Moving to Thailand on the Elite visa with a UK LTD - Some questions re. tax residency

[kjc500]

I'm struggling to find an answer so if anyone can help that would be appreciated...

I'm currently a UK resident and I want to move to Thailand. It seems the Elite visa is the best option for me. I have a UK Ltd company from which I take a salary and dividends from and I've been told that if I become a non-UK resident I will be able to take dividends at 0% tax in the UK (as long as my salary stays below the £12,500 threshold). On the Thai side, if you don't remit foreign derived income within the same year, it's tax free. My questions are:

1. The Elite visa doesn't allow you to work. The HMRC residency test is easy to pass if you are working full time abroad, but is there going to be trouble if the visa in Thailand does not allow work? Will HMRC basically say that I wasn't working abroad and therefore can't claim non-residency?

2. I'll most likely be in Thailand for more than 6 months of the year (UK less than 90 days). Will this make me an automatic Thai tax resident negating the above?

3. Is it necessary for me to get some kind of tax residency doc in Thailand to show as proof of residency to HMRC (even if I will not be officially working in Thailand)? And is this even possible in Thailand on the Elite? I understand that HMRC don't like it if you leave but don't become a tax resident elsewhere.

4. If I understand correctly, dividends are not classed as income, so I can take dividends from my company and Thailand would not view it as me earning income from controlling my company there, rather I'd be earning passive income as a shareholder. Is this technically correct?

The company structure is remaining for now - just trying to figure out if this scenario is doable.

 

[Marzio]

Why don't you just use a transparent entity instead of UK LTD?

 

[kjc500]

Why don't you just use a transparent entity instead of UK LTD?

You mean an LLP? I've spoken to my accountant an he basically advised against that. Right now my priority is to fix my personal tax liability and then I will consider working on restructuring the business.

 

[Marzio]

You mean an LLP?

Depending where are your customers you could also consider a US LLC or other tax transparent entities.

my accountant basically advised against that

Did he explain why?

Right now my priority is to fix my personal tax liability

Thai elite visa + transparent entity = 0% taxation if you don't remit funds in Thailand in the same year.

This structure worked until now, it remain the be seen if under the new government things will change but i think they'll continue to leave farangs alone so they can spend their money in LOS.

 

[kjc500]

Did he explain why?

He basically said that HMRC have some broad law they can act on if they see anyone doing anything simply to evade tax. The structure might be legal but the way I'd be using it they could decide to take some action. I don't really want to go there as I'd like to sleep well at night.

US LLC would be pretty straight forward but I'd need to make sure I could keep access to payment providers etc I'm using now. Probably would be fine.

Are you able to help with my specific questions though? Thanks

 

[Marzio]

He basically said that HMRC have some broad law they can act on if they see anyone doing anything simply to evade tax

He is probably talking about GAAR (general anti abuse rules) but those are valid if you stay in UK and create an artificial structure only to avoid taxes.

Here we are talking about moving your tax residency so GAAR has nothing to do in this context.

US LLC would be pretty straight forward but I'd need to make sure I could keep access to payment providers etc I'm using now.

US LLC can acces all the major payment gateways like Stripe and PayPal, the only downside depending in which currency do you bill clients is that you could have an automatic currency conversion if you use a payment gateway that uses a settlement currency that's different from the currency you are using to invoice your clients.

For example US Stripe and PayPal have only $ as settlement currency so if you bill your customers in £ you will experience a currency conversion fee from £ to $

Are you able to help with my specific questions though?

No, i'm only here wasting my time trying to increse the golden stars count on my profile.

There are a lot of providers on this forum, somebody will be able to help you

 

[Larin]

1. The Elite visa doesn't allow you to work. The HMRC residency test is easy to pass if you are working full time abroad, but is there going to be trouble if the visa in Thailand does not allow work? Will HMRC basically say that I wasn't working abroad and therefore can't claim non-residency?

They can always challenge your claim of fulfilling an automatic non-residence test. It would then be up to you to show the evidence that you work full-time abroad and fulfill the test.

2. I'll most likely be in Thailand for more than 6 months of the year (UK less than 90 days). Will this make me an automatic Thai tax resident negating the above?

Even if you become a tax resident in Thailand, it does not automatically make you a non-resident in the UK. In case you are a tax resident in both countries the double tax treaty between Thailand and the UK would be used to determine where you will be considered a tax resident. You can find the treaty here: https://assets.publishing.service.g...e/507424/uk-thailand-dtc180281_-_in_force.pdf
Article 4 is what you are interested in.

3. Is it necessary for me to get some kind of tax residency doc in Thailand to show as proof of residency to HMRC (even if I will not be officially working in Thailand)? And is this even possible in Thailand on the Elite? I understand that HMRC don't like it if you leave but don't become a tax resident elsewhere.

Again. See the answer above. HMRC does not take a view on whether you are a tax resident elsewhere. They only care whether you are a tax resident in the UK, based on UK law.

4. If I understand correctly, dividends are not classed as income, so I can take dividends from my company and Thailand would not view it as me earning income from controlling my company there, rather I'd be earning passive income as a shareholder. Is this technically correct?

I cannot comment on this as I am not as familiar with Thai law. Others on the forum might help.

 

[kjc500]

Thanks for your help.

Again. See the answer above. HMRC does not take a view on whether you are a tax resident elsewhere. They only care whether you are a tax resident in the UK, based on UK law.

I think this is possibly a good thing for me. Even when I purposely fail the working abroad full time test, I can think I can still pass the residency test and be marked a non-resident. Hopefully they just leave me alone.

 

[Larin]

UK has automatic non residency tests, which if fulfilled make you a non-resident (for example, the one you mentioned about working abroad full time), UK also has automatic residency tests that if fulfilled make you a resident. The rest is based on ties to the UK. So, I am not sure what you refer to.

 

[kjc500]

Sure - I just meant I was running through this flow and can seem to pass it even if I answer no to working full time abroad (working some days in the UK and having a temp home here etc.) - Guidance – Guidance – GOV.UK

Anyway, I think I should be fine. Do you know specifically about the rules in Thailand? Someone else has mentioned that getting a Thai TIN is easy but I'm unsure if that's a good idea whilst technically on a long term tourist visa.

 

[zzzzzz]

Sure - I just meant I was running through this flow and can seem to pass it even if I answer no to working full time abroad (working some days in the UK and having a temp home here etc.) - Guidance – Guidance – GOV.UK

Anyway, I think I should be fine. Do you know specifically about the rules in Thailand? Someone else has mentioned that getting a Thai TIN is easy but I'm unsure if that's a good idea whilst technically on a long term tourist visa.

You can get TIN, and it doesn't mean you're working there. Example:
- you stay 180 days in Thailand and automatically become tax resident
- you remitt dividend from abroad in less than 1 year
- you own Thai stocks with Thai broker and get dividend
- you get interest at Thai bank
...

 

[kjc500]

Great thanks, so that part is straightforward then. Does having a TIN introduce any reporting requirements or do you only need to do anything if you have some taxable income each year?

 

[kjc500]

In terms of TIN, you can get it no problem, and as long as have no local Thai income you do not have to file any reports.

Thanks - really appreciate your help.

 

[bnpsu]

Depending where are your customers you could also consider a US LLC or other tax transparent entities.



Did he explain why?



Thai elite visa + transparent entity = 0% taxation if you don't remit funds in Thailand in the same year.

This structure worked until now, it remain the be seen if under the new government things will change but i think they'll continue to leave farangs alone so they can spend their money in LOS.

What if you sit in Thailand and do work, wouldn't that count as local Thai income?

 

[jafo]

He basically said that HMRC have some broad law they can act on if they see anyone doing anything simply to evade tax. The structure might be legal but the way I'd be using it they could decide to take some action.

This is an absolutely wonderful honest accountant with integrity. He's revealing to you between quotes "They got the guns and the courts and do as they damn please". Buy this man a Louis XIII drink! I wished I could find ANYONE, professional or not, like this. You are so blessed!