Since Thailand may offer preferential regimes in certain sectors or structures, undistributed profits could potentially be attributed to the Portuguese resident shareholder and taxed annually in Portugal.<\/p>\n\n\n\n
Anti-abuse provisions and shareholder transactions<\/h3>\n\n\n\n
Transactions between the shareholder and the Thai company, such as loans or other financial arrangements, must comply with arm\u2019s length principles.<\/p>\n\n\n\n
Portuguese tax authorities may recharacterise arrangements that lack economic substance or appear artificial.<\/p>\n\n\n\n
Deemed employment or management income<\/h3>\n\n\n\n
If the shareholder performs management or executive functions from Portugal for the Thai company, remuneration may be taxable in Portugal as employment or self-employment income at progressive rates of up to 48%, plus applicable surcharges.<\/p>\n\n\n\n
The Portugal\u2013Thailand tax treaty will be relevant in determining the allocation of taxing rights.<\/p>\n\n\n\n
Non-Habitual Resident (NHR) regime \/ transitional regimes<\/h3>\n\n\n\n
Although the traditional NHR regime has been phased out for new applicants as of 2024, transitional or replacement regimes may still apply.<\/p>\n\n\n\n
Historically, certain foreign-source income could benefit from favourable treatment, but current eligibility depends on specific transitional rules.<\/p>\n\n\n\n
Thai exit tax considerations<\/h3>\n\n\n\n
Thailand does not generally impose a comprehensive exit tax on individuals leaving tax residency.<\/p>\n\n\n\n
However, Thai-sourced income and gains up to the date of departure may remain taxable, and ongoing obligations may apply depending on the individual\u2019s status and income sources.<\/p>\n\n\n\n
2. What happens to a Thai company\u2019s tax position if its shareholder relocates to Portugal?<\/h2>\n\n\n\nManaging dual residence<\/h3>\n\n\n\n
A Thai company is generally tax resident in Thailand if it is incorporated there or if its place of effective management is located there.<\/p>\n\n\n\n
If the place of effective management shifts to Portugal, for example due to relocation of key decision-making, it may also be considered tax resident in Portugal. This may result in dual residence and potential double taxation on worldwide profits.<\/p>\n\n\n\n
Single residence based on the Portugal\u2013Thailand tax treaty<\/h3>\n\n\n\n
The Portugal\u2013Thailand tax treaty provides mechanisms to resolve dual residence situations, typically based on the place of effective management.<\/p>\n\n\n\n
In practice, this may require coordination between the tax authorities of both countries.<\/p>\n\n\n\n
Corporate exit tax considerations<\/h3>\n\n\n\n
Thailand does not generally impose a formal corporate exit tax regime.<\/p>\n\n\n\n
However, restructuring or migration of effective management may still have tax consequences depending on asset location and business structure.<\/p>\n\n\n\n Once the company is considered tax resident in Portugal, based on its place of effective management, it becomes subject to Portuguese corporate income tax (IRC) on its worldwide income.<\/p>\n\n\n\n The standard rate is 21%, potentially increased by municipal and state surcharges, leading to an effective rate of up to approximately 31.5%.<\/p>\n\n\n\n Portugal may allow a step-up in the tax basis of assets and liabilities, including goodwill, upon migration, depending on how the relocation is structured.<\/p>\n\n\n\n This ensures that only gains accrued after becoming Portuguese tax resident are subject to taxation.<\/p>\n\n\n\n Assets recognised at fair market value may be depreciated or amortised in accordance with Portuguese tax rules, generating deductible expenses over their useful life.<\/p>\n\n\n\n Dividends distributed by a Portuguese tax resident company are generally subject to a 25% withholding tax, which may be reduced under the Portugal\u2013Thailand tax treaty.<\/p>\n\n\n\n As in other cases, there is typically no step-up for retained earnings accumulated prior to migration.<\/p>\n\n\n\n If a Thai entity transfers its place of effective management to Portugal, it may become tax resident there, potentially resulting in dual residence issues.<\/p>\n\n\n\n Portugal does not provide a straightforward mechanism for re-domiciling a Thai company into a Portuguese legal entity, such as a Sociedade por Quotas (Lda). Therefore, restructuring options, such as incorporating a new Portuguese entity or reorganising the group structure, should be carefully evaluated.<\/p>\n\n\n\n Migration may trigger tax consequences in Thailand depending on the structure adopted, including potential taxation on unrealised gains or adjustments linked to asset revaluation or business restructuring.<\/p>\n\n\n\n Relocation as an individual to another country has significant personal income tax consequences. However, if the individual is also a business owner, the business itself may effectively relocate as well, resulting in a higher level of tax complexity.<\/p>\n\n\n\n This additional corporate tax dimension requires thorough analysis of the impact of the owner\u2019s relocation on the company\u2019s legal and tax status, and therefore careful tax planning well ahead of the relocation itself.<\/p>\n\n\n\n![\"moving](\"https:\/\/lamarescapela.pt\/wp-content\/uploads\/thailand.webp\")
<\/figure>\n\n\n\n3. What would be the Thai company\u2019s tax position once it has become a tax resident of Portugal?<\/h2>\n\n\n\n
Corporate Income Tax<\/h3>\n\n\n\n
Step-up for assets and liabilities<\/h3>\n\n\n\n
Depreciation and amortisation<\/h3>\n\n\n\n
Dividend withholding tax<\/h3>\n\n\n\n
4. What would be a Thai entity\u2019s tax position if its residence is relocated to Portugal?<\/h2>\n\n\n\n
Final remarks<\/h2>\n\n\n\n