Southeast Asia is one of the most popular destinations for tourists from all over the world, especially Thailand which has continued to captivate people of all ages and nationalities for several decades. What few people probably know is that living in Thailand can actually have great tax advantages.
Most people find obtaining a visa there problematic and therefore devote themselves to making visa runs, relying on the inefficiency or laxity of the Thai immigration authorities, but of course, people dont even stop to think about what it would fiscally mean to obtain permanent residence there.
As we have seen many times before, what once worked, doesnt always work forever. Thai authorities also seem to have started getting more serious with tourists. They have long referred to visa runs as an illegal practice that they will pursue.
It´s true that if you get into difficulties it is harder as a tourist when you leave and enter by air (it seems that the typical exit and entry by land on the same day no longer works) more or less two or three times in a row. Nonetheless, its not something you can continue doing forever like before.
We are seeing more and more cases in which illegal long-term residents have been banned from entering the country. In airports you´ll find large billboards that warn of the potential fines and the several year entry ban (depending on how long you have been illegally living there) if you remain in the country beyond the authorised time.
If you follow the Flag Theory (which you should) Thailand can be a perfect flag for any permanent traveler or digital nomad. In fact, once you have learnt how to obtain permanent residence in Thailand, it could also be a great option in which to maintain your fiscal (and real) residence.
The unique tax system in Thailand
Thailand is a very attractive place to live because it has a very unique tax system, that being well structured offers complete tax exemption (but on the contrary, if ill designed could be very expensive).
The Thai tax system is mostly comparable with those of the Non Dom Countries of English tradition, like Malta, UK or Ireland. In addition to income that is obtained in the country, tax is only paid on foreign income that is transferred to the country. And this foreign income is only taxed if it has been transferred to the country in the same calendar year.
If the foreign income was obtained from previous years and has been invested abroad, these assests can then be transferred to Thailand free of taxes in the following years.
Therefore, if you want to take advantage of this very attractive tax system you must have the sufficient funds to be able to live in Thailand for a year, since foreign income shouldn´t be transferred to the country in the same year.
If you transfer the money in the same year, income tax rates of up to 35% are applied.
Given the low cost of living in Thailand, it shouldnt be very difficult to stick it out for a year in order to take advantage of Thailand’s tax system and achieve full tax exemption.
However, this regulation can cause some serious problems to certain groups of people. First of all, among them are the (pre) -retirees, whos only income is their pensions and are charged monthy from Thailand.
In many cases they may not have any other assets and only survive on their monthly pension, so they are not in any position to take advantage of the tax system and must pay the pension that is given to them.
Thailand’s tax authorities have already admonished this group of people in the past, condemning some US and European pensioners to pay fines.
It´s easy to understand the particular manner of Thai territorial taxation if we take into account that it is a country that greatly hinders the foreign establishment of local companies.
While there are already some compromises, like for the creation of software companies with wholly foreign ownership, I wouldn´t trust the long-term legal stability of Southeast Asian Countries that much.
In neighbouring countries like Vietnam for example, many foreign investors have had to prove to their companies, allegedly tax-free for five years, that they do not charge them coperation taxes, but in the end other kinds of taxes are imposed on them anyway. So although you can invest all the money you want in Vietnam, it is then very difficult to take the profits out of the country.
Without a doubt, it is advisable to maintain a skeptical stance with state promises before setting up local businesses in Thailand. Although you can obtain permanent residence there, it may be better to operate in foreign markets regardless of your residence status in Thailand.
An additional advantage to Thailand’s very unique approach to taxation is that it is not perceived as a tax haven by other states.
The mention of companies and businesses in Malaysia, Singapore and Hong Kong can lead tax inspectors in your country of origin to ask more questions, but Thailand will certainly not have this effect. If anything, they might ask you about your favorite beaches there. After all, there are many other reasons to choose Thailand as a country of residence apart from saving taxes.
However, it must be taken into account that in order to activate tax liability in Thailand you must have been in the country for at least 180 days all together. In other words, in order to have fiscal domicile in Thailand you must stay there for at least half a year. Unlike what happens in Panama or Paraguay, it will have to be a real stay.
Of course this means that despite having a permanent residence visa, you are not required to pay taxes there if you stay in the country for less than six months.
Permanent residence in Thailand with the Thai Elite Visa
As previously mentioned, taking chances with visa runs is not a good long-term solution if you want to stay in Thailand forever. It is therefore preferable to obtain a legal residence permit, something that is naturally not that easy if done through official channels.
Thailand only grants an official residence permit to 20 people per year for each country. In the case of countries with many inhabitants interested in living in Thailand, such as Germany, you may wait forever if you want to obtain your residence permit through this process.
It´s easier if you are over the age of 50. This is because Thailand grants pensioners the right to stay if they invest at least 10 million bahts into the country. By investing 10 million bahts, the one-year stay visa can be extended without restrictions.
According to the current price, this implies a necessary investment of about €250,000. Thailand is therefore considerably more expensive than its southern neighbor Malaysia, which offers pensioners purely territorial taxation associated with a multiple entry visa for 10 years for an investment of only €50,000.
The option of extending a tourist visa doesn´t go very far either. These three-month visas issued by the relevant embassies can be extended for a maximum of one year, and must always be authorized by an immigration officer.
As difficult as the idea may seem at first to stay long-term in Thailand, you´ll soon realise that its not so hard
People can sometimes tend to overlook programmes that are 100% legal: For example, the Thai Elite Programme that offers multiple advantages along with permanent residence in Thailand. You only need some loose change.
The Elite Programme is an official programme of the Thai Government that depends on the Ministry of Tourism. Although the programme is widely publicised, only around 250 people make use of it a year. However, if we consider the fact that the days of making long-term visa runs is fast disappearing, it´s highly likely that there will be more applicants in the future.
Ultimately, the “Thailand Elite” programme is basically the purchase of a residence permit.
In exchange for a certain amount of money and according to your chosen programme, you receive; a permanent visa with a temporary limit, support with the immigration authorities and special advantages in several Thai establishments, such as discounts at hotels and spas.
In particular, the limousine airport pick-up service and the possibility of going through airport controls and customs quickly is a very attractive prerogative for many.
For those who have spent hours waiting and queuing at Bangkok airport will appreciate being able to make their way to the hotel 10 minutes after getting off the plane.
Considering the amount of advantages that come with the right of residence, we have to say that its actually not that expensive.
The programme costs 500,000 baht, this is around €13,000 and entitles you to a five-year stay. Prorated monthly you would be paying around €200 in exchange for legal residence in Thailand, plus some additional benefits.
In other categories of the programme you pay up to €50,000, but your right of residence is extended for up to 20 years and other family members can be included. Prorated, the status of legal residence in Thailand would come to less than €100 per month.
But for the true perpetual traveller this amount shouldn´t be a problem. After all, this not only means that you can spend an entire lifetime in an extremely attractive country, but also benefit from the complete exemption from taxes on foreign income.
The Thailand Elite programme is offered in eight different modalities, and each one comes with different advantages. In addition to the variation of the programme for individuals, families and real estate owners, another decisive point is duration.
For individuals, using Elite Easy Access for five years costs 500,000 baht, so around €13,000. The 10 year Elite Privilege Access costs about €26,000, while the most advantageous programme; the Elite Ultimative Privilege costs around 2,000,000 baht, or about € 50,000, but offers 20 years of residence visa.
Visits to golf courses and spas are included in the latter, while the other programmes also offer airport pick-up, various discounts and other advantages.
It is also worth mentioning that the most cost-effective programme; the Elite Easy Access Visum, can be upgraded to an Elite Ultimative Privilege at any time. For those who want to stay in Thailand for more than five years can prolong the programme for up to 15 years, while paying almost €39,000 of difference
Here you have a graph with the details of each programme and their advantages:
With The Elite Programme your trip to Thailand will be as uncomplicated as possible. Upon arrival a friendly and English-speaking staff member will act as your guide, quickly escorting you to the priority counter where within only a few minutes they will stamp your passport, this states your one-year stay and is marked with an Elite Programme sticker.
It is possible for this sticker to be placed on your passport at all airports in the country provided you make a booking far in advance. The Elite Visa can be renewed annually at any immigration centre if you do not wish to leave Thailand during that period.
You must go to the immigration authorities or the Thai Elite Office in Bangkok every 90 days to show your passport.
This partnership with Bangkok Bank is very appealing. The holders of a Thai Elite have the special privilege of being able to open an account in foreign currency and pay much less commission for administration and transfers.
Applying for a Thailand Elite is really simple. The first thing you have to do is present a copy of your passport in order to request pre-authorization from the Thai authorities. This takes about five days.
You then have to fill in the form for your chosen programme, attach the documents and necessary ID photos, scan them and then send them to the relevant office. By paying the membership fee, the entire procedure is dealt with within a week.
The final step is having the Elite Visa sticker put in your passport, which can be done in Thai airports as well as in Thai embassies in your place of residence before your trip.
What do you think, has Thailand convinced you? You have many more options in our blog and, of course, you can also sign up to Tax Free Today and download all of our free ebooks.