Capital Gains Tax: A Guide for Expats in Thailand

Capital gains refer to the profit from selling an asset for more than its purchase price. Common assets that generate capital gains include stocks, property, cryptocurrency and other investments. Understanding these gains is not just essential, but it can also empower you to make informed financial decisions. Tax regulations vary significantly between countries and Thailand has specific rules for taxing these gains. As a result, accurately calculating and reporting capital gains is crucial to staying compliant with Thai tax authorities, but it also puts you in control of your financial situation.

This article provides a comprehensive overview of capital gains tax obligations for expats in Thailand. We’ll cover essential aspects like calculation methods, filing requirements, and critical Thai-specific tax considerations to help you manage your investments smoothly and avoid compliance issues. Whether you’re new to Thailand or need a refresher on local tax rules, this guide aims to clarify your obligations and provide practical insights into managing your capital gains effectively.

Understanding Capital Gains in Thailand 

Capital Gains: Thai Revenue Code Classification

In Thailand, capital gains are treated as assessable income. They fall under Section 40(4) of the Thai Revenue Code, which broadly categorises ‘income derived from capital.’ This classification includes capital gains and income from dividends and interest, grouping these under a single income type for tax purposes. Understanding this classification is critical for expats because it dictates the specific tax obligations and forms required when reporting these types of income. 

Why Capital Gains Matter for Expats in Thailand

Accurate reporting of capital gains is essential for expats living in Thailand, as failing to comply with local tax regulations can lead to penalties and potential complications with visa status. Thai tax authorities expect individuals to report assessable income correctly, including gains from assets sold domestically and, in some cases, internationally if the proceeds are remitted into Thailand. Given that Thailand’s tax system differs from many other countries, expats need to understand the specifics of capital gains tax.

Thai Tax Obligations for Capital Gains

Tax Residency and Its Importance

In Thailand, tax residency plays a significant role in determining an individual’s tax obligations. An expat qualifies as a Thai tax resident if they spend 180 days or more in the country within a calendar year. Thai tax residents are required to report assessable income, including certain capital gains, regardless of where it was earned. For expats planning to stay long-term, understanding and tracking residency status is essential, as it directly affects tax obligations on both domestic and foreign-sourced income.

Remittance Basis of Taxation

Thailand operates under a remittance tax system, which differs from a worldwide income tax model. For Thai tax residents, foreign-sourced income—including capital gains from assets sold abroad—is only taxable if it is remitted into Thailand. If the income remains in an overseas account and is not transferred to Thailand, it does not incur Thai tax. This remittance basis allows for greater flexibility in managing foreign-sourced gains but requires careful planning around the timing of remittances to manage tax liabilities.

Exemptions and Non-Taxable Remittances

Several types of remittances are exempt from capital gains tax in Thailand, allowing expats to transfer certain funds without incurring additional tax liabilities. These exemptions include:

• Cash held in overseas accounts before 31st December 2023: Any foreign funds already in bank accounts as of this date are generally exempt from capital gains tax if remitted later.
• Original Capital (Non-Gains) Remittances: If the funds transferred to Thailand are from the original investment due to not making a profit, they are typically non-taxable.
• Inheritances, gifts, and loans: Certain funds transferred as inheritances or gifts may qualify for exemptions, provided they meet specific conditions under Thai law. Loans are also exempt from capital gains tax if documented as such. The gifts & loan rules are complicated and the devil is in the detail to be classed as non-taxable remittances.

Understanding these exemptions helps expats make strategic decisions about remitting funds to Thailand without triggering unnecessary taxes.

Filing Thresholds and Requirements

For Thai tax residents, capital gains remitted into Thailand that exceed certain thresholds require filing a tax return. Married individuals who remit over 120,000 baht of assessable income, including capital gains, into Thailand are required to file. The threshold for single individuals is lower, set at 60,000 baht. Failing to meet these filing requirements can result in penalties, so keeping track of remittances and ensuring compliance with Thai tax laws is essential. You can find out more about tax thresholds, allowance and deductions here. 

Currency Conversion Requirement

Any foreign currency amounts must be converted to Thai baht when reporting capital gains in Thailand. Thai tax authorities require conversions based on the exchange rate for each gain or loss at the transaction date. This conversion practice is especially relevant for expats with foreign-sourced income, as fluctuations in exchange rates can affect the overall amount of taxable income when reported in baht. For accurate tax reporting, expats should maintain detailed records of exchange rates and transaction dates for all foreign-sourced gains.

Methods of Calculating Capital Gains 

Overview of Calculation Methods

Two primary methods are commonly used to calculate capital gains: FIFO (First-In-First-Out) and Moving Average Cost.

Each method offers a different way of determining the cost basis of assets sold, directly impacting the amount of capital gain reported for tax purposes. In Thailand, either method may be used, depending on individual circumstances and preferences.

For a more comprehensive article comparing the two methods of calculating capital gains click here.

Explanation of FIFO (First-In-First-Out)

The FIFO method assumes that the first assets purchased are the first ones sold. This means that when calculating capital gains, the oldest acquisition cost is matched with the sales proceeds until those units are exhausted, then moving to the next batch of purchases.

• Pros:

• • FIFO is straightforward to track, especially for assets bought infrequently.

• • In a rising market, where prices generally increase over time, FIFO may result in lower taxable gains because earlier, cheaper assets are matched with the sales price.

• Cons:

• • In a falling market, FIFO may produce higher taxable gains, as the oldest (higher-cost) assets are recorded as sold first.

• • FIFO doesn’t necessarily reflect the true cost basis if purchase prices vary widely over time.

Explanation of Moving Average Cost

The Moving Average Cost method calculates the average cost of all units held at any given time. Every time a new purchase is made, the average purchase price across all units is updated, creating a “moving” average cost.

• Pros:

• • It provides a balanced cost basis, which can be beneficial in volatile markets where purchase prices vary significantly.

• • Reflects a more consistent view of the cost of investments, reducing the impact of extreme price fluctuations on reported gains.

• Cons:

• • Requires regular updates to the average cost with each new purchase, which can be complex for active investors.

• • Thailand may demand more detailed record-keeping to ensure accuracy, especially when multiple transactions occur within the same tax period.

Practical Example

To illustrate the difference between FIFO and Moving Average Cost, consider a cryptocurrency investment, with each purchase and sale converted to Thai baht:

1. Purchase History:

1. • January: 10 units at 1,000 baht each.

1. • March: 5 units at 1,200 baht each.

1. • June: 8 units at 1,500 baht each.

1. Sale:

1. • November: 10 units sold at 2,000 baht each.

Using FIFO:

• With FIFO, the 10 units sold in November would be matched with the January purchase price (1,000 baht each).
• Total cost basis: 10 x 1,000 = 10,000 baht.
• Capital gain: (10 x 2,000) – 10,000 = 10,000 baht.

Using Moving Average Cost:

• Average cost per unit after all purchases: (10 x 1,000 + 5 x 1,200 + 8 x 1,500) / 23 units = 1,239 baht (rounded).
• Total cost basis for 10 units: 10 x 1,239 = 12,390 baht.
• Capital gain: (10 x 2,000) – 12,390 = 7,610 baht.

This example demonstrates how each method affects the taxable gain differently, which can be a deciding factor depending on individual tax and financial objectives.

Thai-Specific Considerations for Different Investment Types

Common Asset Types and Their Tax Treatment

Thailand applies specific tax rules to different asset types, which can vary widely regarding reporting and taxation. Understanding the nuances of each asset type is essential for expats with a diverse investment portfolio.

Here’s a brief overview of common assets and their treatment under Thai tax law:

• Overseas or funds held in a General Investment Account (GIA): Gains from the sale of stocks are taxable if the proceeds are remitted into Thailand. Expats should note that each stock sale must be treated as a transaction requiring separate gain calculations.
• Cryptocurrency: Gains from cryptocurrency sales or exchanges are taxable upon remittance to Thailand. Each cryptocurrency transaction is treated as an individual taxable event, and exchanges between cryptocurrencies (e.g., Bitcoin to Ethereum) are also considered sales for tax purposes. More detailed information on cryptocurrency taxation in Thailand can be found here. 
• Bonds and Bond Wrappers: Some bonds, especially those structured as ‘wrappers’ around other assets, may have unique tax considerations, depending on the structure, meaning the overall gain of the structure may be used for the tax calculation. Expats should check the tax treatment of any specific bond or fund, as it may impact tax liability.
• Real Estate: Gains from selling property overseas are generally taxable for Thai tax residents if remitted. These proceeds if sent to Thailand may incur capital gains tax. Learn nore about on navigating gains on property gain here. 

Handling Long-Term and Short-Term Gains

Unlike some tax jurisdictions that differentiate between short-term and long-term gains, Thailand taxes all capital gains remitted to the country, regardless of how long the asset was held. This means both short and long-term gains are treated the same for tax purposes. This uniform treatment simplifies reporting for expats but can impact financial planning, mainly if they are accustomed to tax benefits for long-term holdings in their home countries.

Thailand Treatment of Gains and Losses

Thailand’s tax code does not allow the offsetting of capital losses against gains for different assets. If an expat incurs a loss on one asset but gains on another, they cannot reduce their taxable gain by netting the two amounts. Each gain must be reported independently without adjusting for losses. This rule may influence investment strategy, limiting the potential for tax relief on loss-making investments. Expats may need to manage their portfolios with an understanding that losses won’t lower their overall tax burden in Thailand.

Asset Sales and Exchanges

In Thailand, any domestic transaction involving the exchange of assets, including cryptocurrencies, is considered a taxable sale. (There are exclusions for capital gains tax on domestic stocks listed on SET & certain domestic mutual funds)

For cryptocurrencies, the capital gains tax rule applies even if assets are swapped for one another rather than sold for cash. For example, converting one cryptocurrency into another (e.g., exchanging Bitcoin for Ethereum) triggers a taxable event, and the gain or loss must be calculated based on the baht value at the time of the exchange. This treatment underscores the importance of detailed record-keeping, especially for expats active in cryptocurrency trading, as each trade needs to be accounted for as a separate sale for tax purposes.

Double Taxation Agreements (DTAs) and Tax Credits

Overview of DTAs

Thailand has established Double Taxation Agreements (DTAs) with over 60 countries. These agreements are designed to help prevent expats from being taxed on the same income in their home country and Thailand. For capital gains, DTAs may allow expats to claim tax credits in Thailand for any taxes paid in another jurisdiction on the same gains. This means that, under the right conditions, an expat might reduce or eliminate the need to pay additional Thai tax on capital gains already taxed elsewhere.

Applying for Tax Credits

To claim tax credits under a DTA, expats must provide documentation proving that tax has already been paid on the capital gains in another country.

The key steps are:

• Obtain a Tax Certificate: Request a tax certificate from the tax authority in the jurisdiction where the capital gains were initially taxed. This document proves that the tax was paid, which is essential for the Thai Revenue Department to grant a credit.
• Submit the Tax Certificate: Attach the tax certificate to your Thai tax return (form PND 90) when reporting capital gains. This helps avoid duplication of taxes by showing that the income was already taxed abroad.
• File the Necessary Forms: Even if claiming a tax credit under a DTA, expats must complete and submit the Thai tax forms to ensure compliance with local regulations.

Key Considerations for DTAs

While DTAs help prevent double taxation, they do not waive the requirement to file a Thai tax return. Expats qualifying as Thai tax residents must still report their assessable income, including any foreign capital gains remitted into Thailand, even if they claim a credit under a DTA. Furthermore, tax credits are only applicable if the relevant DTA provisions cover the specific type of income being remitted. Therefore, confirming that your country’s DTA with Thailand includes capital gains and ensuring proper documentation is filed to secure the tax credit is essential.

Watch Our Webinar: Investment Capital Gains & Thai Tax Rules

Filing Capital Gains Taxes in Thailand 

Obtaining a Thai Tax ID Number

If you have a tax filng liability and meet the criteria to have to file, then you must first obtain a Thai Tax Identification Number (Tax ID) to report and pay capital gains tax in Thailand. This number is essential for filing tax returns and tracking tax records in Thailand. Here’s how to get one:

1. Visit Your Local Revenue Office: Expats can apply in person at a Thai Revenue Department office. Bring your passport and any documents showing proof of residence (e.g., work permit or lease agreement).
2. Use a TIN Service: Expat Tax Thailand offers an easy paid online process for acquiring your TIN without leaving your home.

Using the P.N.D. 90 Form

Capital gains are reported using Thailand’s PND. 90 form, which covers income from sources such as investments and foreign gains remitted to Thailand. Filing the P.N.D. 90 form can be done in the following ways:

• Online Filing: The Thai Revenue Department offers an online portal for e-filing, which is accessible in English and Thai. Online filing is convenient and can help streamline the process, but expats must ensure they complete the form accurately.
• In-Person Filing: If preferred, you can file the P.N.D. 90 form person at a local Revenue Office. This method may benefit expats who need additional assistance from tax officers.
• A Professional Filing Service: Calculating capital gains can be complicated. Our online Assisted Filing Service provides all the support you need to ensure full compliance.

Specific Tax Deadlines

It’s crucial to adhere to Thailand’s tax deadlines to avoid penalties.

For capital gains filing:

• Paper Filings: The deadline for submitting paper tax returns is 31st March.
• Online Filings: For those using the online portal, the deadline extends to 8th April.

These dates apply to each tax year, so expats should plan to file well in advance to avoid last-minute issues.

Importance of Accurate Record-Keeping

Thai tax authorities require detailed records for all transactions related to capital gains, especially for expats who may have foreign-sourced income.

Accurate records should include:

• Transaction dates
• Amounts in the original currency and converted to baht
• Supporting documents, such as bank statements, sale receipts, and any related tax certificates for foreign tax paid

If an audit is required, Thai authorities may request documentation up to five years back. Maintaining precise and organised records ensures expats can substantiate their tax declarations if needed and demonstrates compliance with Thai tax laws.

Summing Up

As an expat, navigating capital gains tax in Thailand requires a careful understanding of local tax laws, residency status, and reporting requirements. You can reduce your tax liabilities and stay compliant by staying informed about your obligations and exploring tax management strategies like DTAs, exemptions, and remittance planning.  Under Thai law, each investment requires accurate reporting is essential to avoid complications. This guide equips you with the knowledge to make informed decisions and manage your capital gains efficiently.

How Can We Help

At Expat Tax Thailand, we specialise in providing tailored support for expats managing capital gains and other complex tax obligations. Our team offers services such as Assisted Filing for accurate, timely compliance, strategic tax planning to leverage exemptions and DTAs, and comprehensive guidance on navigating the remittance system.

With our support, you can simplify the tax process and ensure your investments are managed in full compliance with Thai law. Contact us for a free consultation or explore our online resources for more insights into expat tax planning in Thailand.