If you spend a lot of time in Asia and like Thailand then you should consider Thailand tax residency as a possibility to save taxes.
Overview of Tax Residency in Thailand
- Thailand has a territorial tax regime which suits digital nomads with international clients
- You trigger tax residency by spending 180 days in the country
- Progressive personal income tax rates that apply on local source income and income brought into the country
- As a nomad, your tax rate is mainly determined by your cost of living
- No social contributions on foreign income
Tax Benefits of Being a Tax Resident of Thailand
The main benefit of being a tax resident in Thailand is that Thailand applies a form of a territorial tax system.
Basically, this means that income from foreign sources is not taxed.
In Thailand the tax rules state that income earned from abroad is only subject to tax if you bring it back into the country.
That means that any income you keep outside the country because you don’t need it to cover your living expenses remains tax free.
For digital nomads this is a great way to save on taxes.
if you would end up working for a local employer or client, this income would be fully taxable in Thailand. Yet, this is a rare case amongst nomads.
Taxes in Thailand
Let’s have a closer look at the different tax rules and rates in Thailand that can apply to you.
Personal Income Tax Rates
The personal income tax rates in Thailand are progressive. This means that the higher your taxable income, the higher the income tax rate.
Below you can find an overview of the different tax brackets:
- <150.000 THB: 0%
- 150.000-300.000 THB: 5%
- 300.000-500.000 THB: 10%
- 500.000-750.000 THB: 15%
- 750.000-1.000.000 THB: 20%
- 1.000.000-2.000.000 THB: 25%
- 2.000.000-5.000.000 THB: 30%
- >5.000.000 THB: 35%
I do want to remind you again that if your income comes from abroad you only have to pay tax on the income you bring into Thailand.
An example can clarify this.
Let’s say you spend six months per year in Thailand and during those six months you spend 500.000 THB (~€13.500).
Then you have to pay 27.500 THB (~€750) in taxes. This is a tax rate of 5,5%.
However, you probably even make way more than this but you just don’t bring that other money into Thailand.
If your total income is €50.000, your tax burden is actually only 1,5%.
Income is deemed to brought into Thailand in the following cases:
- Money deposited in a Thai bank account
- Cash brought into the country
- Expenses in Thailand paid with a foreign debit or credit card
However, the latter point is open for discussion according to various Thai tax specialist.
Basically you could say that your tax burden as a digital nomad in Thailand depends on your living standard: the more you spend, the more you pay.
Social Contributions in Thailand
If you work for a Thai company as an employee, you’ll have to pay 5% social contributions. However, the maximum contribution is only 750 THB per month.
Employers and the government match your contribution with the same amount.
For digital nomads with income from abroad these provisions don’t apply.
Nevertheless, you always have the option to voluntary join the scheme.
Thai Corporate Tax Rate
The standard corporate income tax rate in Thailand is 20%.
For small companies lower rates can apply if they meet certain conditions.
Requirements to Become a Tax Resident in Thailand
In Thailand you qualify as a tax resident if you spend 180 days or more in the country throughout the calendar year.
This is a clear threshold. If you stay less you’re not a tax resident, if you spend more days you do qualify as a Thai tax resident.
Your stay shouldn’t be continuous. The authorities look at the aggregate over the whole year.
How to Establish Tax Residency in Thailand?
If you want to become a tax resident of Thailand you need to take a few steps.
Secure Long-Term Visa
The first step in establishing tax residency in Thailand is to secure a long-term visa that allows you to stay in Thailand extensively.
Visa runs don’t cut it if you want to officially base yourself in the country.
Since it’s launch the Destination Thailand Visa is the perfect option for digital nomads. This visa allows you multiple entries for up to 180 days and is valid for five years.
However, Thailand also offers various other visas.
Meet Tax Residency Requirements
Second, you need to meet the requirements to qualify as a Thai tax resident.
As discussed, you do this by spending 180 days or more in the country throughout the year.
Obtain Tax Number
The next step is to obtain a Thai tax number.
You can apply for a tax number with your local office of the Revenue Department.
You’ll need to bring along your passport and complete some documentation.
File Tax Return
Once you have your tax number and you completed the year as a tax resident of Thailand, you will need to file a personal tax return to declare your taxable income.
The due date is 8 April of the next year.
My Tax Perspective on Getting Tax Residency in Thailand for Nomads
Thailand is a great place to have your tax residency as a digital nomad.
If you work with foreign clients and set up the right structure you can heavily minimize your tax burden.
Your tax burden will basically depend on your cost of living while you are in Thailand. From that perspective you are in charge yourself of how much tax you want to pay.
The launch of the Destination Thailand Visa really helped as well as before that the visa situation was a bit tricky for most nomads.
The important caveat is that you do have to spend 180 days in Thailand per year to qualify as a tax resident.
So, if you’re not a huge fan of Thailand or want to keep maximum flexibility, it can be hard to meet this requirement.
How is Thailand for Digital Nomads?
This part probably speaks for itself. Thailand has been a favorite for many nomads for years already. However, for those who have been living under a stone, I’ll give a short recap:
- Community: many nomad communities around the country (Chiang Mai, Bangkok, the islands)
- Cost of living: like many South East Asian countries Thailand offers a low cost of living
- Infrastructure: good internet connection, coworkings and modern housing facilities
- DTV: the Destination Thailand Visa really offers nomads the option to stay in the country without the stress of border runs
Need Further Help? Work With Me!
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