Navigating Finances as a Digital Nomad in Thailand

As the world continues to embrace remote work, Thailand has responded with initiatives like the new Long-Term Resident visa program to attract foreign talent and digital professionals. These developments open exciting opportunities but they also bring new challenges in managing international finances, understanding tax obligations, and maintaining proper accounting practices.

This guide explores everything from residency rules and visa options to tax obligations, international income management, and essential accounting practices. By the end of this article, you’ll have a clearer understanding of how to stay compliant with Thai and home country regulations.

Thai Residency Rules

You are considered a Thai tax resident if you stayed in Thailand for 180 days (around six months) or more within a tax year. The tax year follows the calendar year and you should count any part of a day spent in the country.

This only means that they are subject to the tax laws in the Kingdom and must declare their worldwide income to the Department.

Types of Visas for Digital Nomads

1. Tourist Visa
   It’s a stamp or document in your passport that’s needed to enter Thailand for tourism. It is valid within three months (for single-entry) and over a six-month period (for multiple-entry visa) from the issuance date. Once you enter Thailand, you can stay for a maximum of 60 days.
   It is possible that you can extend your stay for another 30 days at a Thai immigration office.
2. Long-Term Resident visa program
   LTR visa program’s first of the many privileges is “10 years renewable visa permission will be granted to stay in Thailand the first time for 5 years. It can be extended for five more years if you meet qualifications. Other perks are multiple re-entry permit, permission to work in Thailand, and tax exemption for overseas income.

Work Permit Considerations

If you are planning to work in Thailand, you will need to obtain a work permit. This is applicable even if you are working remotely for a company based outside the Kingdom.

To qualify for the LTR visa, you must meet specific financial and other requirements, such as having a stable income from abroad. It’s not enough that you are eligible for this visa, you must also ensure that the work activities you conduct comply with the local labor laws and regulations.

Even if the LTR visa allows for long-term stays, you still need to renew it periodically. Make sure you keep abreast of the renewal process and any changes in regulations.

Thai Tax Obligations for Digital Nomads

The personal income tax system in Thailand, like any other system, is progressive. Meaning, the rate increases (up to 35%) as your income rises. Take a look at the breakdown of the tax brackets and rates for digital nomads and other residents:

This means that if you earn up to 150,000 THB, you won’t pay any income tax.

Taxable Income for Non-Residents vs. Residents

As previously discussed, individuals need to stay for at least 180 days in a calendar year to be considered tax residents. Only the income remitted into the Kingdom during the tax year is taxable.

On the other hand, those who stayed for less than 180 days are considered non-residents. They are only taxed on the income they earn within Thailand. Foreign-sourced income is not subject to Thai tax unless it’s brought into Thailand during the tax year.

LTR Visa Tax Benefits

1. Highly-skilled professionals benefit from a flat 17% personal income tax rate.
2. LTR holders are exempt from paying tax on income earned abroad.

Taxpayers must file their annual tax returns by March 31st (for paper returns) or April 8 (for online returns) of the following year.

Employees in Thailand must contribute 5% of their salary to the social security fund, maxing out at 750 THB per month.

Managing International Income

The legislation regarding bringing in income from another country into Thailand within the same year by a tax resident that they have to pay Thai tax on it that same year started on January 1, 2024.

But here’s the good news! If you’ve already paid taxes on that income in the foreign country, you can get a tax credit for that amount in Thailand. This is thanks to agreements called Double Tax Treaties that guarantee you don’t get taxed twice on the same income.

So let’s say you earned USD 10,000 in another country and paid USD 2,000 in taxes there. When you bring that money into Thailand, you can use the USD 2,000 tax credit to reduce what you owe in Thai taxes. This scheme eases your tax burden.

Double Taxation Agreements

Thailand has over 60 countries it has DTAs with. Either you get exempted or you get tax credits. To be eligible,

1. You should stay in Thailand for at least 180 days in a tax year
2. Be a juristic person incorporated under the Civil and Commercial Code

If you meet these requirements, you as the taxpayer can initiate a mutual agreement procedure (MAP) application by forwarding a request in writing and in Thai to the Revenue Department.

The request must be submitted alongside the below information.

• Your name, address, and tax number
• Names of others involved
• Power of attorney (if applicable)
• Countries involved
• Details about the case and tax periods
• Actions leading to double taxation issues
• Reasons and analysis explaining why there is an issue
• Steps taken to avoid double taxation in Thailand or elsewhere
• Any remedies sought in Thailand or other countries
• A statement confirming all information is accurate and you will provide more if needed
• Any other helpful information to resolve the case

When submitting, your request should be addressed to the Director-General and within a time limit specified in the respective DTA Refer to the hyperlink above on the word “information” for more information regarding the MAP guideline.

The Revenue Department
90 Soi Phaholyothin 7, Phaholyotin Road, Phayathai, Bangkok 10400

Banking Considerations

In opening a Thai bank account, research and choose a bank that caters to foreigners. Popular options for you are Bangkok Bank, Kasikorn Bank, and Krungthai Bank.

You will need your passport, visa, work permit (if applicable), and a copy of your lease agreement or utility bill for proof of address.

The next step in the process is going to the branch with your documents. You may need to fill out the application form and submit the required documents.

Make an initial deposit to activate your account. The amount varies by bank but it is usually around 20,000 THB.

Managing Multiple Currencies

If you are to hold and manage multiple currencies, some Thai banks offer foreign currency accounts. Use your bank’s currency exchange services to convert money when you need it. Don’t forget the exchange rates and fees.

Leverage online banking so you can easily monitor your accounts, transfer funds, and manage multiple currencies without getting stressed out. It’s also best that you rely on currency conversion apps to be updated of currency conversion and for you to manage your finances on the go.

Accounting and Record-Keeping

It is important that you keep accurate financial records for the reasons below.

1. You meet all tax obligations without worries of being penalized.
2. You’d understand your financial situation and track your inflows and outflows so you can make informed decisions.
3. You have readily available documents needed for audits and legal matters.

Recommended Accounting Practices

1. Open a separate bank account and credit card for business expenses. This keeps your finances organized and simplifies the tax preparation process.
2. Document all income and expenses as soon as they occur, so you don’t miss important details.
3. Use accounting software to be as accurate as possible in bookkeeping.
4. Store all your receipts and invoices for at least seven years (for tax purposes).
5. If you travel for work, keep a log of your travel expenses and mileage.

Tax Planning Strategies

The following are strategies you can apply to reduce your tax liability or just simply manage your taxes.

1. You may want to take advantage of all available tax deductions and exemptions. It can be related to your work like travel, accommodation, and office supplies. Just keep detailed records and receipts to substantiate your claims.
2. If you expect higher income in a particular year, you might want to defer some expenses to that year to offset the higher income.
3. Consider the best business structure. Each of these has different tax implications so choose the one that offers the most tax benefits without compromising your business’ needs.
4. For freelance income, be sure that you are aware of the tax obligations for freelance work (example, quarterly estimated tax payments).
5. For passive income, you must understand the rules for every type of passive income as they may be taxed differently.

Complying with Home Country Tax Laws

First and foremost, before you immerse yourself in your tax obligations in Thailand, you should be able to understand your obligations in your home country.

Many countries like the U.S. have citizenship-based taxation (CBT), instead of residence-based taxation (RBT). It means that you should report and pay taxes on your worldwide income, regardless of where you live.

Reporting Foreign Income and Assets

It is mandated that you report any foreign income and assets to your home country’s tax authorities. For U.S. citizens, you may file Form 8938 (Statement of Specified Foreign Financial Assets) and possibly FinCEN Form 114 (Report of Foreign Bank and Financial Accounts, or FBAR).

Other countries may have similar requirements. Thus, it’s best to check the specific rules for your nationality.

Seeking Professional Help

These are the instances when to partner with an accounting service provider or a tax professional/advisor in Thailand.

1. You are unsure about your tax obligations (both in Thailand and your home country)
2. You’re establishing a business in Thailand
3. You deal with income and expenses in various currencies
4. You need help setting up efficient recordkeeping systems
5. You want to identify all possible deductions and exemptions you are eligible for
6. You want to keep informed of new regulations affecting your financial planning.
7. You’re planning for long-term financial goals like retirement

Conclusion

You may face various challenges working as a digital nomad in Thailand. But the information discussed above helps you gain valuable insights on overcoming them.

Reliance Consulting was established to help remote workers in the Kingdom navigate their finances in a country foreign to theirs. Consult us for any concerns you have.