I- Rental income and real estate gains from property located in Thailand:
Income received in Thailand are subject to income tax in Thailand
A- WithHolding tax
Rental income:
o Non-residents: A single tax of 15% applies (the “withholding tax”).
o Residents: After obtaining a Tax ID, will therefore be taxed according to the Thai progressive scale between 5 and 35% for residents. The withholding tax (5%) will be deducted and the deposit deducted from the annual tax payable.
The withholding tax is collected at source by the manager who must provide a receipt (Tawi 50). If the collection has not been made, the owner of the property will have to himself declare and obtain a receipt from the revenue department.
Capital gain:
The seller is a company: o The seller is a company: The withholding tax will be 1%, from Land’s value (Contract selling price) The seller is an individual: The withholding tax is calculated on the value set by the Land office (standard deduction for the seller’s years of ownership), individual’s tax rate (exception from 0 to 150.0000 THB, the rate will be 5%).
Tax Rates of the personal Income Tax:
Capital gain: After the purchase of an apartment at 1 million THB, resale at 1.500.000 THB, the calculation of the tax will be made on the capital gain of 500,000 THB. Cashback: Cashback is not considered as a taxable income in Thailand. Deduction: Depending on your personal situation, expenses, a certain number of deductions can be made: Personal deduction, dependent children and relatives, health insurance, life insurance, pension funds, real estate loans, personal expenses.
II- Property Tax in Thailand
The Land and Building Tax Act B.E. 2562 (2019), which will come into force on January 1, 2020), aims to boost investment in Thailand and boost the country’s economy.
The tax rate will be determined by the use of the property and its value on the land office (note: the value on the land office may be 20 and 40% lower than the price of the property on the market) thus replacing the current rate of 12,5% calculated on the rental value of the property. The declaration will be made to the local district office and the first payments will start in February 2021. The property will be taxable after it has obtained the property title deed.
Example: an apartment purchased on a plan will not be taxable during construction. Upon completion, the tax shall be payable only after obtaining the title deed from the Land Office. For property acquired in Leasehold, in case of leasehold less than 3 years, the property will be taxable if the property is the subject of the date which sign lease agreement a title.
*Exemption for a first home buyer, name of the owner should appear on the house registration book.
- Owner of the house or condo only, exemption until 10 million THB
- Owner of the house and land, exemption until 50 million THB
** Land Office value. Note that the Land Office value could be 20 to 40% lower than the purchase price. (in the above example 30% discount from the market value)
· From 2022, ceiling rate: 0,3%
This article is a general briefing note which does not replace the advice for any individual situation. Its content shall not be liable to the firm in the event of a different application by the tax authorities in France or Thailand.