Exit strategy options for a Thailand-based crypto investor

[Curveball]

Hi guys,

As I understand it, Thailand does not have a separate capital gains tax. Instead, crypto profits are classified as income and therefore subject to the country's progressive income tax system (the top tax bracket is 35% for annual income above 5 million baht).

Enforcement is lax so many crypto investors fly under the radar simply through non-declaration. This might not be a problem for small-volume transactions; but due to bank reporting requirements, by transacting in larger sums, one runs the risk of being audited with the possibility of incurring significant financial penalties.

My ultimate goal is to purchase property in Thailand with my crypto profits, but without having to be subject to the 35% tax when cashing out.

Assuming that I wanted to exit for an amount exceeding 5 million baht, what are some possible options (either onshore or offshore) for a tax optimal approach?

Thank you in advance for your assistance.

 

[daxbr]

Hi guys,

As I understand it, Thailand does not have a separate capital gains tax. Instead, crypto profits are classified as income and therefore subject to the country's progressive income tax system (the top tax bracket is 35% for annual income above 5 million baht).

Enforcement is lax so many crypto investors fly under the radar simply through non-declaration. This might not be a problem for small-volume transactions; but due to bank reporting requirements, by transacting in larger sums, one runs the risk of being audited with the possibility of incurring significant financial penalties.

My ultimate goal is to purchase property in Thailand with my crypto profits, but without having to be subject to the 35% tax when cashing out.

Assuming that I wanted to exit for an amount exceeding 5 million baht, what are some possible options (either onshore or offshore) for a tax optimal approach?

Thank you in advance for your assistance.

Not enough info to make determination. Need citizenship/residence, visa status in th, when/ where was transaction made, current location of proceeds.

 

[Curveball]

Apologies for the inadequate info.

Basically, I'm a dual citizen (TH/AUS) permanently based in TH. I haven't cashed out of crypto yet, but intend to do so some time this year, so would like advice on possible options to avoid being hit with the 35% income tax.

 

[Mercury]

Relevant information on crypto taxation in Thailand

As you mentioned, Thai law states that crypto profits (including crypto to Fiat as well as crypto to crypto transactions) are taxable events wherever (in Thailand and abroad) holdings are located and transactions take place.

Unless you haven't done any crypto to crypto transactions since you have moved residence to Thailand, you should already have profits to declare to the Thai Revenue Department ... ?

However, as you said law enforcement is lax, and Thailand has joined but not yet implemented CRS (by 2023).
If you keep your holdings outside of Thailand (Foreign exchanges), never bought using a Thai bank/credit card, and are able to cash out to a foreign crypto-friendly bank, how would Thailand know about it? To be safer, just try not to bring this money in Thailand the same year you cash out.

 

[Curveball]

Relevant information on crypto taxation in Thailand

As you mentioned, Thai law states that crypto profits (including crypto to Fiat as well as crypto to crypto transactions) are taxable events wherever (in Thailand and abroad) holdings are located and transactions take place.

Unless you haven't done any crypto to crypto transactions since you have moved residence to Thailand, you should already have profits to declare to the Thai Revenue Department ... ?

However, as you said law enforcement is lax, and Thailand has joined but not yet implemented CRS (by 2023).
If you keep your holdings outside of Thailand (Foreign exchanges), never bought using a Thai bank/credit card, and are able to cash out to a foreign crypto-friendly bank, how would Thailand know about it? To be safer, just try not to bring this money in Thailand the same year you cash out.

Thanks for your insights.

So suppose I cash out to a foreign bank, wait more than one year, then transfer the funds to my Thai bank account. Technically, would the funds still be classed as "income" and, therefore, subject to income taxes?

 

[Marser]

Relevant information on crypto taxation in Thailand

As you mentioned, Thai law states that crypto profits (including crypto to Fiat as well as crypto to crypto transactions) are taxable events wherever (in Thailand and abroad) holdings are located and transactions take place.

Unless you haven't done any crypto to crypto transactions since you have moved residence to Thailand, you should already have profits to declare to the Thai Revenue Department ... ?

However, as you said law enforcement is lax, and Thailand has joined but not yet implemented CRS (by 2023).
If you keep your holdings outside of Thailand (Foreign exchanges), never bought using a Thai bank/credit card, and are able to cash out to a foreign crypto-friendly bank, how would Thailand know about it? To be safer, just try not to bring this money in Thailand the same year you cash out.

In my opinion this website is just a well written sales pitch (scare tactics) and not a credible source of information. Neither the site or the thai law seems to state that abroad earnings on crypto investments are taxed.

The rev dept have made a statement in the post saying that "crypto is everywhere".. weather that has any legal basis takes some figuring out.

@Curveball

There's still remaining information missing here:
Where is the exchange based?
Where did the funds come from?
Have any tax events happened? ( sales or exchanges to fiat or other crypto )

If it was bought and sold outside the country then its possibly considered under the territorial tax system and exempt if brought in on the next year. If this is the case, you should take a trip to silom road and take a couple of real opinions from respected companies - examples baker tilly, KPMG, sherrings, mazar, etc. Bear in mind this is not an easy question to get an answer to, and i have yet to find it myself, so haven't invested.

If it wasnt sold inside the country yet then it might be possible to take a 6 month vacation ( no exit tax ). But again this needs real advice from a credible source.

 

[Curveball]

In my opinion this website is just a well written sales pitch (scare tactics) and not a credible source of information. Neither the site or the thai law seems to state that abroad earnings on crypto investments are taxed.

The rev dept have made a statement in the post saying that "crypto is everywhere".. weather that has any legal basis takes some figuring out.

@Curveball

There's still remaining information missing here:
Where is the exchange based?
Where did the funds come from?
Have any tax events happened? ( sales or exchanges to fiat or other crypto )

If it was bought and sold outside the country then its possibly considered under the territorial tax system and exempt if brought in on the next year. If this is the case, you should take a trip to silom road and take a couple of real opinions from respected companies - examples baker tilly, KPMG, sherrings, mazar, etc. Bear in mind this is not an easy question to get an answer to, and i have yet to find it myself, so haven't invested.

If it wasnt sold inside the country yet then it might be possible to take a 6 month vacation ( no exit tax ). But again this needs real advice from a credible source.

I am based in Thailand, so I've been using a Thai exchange as a fiat onramp, but have been conducting the bulk of my trades on foreign exchanges.

In terms of "tax events", I have not withdrawn any profits to fiat yet; however, I have been conducting back and forth trades with various cryptos. As to whether crypto-crypto trades are taxable here remains unclear to me. My understanding (could be wrong) is that, at present, only fiat withdrawals to a Thai bank account are considered taxable at this point in time.

Ultimately, I sense that I will need proper tax advice from a qualified professional as relying on hearsay or third-party advice could be problematic when it comes to navigating Thailand's convoluted regulatory framework . Too many conflicting opinions it seems.

Anyway, as a side note, let me just say that I did contact the Revenue Department expecting a clear answer. Much to my dismay, I had to get through two employees until they finally managed to find someone with the requisite knowledge to answer my queries (doesn't bode well when even the tax department can't answer basic questions about taxes lol). Even then, the information I received basically confirmed what I already knew: that crypto profits are taxed as income, with the highest bracket being 35%.

Regarding that website quoted by @Marser above, I have been acquainted with the writings of that lawyer for quite some time and it seems he really knows his stuff. I know of no other person who has written as extensively as he on the issue of crypto regulations in Thailand. However, I know from someone else who contacted him several months ago, that he charges a hefty $10,000 for his services, which is pretty exorbitant when there are probably many legal professionals out there who charge considerably less for high quality advice.

Got a lot more digging to do I guess...

 

[khinkali]

I could not advise more strongly against using the lawyer linked above.

 

[PiersBlack]

I could not advise more strongly against using the lawyer linked above.

@khinkali could you please elaborate more? Feel free to PM if don't want to discuss in public. I know someone in the process of dealing with that particular lawyer...

 

[khinkali]

Hi @PiersBlack I paid for up to 12 hours of professional advice. Once I paid I was told to choose what I think the tax rules will be, and then offered new paid services.

I completely understand that he wasn't able to help (the tax issues were not resolved by Thai authorities until I left). My negative opinion is based on sending my questions before being given a quote and paying it.

This was 2017, maybe he's changed since then. Still, I wouldn't pay in advance!

 

[Curveball]

In my opinion this website is just a well written sales pitch (scare tactics) and not a credible source of information. Neither the site or the thai law seems to state that abroad earnings on crypto investments are taxed.

The rev dept have made a statement in the post saying that "crypto is everywhere".. weather that has any legal basis takes some figuring out.

@Curveball

There's still remaining information missing here:
Where is the exchange based?
Where did the funds come from?
Have any tax events happened? ( sales or exchanges to fiat or other crypto )

If it was bought and sold outside the country then its possibly considered under the territorial tax system and exempt if brought in on the next year. If this is the case, you should take a trip to silom road and take a couple of real opinions from respected companies - examples baker tilly, KPMG, sherrings, mazar, etc. Bear in mind this is not an easy question to get an answer to, and i have yet to find it myself, so haven't invested.

If it wasnt sold inside the country yet then it might be possible to take a 6 month vacation ( no exit tax ). But again this needs real advice from a credible source.

@Marser I just wanted to clarify your proposal as it is an interesting one. Please correct me if I have misunderstood you.

Background info: According to the Revenue Department, those who reside in TH for less than 180 days are not classed as "tax residents" and are therefore exempt from paying income taxes on foreign earned income.

Given this, are you saying that one could leave Thailand, set up a foreign bank account in a crypto friendly country, cash out to fiat via that bank account, and then transfer the funds back to one's Thai bank account the following calendar year as a way to legally minimise or perhaps eliminate taxes?

Obviously would have to confirm this with a legal professional, but is that basically the gist of it?

 

[Marser]

@Marser I just wanted to clarify your proposal as it is an interesting one. Please correct me if I have misunderstood you.

Background info: According to the Revenue Department, those who reside in TH for less than 180 days are not classed as "tax residents" and are therefore exempt from paying income taxes on foreign earned income.

Given this, are you saying that one could leave Thailand, set up a foreign bank account in a crypto friendly country, cash out to fiat via that bank account, and then transfer the funds back to one's Thai bank account the following calendar year as a way to legally minimise or perhaps eliminate taxes?

Obviously would have to confirm this with a legal professional, but is that basically the gist of it?

That's the general concept yes, you stay outside longer than 183 days. It applies to many countries. The thing to look out for is that some country will make an "exit tax" when you try to leave. But as far as i could research, thailand doesn't have this. I'm not sure if your citizenship would have different treatment though, and as you say, you definitely need to take solid legal advice.

 

[CaptK]

Thailand is territorial tax so if you have the funds in a foreign exchange all you would need to do is cash out into an offshore account and then bring the funds back.
An OTC transaction for the coins into a offshore bank account and then remit back to Thailand.

Many Expats from in Thailand do it, many options available banking wise but they are not cheap (1-2% plus Swift fees) on transaction fees any a lot better than 35% tax.

 

[Curveball]

Thailand is territorial tax so if you have the funds in a foreign exchange all you would need to do is cash out into an offshore account and then bring the funds back.
An OTC transaction for the coins into a offshore bank account and then remit back to Thailand.

Many Expats from in Thailand do it, many options available banking wise but they are not cheap (1-2% plus Swift fees) on transaction fees any a lot better than 35% tax.

@CaptK Thanks for the info.

Are you, by any chance, able to recommend some countries with crypto friendly banking systems? I've seen certain names mentioned here and there, but thought I'd ask for your direct opinion on this.

 

[CaptK]

It all depends on nationality, residency but you can look at SEBA for crypto more than 1M CHF/EURO
Quppy, Bitwala and Wirex for 100K or so.

 

[keenok]

@Curveball Did you find out anything new?

I have talked to tax advisors from multiple international auditing firms in Bangkok, not about crypto specifically but about any income from outside Thailand. They all confirmed the heresay: income from a source outside of Thailand, unless it is paid as a compensation for work done in Thailand, is not taxable in Thailand if not remitted to Thailand, and also not taxable if remitted after 12 month (note that it was recommended to leave 12 months after income generation, not just the next calendar year). In any case, it seems to be pretty clear that you do not have to declare income of pay taxes on it if you leave it in an offshore account - and for money remitted, it's also tax-free if you wait long enough.

I am aware of the "crypto income being taxable", but the question is if that overrides the above principle. That would surprise me.

 

[CaptK]

Crypto by definition in Thailand is taxable regardless. So you would need to cash out offshore and then remit it 12 months after. It would need to be dressed up as something else.

 

[4br]

@CaptK Thanks for the info.

Are you, by any chance, able to recommend some countries with crypto friendly banking systems? I've seen certain names mentioned here and there, but thought I'd ask for your direct opinion on this.

Most EU-based or EUR exchanges seem to have have accounts with specialists in Lithuania. I seem to remember reading on here that there is some specifics, which make it easier to deal with crypto there. It seems The UK have become a lot less crypto friendly over the past few years.

I have used Bankera in Lithuania, which has personal and business accounts. I have pushed XXX,XXX euros through there with one routine KYC request, which was waved through. All funds were to FTX, which has not asked any questions. As it is a business account that is more surprising.

------------------------------

As a related question, maybe to @CaptK .

I have been advising a friend on crypto. I told him to get in in March 2020, but wouldn't. But he got in later and is up to being able to pay off his mortgage. I have advised him to sell at the top and buy back a year later, and ride the next bull market correctly, with healthy DCA-ing. Hopefully this can take him to retirement levels.

I suggested that if he wants to cash out, he could move to UAE for 12-13 months, cash out there and then move back. Is that likely to avoid having to pay capital gains?

 

[keenok]

Crypto by definition in Thailand is taxable regardless. So you would need to cash out offshore and then remit it 12 months after. It would need to be dressed up as something else.

Isn't simply tax-free in this case:

1. sell crypto for FIAT on exchange
2. withdraw FIAT from exchange to bank account outside of Thailand
3. wait 12 months
4. remit to Thailand

As I see it, this requires no residence or stay in other countries. Just a bank account, which can even be linked to the Thai address.

 

[CaptK]

Most EU-based or EUR exchanges seem to have have accounts with specialists in Lithuania. I seem to remember reading on here that there is some specifics, which make it easier to deal with crypto there. It seems The UK have become a lot less crypto friendly over the past few years.

I have used Bankera in Lithuania, which has personal and business accounts. I have pushed XXX,XXX euros through there with one routine KYC request, which was waved through. All funds were to FTX, which has not asked any questions. As it is a business account that is more surprising.

------------------------------

As a related question, maybe to @CaptK .

I have been advising a friend on crypto. I told him to get in in March 2020, but wouldn't. But he got in later and is up to being able to pay off his mortgage. I have advised him to sell at the top and buy back a year later, and ride the next bull market correctly, with healthy DCA-ing. Hopefully this can take him to retirement levels.

I suggested that if he wants to cash out, he could move to UAE for 12-13 months, cash out there and then move back. Is that likely to avoid having to pay capital gains?

Depends on country and what exchange he bought the coins from. What you have suggested has worked for my clients.

Isn't simply tax-free in this case:

1. sell crypto for FIAT on exchange
2. withdraw FIAT from exchange to bank account outside of Thailand
3. wait 12 months
4. remit to Thailand

As I see it, this requires no residence or stay in other countries. Just a bank account, which can even be linked to the Thai address.

Make sure the exchange is not tied to any Thai address. Then you are good to go.