Thread: Paying tax in Thailand.

I'd appreciate an answer to this please. A German who still works on/off in Germany says he's paying too much tax there and wants to pay tax here instead. He's under the belief that if he obtains a 'Yellow Book' and shows it to the government back in Germany, that he has proof of abode here, then he can pay tax here instead.
Personally I don't see it as being that straight forward. Does anyone on here pay tax here instead of back home?
I'm just inquisitive as to whether he's barking mad or sensible? He came to my house to ask about obtaining a 'Yellow Book' and gave the above reason as to why he wanted one.

Does he work here ?

No. But he did say something about setting up a business here in his wife's name.

You pay tax where the income is earned, but, if you run the business from here and are paid here, dual taxation agreements apply.

Know a few guys who own business in the west, mostly IT sort of stuff, their companies pay tax in their home country, but they hire themselves as consultants in Thailand and get paid in Thailand.

Nothing to do with the yellow book, BOI has special deals for software related set ups.

Would say he will not get off paying German taxes if he works in Germany, in fact he could pay more tax, as is the case in Australia.
Non residents don't get the tax free threshold allowance.

Originally Posted by Pragmatic

A German who still works on/off in Germany says he's paying too much tax there and wants to pay tax here instead. He's under the belief that if he obtains a 'Yellow Book' and shows it to the government back in Germany, that he has proof of abode here, then he can pay tax here instead.

Has he looked at the Thai tax rates?

Originally Posted by Neverna

Originally Posted by Pragmatic

A German who still works on/off in Germany says he's paying too much tax there and wants to pay tax here instead. He's under the belief that if he obtains a 'Yellow Book' and shows it to the government back in Germany, that he has proof of abode here, then he can pay tax here instead.

Has he looked at the Thai tax rates?

And then depending on type of taxes...most petty taxes, which are demanded and expected in many Farang cultures, are exempt [or nonexistent] in Thailand.

Taxing, per se, isn't as overwhelming and universal in Thailand - citizen or foreigner - as it is known to be in the West.

Sliding scale here. Can go up to 35% of income.

Looks nice at the lower end, but gets quite painful at the upper end.

Originally Posted by Neverna

Has he looked at the Thai tax rates?

I asked him that but he was vague regarding the answer.

Originally Posted by Pragmatic

Originally Posted by Neverna

Has he looked at the Thai tax rates?

I asked him that but he was vague regarding the answer.

It's worth looking at to see if he will actually benefit. Rates are set out here: Personal Income Tax: The Revenue Department

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.

Originally Posted by jamescollister

You pay tax where the income is earned

Yep. Yellow book will do him no good if income is earned in Germany.

Bottom line is that he's barking mad - but largely because he really needs to get professional advice on this rather than guess as there are a lot of variables.

Where he pays tax depends to a large extent both on where the income is earned and which tax authorities consider him to be resident.

A resident in Germany is charged tax on their worldwide income, not just what is earned by them in Germany.

1) Tax residency is normally determined by the number of days an individual spends in/out of a country. If he spends more than 6 months per year in Thailand then he can reasonably claim to be resident in Thailand. The Thai yellow book is irrelevant in proving this.

2) Assuming that Thailand is his primary residence he would then need to show that he is not domiciled in Germany. This means that he neither owns nor rents a domicile (house, apartment etc) in Germany.

If he can tick these two boxes then it would probably get him non-tax resident status in Germany. What this would mean is that he would only need to declare the income derived from work he has performed in Germany (but this is really where he needs to get specialist advice based on his specific circumstances as to whether any of his income could be deemed to be earned overseas).

That's the easy part. Here's the thorny issue, well two thorny issues:

1) Germany and Thailand have a double taxation treaty regarding taxes on income and capital. What it means is that in proving his non-residency in Germany, and that a portion of his income is subject to Thai tax, he then creates a case of 'permanent establishment' in Thailand, which would mean that he should have a legally registered company and a work permit in order to justify the earning of income there.

2) I believe that a German employer is liable for a non-resident employee's German income tax, and needs to ensure that it deducts the correct amount. Ultimately if the guy is self employed then his company (and therefore he) can get into real trouble if he is found to be avoiding taxes. If he's an employee then it is unlikely that his employer will want to play ball on any misdeclaration.

Like I say he needs to get specialist advice based on his specific circumstances, personal taxation is a bit of a minefield.

Haven't looked in a while but, best to my recollection - if you reside in Thailand for 180+ days you are liable to pay Thai income tax. Sliding scale based on amount of income. Typical tax structure - the more you make the greater the percentage that you owe.

In my case American - many moons ago, I was also liable to pay USA income tax - however, in the details, back then, the first USD $75k of foreign earned income was tax exempt from the USA federal income tax. Also, there is a credit for foreign taxes paid - so every cent or baht I paid to Thailand was deducted from the taxes I owed to the USA.

In the end - it didn't really matter who I paid the taxes to - I still had to pay. And, without doing a thorough analysis - it seemed fairly equitable regardless of which country I paid the taxes to. Either or country - my tax burden remained pretty much the same.

Anyway - taxes are a complex and ever changing PITA. Codes change, have exclusions, exemptions, deductions, credits, penalties, alternates, etc. etc.

You should always use professionals to do taxes. Worse thing about taxes is, even if the mistake is honest and made by a tax professional - you are responsible.


Good luck to the German but I expect he is in the same boat regardless. Advise him to get professional help. If for nothing other than to ease his mind.

Thank you to all replies. The German wasn't really wanting answers. I was just inquisitive as to was his quest plausible or not. And why he needed a 'Yellow Book' for proving residence in Thailand. In all I'm, and others are, now wiser from the info above. Thanks again.

Prag , you seem to have an interesting crowd of German friends.

If he has a business here and earns money then why would he have to pay anything to German tax authorities (unless he was stupid). The intelligent choice would be to pay tax here in Thailand.
Of course if it's a small cash business , like most small cash businesses , it's in his partners name (and of course) they don't report truthful earnings at a minimum.

Whatever happened to the older bloke that was several years behind on filing an extension based on marriage ?
(I believe it was due to a lack of money in the bank since his wife was very sick if I recall correctly.)


Note: I live in Thailand full-time. My brokerage accounts are maintained in US ; therefore , I pay tax on all ST / LT stock transactions , dividends and interest to the US Treasury. I'm still a citizen. Possibly German tax law might be the same.

The guy doesn't have a business here. His intention is to set one up in his wife's name, so my understanding is. I assume he then wants her to put him down on the books as a worker. I'd have thought he'd need a 'work permit' before doing anything else. If he doesn't get that as proof that he's employed here then he's fcuked from the start, isn't he? He claims that he pays too much tax when he works in Germany, hence why he wants to pay tax here. The guy is aged early 60's and I can't see the benefits as his working life's end can't be that far off finished.

Originally Posted by PeeCoffee

Whatever happened to the older bloke that was several years behind on filing an extension based on marriage ? (I believe it was due to a lack of money in the bank since his wife was very sick if I recall correctly.)

As far as I'm aware he got his extension by paying 18,000 Baht under the table in Pattaya. There's many a farang around area that does this. Yes the guy's wife is badly sick with HIV and is immobile and is currently living in her daughters house because he can't cope with her. I believe the reason why he's short of money is because to get the best HIV medication to keep one alive you have to pay privately. The government hospital only provide the basics

Originally Posted by Pragmatic

Originally Posted by PeeCoffee

Whatever happened to the older bloke that was several years behind on filing an extension based on marriage ? (I believe it was due to a lack of money in the bank since his wife was very sick if I recall correctly.)

As far as I'm aware he got his extension by paying 18,000 Baht under the table in Pattaya. There's many a farang around area that does this. Yes the guy's wife is badly sick with HIV and is immobile and is currently living in her daughters house because he can't cope with her. I believe the reason why he's short of money is because to get the best HIV medication to keep one alive you have to pay privately. The government hospital only provide the basics

I think you should paste this on the KCI-home visit thread.

Could it be that KCI is on the trail...sadly because it sounds like Patts is on the 'back-hander' trail.
What a joke for the majority of expats that play by the rules.
Pisses me off , what about you ?

Originally Posted by PeeCoffee

What a joke for the majority of expats that play by the rules. Pisses me off , what about you ?

Yeah it pisses me off too. 10 years of being legit and being pissed around by immigration. I really don't blame the ones who pay under the table. I blame the cnuts who take the money. Which is something I don't really understand as KCI must know where the illegals are getting their extensions. So why do they pick on the legit?

Originally Posted by Pragmatic

Originally Posted by PeeCoffee

What a joke for the majority of expats that play by the rules. Pisses me off , what about you ?

Yeah it pisses me off too. 10 years of being legit and being pissed around by immigration. I really don't blame the ones who pay under the table. I blame the cnuts who take the money. Which is something I don't really understand as KCI must know where the illegals are getting their extensions. So why do they pick on the legit?

The way I see it the wankers in Kap Choeng know whats going on in Pattaya ,cos they make all the guys who do their visa's in Pattaya do their 90 day reports there too , even though they live in the Kap Choeng area , they must pick on the legit cos it gives them a feeling of "power "

Originally Posted by PeeCoffee

Originally Posted by Pragmatic

Originally Posted by PeeCoffee

Whatever happened to the older bloke that was several years behind on filing an extension based on marriage ? (I believe it was due to a lack of money in the bank since his wife was very sick if I recall correctly.)

As far as I'm aware he got his extension by paying 18,000 Baht under the table in Pattaya. There's many a farang around area that does this. Yes the guy's wife is badly sick with HIV and is immobile and is currently living in her daughters house because he can't cope with her. I believe the reason why he's short of money is because to get the best HIV medication to keep one alive you have to pay privately. The government hospital only provide the basics

I think you should paste this on the KCI-home visit thread.

Could it be that KCI is on the trail...sadly because it sounds like Patts is on the 'back-hander' trail.
What a joke for the majority of expats that play by the rules.
Pisses me off , what about you ?

There is now an increasing majority that do not play it by the so called rules , simply because they just cannot afford to , even though on their pensions they can live very comfortably here , in my view Even though I am legit ,the bar is set far too high .

They pick on the 'legit' as they're making no money from them, people who pay under the table are a lot more desirable to the local immigration staff.

Originally Posted by buriramboy

They pick on the 'legit' as they're making no money from them, people who pay under the table are a lot more desirable to the local immigration staff.

Actually BRB I don't think that they are "on the take " in KCI and this is whats griping them knowing that their fellow Immigration Officers in Pattaya are making mega bucks and why not? they are providing a service to many people who according to their rules cannot afford to live there ,even though they are living quite well and often supporting a Thai wife and keeping the "house door open" .

Originally Posted by piwanoi

They make all the guys who do their visa's in Pattaya do their 90 day reports there too

A couple of years ago I knew a Dane who did his 90 day report in Pattaya on his motorcycle. A one way distance of 360 km. He went the Khoa Yai national park route. He stayed in Pattaya the one night to return the next day.

Originally Posted by piwanoi

Actually BRB I don't think that they are "on the take " in KCI and this is whats griping them knowing that their fellow Immigration Officers in Pattaya are making mega bucks and why not? they are providing a service to many people who according to their rules cannot afford to live there ,even though they are living quite well and often supporting a Thai wife and keeping the "house door open" .

I've never heard of money being taken under the table at KCI for an extension.

Believe half of what you seem to see and less of what you hear...unless pseudolus says it, of course.