How Rental Income Tax Thailand Applies Regardless of Residency
Rental income tax Thailand imposes on property owners doesn’t depend on being a tax resident — but a 30% standard deduction, progressive tax brackets, and withholding tax rules all affect what’s actually owed.Many purchasers of real estate in Thailand do not use their newly purchased home as a permanent personal residence. Such properties are often intended as holiday homes only, sitting unoccupied for much of the year. One ongoing financial burden of owning a holiday home is the common area fee, which is typically incurred even when the owner isn’t using the property. To help cover such expenses — or simply to earn a return on their investment — some owners rent out their holiday home, generating rental income. These owners should be aware of the tax liabilities that come with earning rental income in Thailand.
It’s important to note that the duty to pay tax on Thai rental income does not depend on being a “tax resident” of Thailand, or on where the income is received — a point that is often misunderstood. A tax resident of Thailand is defined as anyone staying in Thailand for an aggregate of 180 days or more in a tax year (Revenue Code, Section 41).
However, rental income is treated as taxable income regardless of Thai tax residency, under Section 40(5) of the Thai Revenue Code (“RC”). Section 41 provides that any taxpayer who derives assessable income under Section 40 from property situated in Thailand must pay tax on that income, whether it is paid within or outside Thailand. In other words, anyone — tax resident or not — who earns rental income from property located in Thailand must pay tax on it, regardless of whether the payment is made on-shore or off-shore.
The good news is that taxable income isn’t simply the full rental amount received. The RC allows certain deductions. Under Section 43 of the RC, read together with Section 5(1)(a) of the RC and Royal Decree No. 11, a standard deduction of 30% is allowed as expenses in the case of houses, buildings, and other constructions let out by their owner.
However, the emphasis on “owner” here matters. Where a development investor is actually a lessee — having purchased a long-term lease from the developer rather than owning the property outright — and that investor rents the property out to generate income, they are technically “sub-renting” or “sub-leasing.” In such cases, the 30% standard deduction does not apply. That said, a portion of the rent the investor pays to the developer may be credited as an expense against the sub-lease income.
Rental income recipients also have the option to claim actual, sufficiently documented expenses in place of the standard 30% deduction. If those actual expenses exceed the standard deduction, are reasonable, and are properly documented, it may well be worth the additional time and effort to claim them. Note, however, that such claimed deductions are subject to the same restrictions and regulatory scrutiny applicable to deductible expenses claimed by corporate entities in Thailand.
Tax payable is calculated on a progressive personal income tax scale, as follows:
| Taxable Income (THB) | Tax Rate |
|---|---|
| 0 – 150,000 | Exempt |
| 150,001 – 300,000 | 5% |
| 300,001 – 500,000 | 10% |
| 500,001 – 750,000 | 15% |
| 750,001 – 1,000,000 | 20% |
| 1,000,001 – 2,000,000 | 25% |
| 2,000,001 – 4,000,000 | 30% |
| Over 4,000,000 | 35% |
Individual taxpayers must report and remit their income tax using personal income tax return form PND 91 by the end of March following the year in which the income was received. Failure to report income can trigger an assessment by the Revenue Department, with a penalty equal to the amount of additional tax owed, plus a surcharge of 1.5% per month on the unpaid tax.
It should also be noted that an additional category of tax applies each time rent is paid. The person paying the rent is required to deduct a “withholding tax” from the rental payment and remit it to the local Revenue Department. However, both the tenant paying the rent and the property owner receiving it are jointly liable for ensuring this withholding tax is paid.
The withholding tax rate depends on whether the owner is a Thai tax resident, and whether the rent payer is a juristic person or an individual. If the owner is not a Thai tax resident, the withholding tax rate is 15%, regardless of the payer’s legal status. If the owner is a Thai tax resident and the payer is a juristic person, the withholding tax rate is 5%.
Finally, the withholding tax is not an additional tax on top of the rental income tax — it is a pre-payment of the owner’s personal income tax, which is later credited against the owner’s final annual income tax liability. That said, failing to pay the withholding tax at the time rent is paid can result in significant tax and penalty liabilities.
Property owners earning rental income in Thailand should carefully track whether the 30% standard deduction actually applies to their situation, since sub-leasing investors face a different deduction regime — and should also confirm the correct withholding tax rate is being applied based on their residency status and the payer’s legal classification.