Legal
Destination Thailand Visa Tax Optimization for Remote Workers
15/10/2024
Thailand’s Destination Thailand Visa (DTV) program has become a game-changer for freelancers, remote workers, and digital nomads seeking to work remotely in Thailand. However, the extended periods of stay permitted to holders of the DTV (180 days, plus an extension of 180 days per entry) opens them up to potential tax liabilities in Thailand.
In this blog post we will explore the DTV, the tax liabilities faced by holders of the DTV and the use of a Hong Kong Company with offshore status as potential tax optimisation strategy.
Key points
- The Destination Thailand Visa (DTV) in Thailand allows extended stays (180 days, plus 1x 180 day extension) but may lead to tax residency status, requiring holders to obtain a Tax ID and file annual returns.
- DTV holders spending more than 6 months in Thailand per year may be deemed a tax resident and may be taxed on a progressive scale (up to 35%).
- DTV holders are prohibited from working for Thai companies or conducting business within Thailand.
- Thailand’s territorial tax system means only foreign sourced income remitted to Thailand is taxable for DTV holders, while income kept abroad remains untaxed.
- Establishing a Hong Kong company with offshore status can potentially optimize tax obligations for DTV holders, as profits derived from outside Hong Kong may be tax-exempt.
- When using a Hong Kong company to sponsor a DTV application, it’s advisable to operate the business for a few months first to demonstrate legitimacy.
What is the Destination Thailand Visa?
The Destination Thailand Visa represents a significant step in Thailand’s efforts to attract global talent and boost its digital economy. Designed for digital nomads, remote workers, and long-term visitors looking to stay in Thailand, the DTV was launched in 2024. This innovative visa program offers a flexible 5-year solution for those wanting to experience the vibrant Thai lifestyle while maintaining their international careers.
In order to take advantage of the evolving needs and preferences of modern travellers, the Thai government has introduced the Destination Thailand Visa (DTV). This visa is designed to attract digital nomads, remote workers, and long-term visitors looking to stay in Thailand long term.
The DTV is also available to other groups as well, including those who want to learn muay Thai and Thai cooking.
The DTV allows the holder to stay in Thailand and work remotely in Thailand. The holders of this visa must work for companies or clients that are located in other countries and they cannot be Thai.
It is important to note that holders of this visa cannot work for a Thai company or do business in Thailand. Employment with a Thai company would require the individual to obtain the correct visa (Non-Immigrant B visa) and a work permit.
This should be a key consideration for applicants interested in applying for the DTV. Thailand has a very broad definition of what is considered work. This wide definition of work means there is a fine line as to what foreigners can and cannot do in Thailand without a work permit. If a foreigner is caught undertaking work without the correct visa and work permit, there is a risk that they will be deported from Thailand and banned from re-entering.
In order to ensure that your proposed activities fall under the scope of the DTV and that you do not engage in any restricted work activities, please feel free to book a consultation with one of our immigration experts here. Our experts can provide feedback to you ensuring you have the correct information to determine whether the DTV is the best suited visa for your needs.
What are the Key Features of the Destination Thailand Visa?
The Destination Thailand Visa offers a range of attractive features that set it apart from traditional tourist visas:
Extended Duration of Stay and 5 Year Validity
The DTV is valid for 5 years and allows holders to stay in Thailand for up to 180 days per entry. Holders of the DTV can extend their stay for 180 days one time per entry.
Flexible Entry and Exit
The DTV is a multiple entry visa allowing holders to come and go from Thailand as per their needs.
Eligibility for Spouse/Dependents
DTV holders will also be able to bring their spouses and children to Thailand as dependents. Please note, at the moment there is no information as to whether dependents are subject to extra application requirements. We will keep you updated as to any developments.
What are the Eligibility Requirements for the Destination Thailand Visa?
In order to qualify for the Destination Thailand visa, applicants must:
- be at least 20 years old
- be able to demonstrate that they have a stable source of income from remote work or ownership of a business outside Thailand or be enrolled in a qualifying soft power activity such as Muay Thai or Thai cooking.
- be able to provide evidence that they have at least $13,650 (500,000 THB) in a bank account to be used to support themselves throughout their stay in Thailand.
- be able to provide proof of employment or study
What are the Required Documents for Applying for a DTV?
The required documents to apply for the DTV visa as a digital nomad are as follows:
- Passport
- Passport Photograph
- Evidence of Financial Assets
- Amount of no less than 500,000 THB (the requested amount differs between each Embassy)
- Bank statements, payslips, or a sponsorship letter can act as evidence to support an application.
4. Proof of Purpose of Visit:
- Workcation: Employment contract, employment certificate from your country, or a professional portfolio showing your freelance work.
- Thai Soft Power: Proof of confirmation to attend the activity e.g. learning Muay Thai or a letter of appointment from a hospital or medical centre. Please note that copies of any agency/school/institution/company documents must be signed by an authorized person and stamped with the agency/school/institution/company seal.
- Dependent of Primary DTV Holder: Proof of relationship, such as a marriage certificate, birth certificate, or certificate of adoption
Applicants must be aware that any documents in any language other than English or Thai must be translated into English and get the authorization from the company or organisation that provided them.
One final consideration is that the Consular officer handling the application reserves the right to require additional documents, or an interview with the applicant, as deemed necessary, without prior notice.
Please note, that the DTV is still a new visa and therefore, there is still a lot of learning taking place regarding the process and requirements. We have received reports that different embassies and consulates all require different documentation of proofs of finance. For example, certain embassies would like to see 3 months of payslips, while others require 6 months. If you are interested in applying for the DTV, it’s important to be accompanied by experts for a smooth application. For more information about how our experts can help, please see, here.
Destination Thailand Visa Tax Implications for Digital nomads?
Holders of a DTV should be aware that should they stay in Thailand for an extended period of time, they may become subject to Thai taxation laws and requirements.
Thailand residency tax Rules
As per Thai law, anyone who stays in Thailand for over 180 days out of a calendar year is considered a tax resident by the Thai government. This rule applies regardless of the type of visa held, including the Destination Thailand Visa.
For DTV visa holders, it’s important to note that while the initial visa allows a stay of up to 180 days, there’s an option to extend for another 180 days. This extension could potentially trigger tax residency status, making the individual liable to pay Thai taxes on foreign income remitted into Thailand.
In practice a DTV holders, who stays in Thailand for more than 180 days in a calendar year will become a Thai tax resident. Once someone becomes a tax resident they must obtain a tax ID from their local Revenue Department Office and pay tax. This tax will apply to the amount of income transferred by the DTV holder from abroad into Thailand. Such income will be subject to the progressive personal income tax rates from 0 to 35%. For more information about PIT in Thailand, please see the section below and our article here.
Taxable Income in Thailand
As of 2024, Thailand’s Tax Code has undergone significant updates. As per the new regulations the foreign sourced income of Thai tax residents that is remitted to Thailand is now subject to income tax according to Thai PIT Rates.
Please note this is only applicable to income earned and remitted to Thailand after the 1st of January 2024.
This change has important implications for DTV visa holders who become tax residents as since they cannot work for Thai companies or do business in Thailand, all their income would be considered foreign sourced. Therefore, any foreign sourced income remitted into Thailand would be liable for Thai tax (subject to the provisions of any relevant Double Tax Agreements).
The current Personal Income Tax rates in Thailand are as follows:
Thailand’s Territorial Tax Policy
One important consideration is that Thailand currently operates a territorial tax system, where only income in Thailand is subject to Thai tax. Therefore, any income generated by a digital nomad while working in Thailand under a DTV that has not been remitted to Thailand is not taxable in Thailand.
For DTV holders staying less than 180 days, the current rule states that only foreign sourced income brought into Thailand is taxable.
Do Double Taxation Agreements Apply?
Double Taxation Agreements (DTAs) play a significant role in managing tax obligations for DTV visa holders. These agreements aim to eliminate the risk of double taxation when an individual operates in more than one country. Thailand has DTAs with numerous countries, including Australia, China, France, Germany, Hong Kong, Japan, the United Kingdom, the United States, and Singapore.
For DTV visa holders, these agreements can provide tax credits or exemptions. If an individual has paid taxes in their home country and that country has a DTA with Thailand, they may be exempted from paying taxes on the same income in Thailand. If tax has been paid in their home country and further tax is owed in Thailand, a tax credit can be obtained. This tax credit will essentially deduct the tax already paid in the home country from the outstanding tax owed in Thailand. This prevents income from being taxed twice.
For more information about DTAs please see here.
How can a Hong Kong Company Help Potential DTV Applicants?
One of the major criteria for applying for the DTV is that the applicant’s employer must be outside of Thailand. While freelance work is an acceptable form of employment, many applicants would prefer the security of an actual company, whether for liability issues or tax reasons.
For such applicants, opening a company in Hong Kong could be a good option. By opening a company in Hong Kong, the applicant could apply for the DTV using this company as their employer.
The use of a Hong Kong company can also be used to ensure compliance with the requirements of the DTV as any clients can be invoiced and paid via this entity and therefore in Hong Kong. This is a key consideration as while DTV holders may work in Thailand, they are strictly prohibited from engaging in business activities within Thailand or working for Thai employers. The use of a Hong Kong entity mitigates this risk. Violating these terms could lead to serious consequences, including deportation and re-entry bans.
Tax Optimisation
Companies in Hong Kong are subject to a low corporate income tax (CIT) rate which is among the lowest in the world, currently capped at a maximum of 16.5% (8.25% for the first HKD 2 million (approximately 257,000 USD/9 million THB)) for profits generated within Hong Kong. Hong Kong also does not impose capital gains taxes, withholding taxes on dividends and interest, or indirect taxes such as VAT or GST.
Even more attractive is the fact that Hong Kong allows offshore companies to claim a tax exemption on profits derived from outside Hong Kong as a company with offshore status.
Offshore status in Hong Kong refers to companies that conduct their business operations entirely outside of Hong Kong and earn their profits from foreign sources. This status allows such companies to benefit from a tax exemption, meaning they are not subject to Hong Kong’s profits tax on income earned outside the territory.
However, it must be noted that obtaining offshore status can be complex and may require significant effort in terms of documentation and compliance. Companies must be cautious not to engage in activities that could be deemed as conducting business within Hong Kong, and running the risk of establishing a permanent establishment which would jeopardise their offshore status.
For a more detailed overview of how a Hong Kong company could be beneficial, please see our blog post here.
How can Belaws help?
For more information about the DTV in Thailand why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
Our consultations last for a period of up to 1 hour and are conducted by expert Lawyers who are fluent in English, French and Thai.
Consultations can be hosted via WhatsApp or Video Conferencing software for your convenience. A consultation with one of our legal experts is undoubtedly the best way to get all the information you need and answer any questions you may have about your new business or project.
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Frequently asked questions
Can I work for Thai companies with a DTV?
No, the DTV does not permit employment with Thai companies. It’s specifically for remote work with non-Thai employers or participation in approved Thai cultural activities.
For the DTV, how many times can I extend my stay per entry?
You can extend your stay once per entry for an additional 180 days. This must be done at a Thai immigration office before your initial 180-day stay expires.
Is there a minimum income requirement for the DTV?
While there’s no specific income requirement, applicants must show financial stability, typically through bank statements showing at least 500,000 THB or equivalent.
Can I apply for the DTV from within Thailand?
No, you must apply from outside Thailand, typically in the country where your employment is based or where you can establish your presence.
Are there restrictions on nationalities that can apply for the DTV?
While the DTV is available to many nationalities, some restrictions may apply. It’s best to check with your nearest Thai embassy or consulate for specific eligibility criteria based on your nationality.
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