract is not always required. I know guys who own UK Ltd companies. As Directors of that company they wrote a letter, basically to themselves, that they could work remotely. That is not a full employment contract stating conditions of work, salary etc. The other documents supplied were company documents and a tax return.
Anonymous *************
ORIGINAL POSTER
@Greg *******
yes, as the owner of a company, this is how it works. However, I would want to avoid registering a company in Germany because it makes everything more complicated

The ideal situation would be for me:

- Employer in Germany pays no taxes and social security contributions

- Taxation in Thailand

- Private conclusion of social insurance
Greg ********
Anonymous participant Well sometimes in life the ideal situation is not possible is it in your given circumstances. :-) :-)
Anonymous *************
ORIGINAL POSTER
@Greg *******
In fact, I see the circumstances as given. I just hope that my employer's payroll office sees it the same way. 😉
Greg ********
Anonymous participant I do not know the German system but for the UK if you are on payroll you would pay tax as PAYE (Pay as you earn) ie tax load at source before you get your salary. If the UK employer would allow you to become a contractor ie independent they would pay you through a Ltd company , your or an umbrella company. That would be for the full invoice amount without deductions. It is then your responsibility for tax and SS. I have been a contractor for many years previously in both UK and Belgium. There was no way to be paid as an individual. Companies cover theor backs by dealing with a legal entity ie a company. I could never see a UK company employing me just sending my earning directly to my own bank account if not on their payroll as an employee. If I am an employee in the UK the company is responsible for the tax deductions and remitting them to the tax authorities.
Anonymous *************
ORIGINAL POSTER
@Greg *******
In my opinion, the same situation also applies to Germany.

I could even live with it if my employer continued to pay the wage tax to the German state. I just want legal certainty.

If he pays the wage tax in this way, but does not pay any social security contributions, as there is no longer a social security obligation, that would be completely sufficient.
Greg ********
Anonymous participant If he would employ you as a contractor through your own legal company outside Germany ot may be advantageous but complex. Depends kn the amount involved. Opening a company in Dubai or Singapore for example.
Sebastian ***********
Following
Wannikea *********
At this time, the Thai tax laws only provide for earned funds transferred into Thailand being liable for tax. Those funds would then be subject to the dual taxation agreement if one is in place.
John **********
@Wannikea ********
that's not exactly true. Dividends, interest, capital gains, etc all count as income in Thailand
Wannikea *********
@John *********
thx John, I'd count those as earnings as well, as opposed to wages.
John **********
@Wannikea ********
normally those are classed as unearned income.
Wannikea *********
@John *********
I'm poor, never had to deal with it 555
Roger ***********
I m in your case, no tax d in Germany so you get it back if you paid. No social security deduction as no longer in krankenkasse
Greg ********
You need to talk to a tax expert with experience of both systems but what you stated regarding tax is correct. You would get tax credits in Thailand for any taxes paid in Germany under the double taxation agreement and remitted to Thailand.