Recently, a post on Xiaohongshu has gone viral in the Thai-Chinese community.
The post is titled "Domestic house sale funds in Thailand recognized as income and frozen! How to solve it?"
The poster stated: He moved to Thailand in 2017, spending about 300 days each year there for retirement, enjoying the pace of life in Thailand, and then planning to settle there for retirement long-term.
Lately, he found an apartment in Bangkok, paid a deposit for his retirement, and then sold an old house in Licang District, Qingdao, Shandong in China. After selling the house, he converted the money into US dollars and brought about 14 million baht to Thailand.
He converted this money into US dollars and deposited it into a Thai bank account, ready to pay in full.
Unexpectedly, after the Thai bank received the funds, the tax office saw the money being deposited and immediately froze all his accounts!
The bank told him that the tax office had recognized this money as his "income for 2024," saying he must pay tax and might face legal responsibilities, even possibly imprisonment.
He went to the bank and the tax office several times, trying to explain that it was not his income, but money from a house legally purchased in China over twenty years ago, now sold to fund his retirement in Thailand.
He submitted property deeds, sale contracts, transaction records, floor plans, and purchase invoices from 2002 to explain the origin of the funds. However, the Thai authorities still treated it as income, insisting he pay taxes, amounting to over 6 million baht.
The bank also said that, in addition, the immigration bureau must provide proof that all the money in his bank does not involve illegal work or business funds in Thailand.
The poster has already paid the booking fee for the apartment in Bangkok, and the deadline to pay in full is approaching. If he fails to pay on time, he will lose the deposit.
Netizens commented that bringing such a large amount of cash to Thailand inevitably leads to scrutiny.
The poster mentioned that he had consulted a lawyer, and whether it was cash or remittance, he could not avoid taxation by Thai authorities.
What's going on here?
Will the Chinese government really tax the sale of houses by Chinese people in China?
PASA checked online and consulted professionals at a Thai law firm, and it turns out this is indeed true.
Chinese residents living long-term in Thailand must pay taxes in Thailand on the sale of houses in China!
The Thai Revenue Department issued Directive Paw 161/2566, making significant adjustments to the personal income tax treatment of foreign income, effective from January 1, 2024.
The new regulation states that Thai citizens, as well as foreign citizens residing in Thailand for more than 180 days, must pay taxes in Thailand on labor remuneration, business profits, and property income received from abroad, regardless of the transfer time.
Indeed, countries around the world have regulations to tax their residents on foreign income. A Chinese person earning a salary or capital gains in Thailand, if it reaches a certain amount, also needs to pay personal income tax in China.
Usually, if two countries have signed an agreement, they can avoid double taxation (if country B's tax residents earn money in country A and it has been taxed there, country B will not tax it again), but if there is no tax treaty between the two countries, country B can also tax your income from country A.
There is no tax recognition agreement between China and Thailand, so if a Chinese person resides long-term in Thailand, regardless of whether they have paid taxes in China, as soon as the money enters a Thai account, they need to pay taxes on their income in Thailand.
This includes your house sale funds.
In response to recent public concern about "whether Chinese citizens residing long-term in Thailand need to pay taxes in Thailand on their foreign income," Clyde Law Firm, based on current Thai laws and regulations, provided the following legal advice:
What does "Thai tax resident" mean?
According to Article 41 of the Thai Tax Law, any individual who resides in Thailand for a total of 180 days in a tax year is considered a Thai tax resident.
Once recognized as a tax resident, in principle, you must declare and pay taxes to the Thai tax authorities on income from both Thailand and abroad.
What includes foreign income?
According to legal provisions, the global income of Thai tax residents should be taxed, including but not limited to:
Salaries, dividends, interest received in China;
Capital gains from selling overseas real estate;
Any other form of foreign earnings.
It is particularly important to note that according to the new policy issued by the Thai Revenue Department starting in 2024, foreign income, once remitted to Thailand, regardless of the year it was earned, should be included in the tax base and calculated according to the Thai personal income tax progressive rates.
What are the Thai personal income tax progressive rates?
0 - 150,000 baht: tax-free
150,001 -300,000 baht: 5%
300,001 -500,000 baht: 10%
500,001 -750,000 baht: 15%
750,001 -1,000,000 baht: 20%
1,000,001 -2,000,000 baht: 25%
2,000,001 -5,000,000 baht: 30%
Over 5,000,000 baht: 35%
Is there an exemption rule?
Currently, Thailand does not have a general tax exemption policy for foreigners' global income. That is, as long as you meet the tax resident criteria and remit foreign income to Thailand, there is a legal obligation to pay taxes.
Thailand and China have not signed a comprehensive bilateral personal income tax agreement, so the general "double taxation relief" does not apply.
The recent case of "foreign house sale funds remitted to Thailand being taxed" legally, if the house sale funds are considered personal capital gains and remitted to Thailand, indeed have a legal basis to be considered taxable income and required by the tax bureau to pay taxes. Especially when the amount is large, it is more likely to attract the attention of the Thai tax authorities and anti-money laundering departments of banks.
So, what should Chinese residents living long-term in Thailand do?
Clyde Law Firm states: Although there is a global tax obligation legally, in practice, many high-net-worth individuals (such as Chinese entrepreneurs with assets worth hundreds of millions) usually use the following methods for tax arrangements and risk control:
Avoid becoming a tax resident: for example, by controlling the number of days residing in Thailand each year not to exceed 180 days, avoiding triggering tax resident status.
Do not remit foreign income to Thailand: such as keeping it in a foreign bank account or arranging assets through an offshore structure.
Hold assets through companies, trusts: avoid directly holding foreign earnings in personal names, isolating through legal entities or trusts.
Specify the purpose of remittance: if it is necessary to remit money to Thailand, it should be indicated as "living expenses," "education expenses," etc., to avoid being considered taxable income by the tax bureau.
Therefore, Chinese citizens residing long-term in Thailand, if they meet the tax resident criteria, indeed have a global income tax obligation;
And Thailand does not have a general exemption for foreigners' global income, specific situations need individual planning;
Chinese people in Thailand are advised to legally design their tax structures in advance to avoid unnecessary tax and legal risks.
If you have a large amount of funds to be transferred in and out of Thailand, be sure to consult professional institutions and legal and tax professionals in advance to make reasonable tax avoidance.
Simply transferring a large sum of money into a Thai account could trigger the nerves of the Thai tax authorities, bringing unnecessary losses to yourself, and even legal risks.
So, although it is unfortunate for the poster on Xiaohongshu, it seems that the 6 million baht tax payment is unavoidable.
Unless other channels can be found to coordinate, this money will definitely have to be paid, because that's what Thai law stipulates—even though the rationality of such regulations may seem counterintuitive.
As for Chinese bosses residing long-term in Thailand, they should also be cautious and consult professional lawyers to avoid inadvertently contributing millions of hard-earned money.
