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How Does a Shelter Business Visa Compare to the Elite Visa and SMART Visa?

One question we hear often at Shelter is, how does our business visa solution stack up against the Elite Visa and Smart Visa? We would like to tackle this question head on, especially since there seems to be a lot of confusion regarding whom these visas are for and the rights they afford you in Thailand.

Obviously no single visa option is right for every working expat, and depending on your income and intended scope of activities in Thailand, certain visas will be more attractive than others. Our aim here is to compare the Elite Visa, Smart Visa, and Shelter Business Visa from the perspective of the location-independent professional or entrepreneur, so that readers can decide which option is the most appropriate for their circumstances.

Elite Visa

The Thai Elite Visa is an increasingly popular option for those wishing to stay long-term in Thailand. It is quite expensive (500,000 THB and up), but it does allow you to stay from 5 to 20 years in Thailand without having to deal with its bureaucratic visa system.

Originally, the idea of the Elite Visa was raised by the Tourism Authority of Thailand (TAT) as a “pay-to-stay” alternative to help bring high-end visitors to Thailand. Accordingly it includes a long list of “elite” privileges such as access to airport pick-up services, privilege passport lanes, airport lounges, visa assistance, golf club memberships, and discounts on various services in Thailand. By showing your Thailand Elite Card, you immediately get discounts for you, your family, and your guests.

Importantly, however, the Thai Elite Visa does not confer the right to work. Legally speaking, without a work permit, you are not supposed to do any activity that generates income in Thailand. This is not to say that you will be busted by the immigration police, but it could create tax problems down the road with respect to your home country.

Put another way, the Elite Visa does not give you tax residency for your business/work. So if your aim is to work legally in Thailand, pay into the system, and receive benefits like healthcare, this visa option is probably not for you.

Smart Visa

The Smart Visa was introduced in February 2018 specifically to attract highly-skilled experts, investors, executives, startups, and solo entrepreneurs who wish to work or invest in the following S-Curve industries:

  1. Next Generation Automotive
  2. Affluent Medical and Wellness Tourism
  3. Agriculture and Biotechnology
  4. Aviation and Logistics
  5. Biofuels and Biochemicals
  6. Digital
  7. Medical Hub
  8. Smart Electronics
  9. Food for the Future
  10. Automation and Robotics
  11. Alternative Dispute Resolution
  12. Human Resource Development in Science and Technology
  13. Environmental Management and Renewable Energy

There are four types of Smart Visa, and each comes with a range of real perks including one-year check-ins at immigration instead of ninety days, work eligibility for spouses and children without the need of work permits, and no need to apply for re-entry permits. While the Smart Visa does not actually come with an associated Work Permit, the right to work is inherent in the visa itself.

In total, there are five types of Smart Visa (the fifth being the Non-Immigrant O Visa for family members):

  • Smart T (Talent): For science and technology experts who earn at least 100,000 baht per month
  • Smart I (Investor): For investors who make an investment of at least 20 million baht
  • Smart E (Executive): For executives with at least a Bachelor’s degree, ten years work experience, and a minimum monthly salary of THB 200,000
  • Smart S (Startup): For entrepreneurs who have health insurance, can deposit 600,000 baht in Thailand, and set up a company in one of the ten targeted industries

The application process for the Smart Visa is known to be long and cumbersome, leading many to consider other options. First you must apply for a “qualification endorsement” and have the relevant government agency assess your skills and provide an endorsement if the criteria are met. After an endorsement is issued, other requirements will be screened by other bodies. In all, you need to be approved by at least five different government departments (BOI, NIA, DEPA, NRCT and TISR). If and when all qualifications are fulfilled, the applicant will be given a letter of endorsement which they can use for their Smart Visa application at an embassy or consulate outside Thailand or at the One Stop Service Center for Visa and Work Permit in Bangkok.

An additional point that bears mentioning is the low approval rate of applicants for the SMART Visa. According to Khaosok English, around one-third of the applicants in the first eight months of the program’s history (9 out of 37) were not approved for their visa. This goes to show that approval for the Smart Visa is not guaranteed even for those who meet the general requirements, probably because the screening process is adjudicated much more deeply than other types of visas with lower barriers to entry.

Although the Smart Visa was rumored early on to be a “digital nomad visa”, it has turned out to be more appropriate for highly-skilled  experts in technology and science, top-level executives, investors, and funded startups from a select few accelerators and incubators. While the benefits are great if you are eligible, the sad fact is that most location-independent professionals simply do not qualify for the Smart Visa.

For more on the question of how smart the Smart Visa is for location-independent professionals, see this in-depth article from locationindependent.co.uk.

Shelter Business Visa

To appreciate Shelter’s unique value, it is useful to note at the outset how different our business model is from the Elite and Smart Visa options—both government programs designed to bring foreign revenue and technology experts into Thailand.

By contrast, Shelter is an Employer of Record (EoR)—a company that employs you or your team according to local labor laws and manages your payroll, tax, social security, and immigration processes. You still work on your own behalf; the EoR just handles the administrative and compliance responsibilities for you.

Unlike a normal Thai limited company, which is limited in the number of foreign nationals it can employ, Shelter is unique in that it has been granted special exemptions by the Board of Investment (BOI) as one of a small number of companies in the technology sector working to move Thailand forward into the digital age (another side of the same initiative behind the Smart Visa). As such, we are allowed to employ a higher ratio of foreign to Thai nationals if they meet the following experience and education requirements.

  • Are at least 22 years old
  • Have either one of the following:
    • An IT-related university degree, plus at least 2 years of relevant work experience
    • Any type of university/college/school diploma or certificate, plus at least 5 years of relevant work experience (backed by recommendation letters)
  • Work in one of the following fields:
    • Software development
    • Blockchain
    • Design
    • Marketing
    • Other tech/digital-related activity
  • Have an existing business or client base
  • Bill a minimum of $1,500 USD per month
  • Commit to a one-year contract

Whether you are a digital freelancer or entrepreneur looking for a favorable tax haven, or just trying to get legal after years on inappropriate visas, the nice thing about working with an EoR is that it makes relocating your business overseas simple. In Shelter you have a dedicated business partner—a team of local experts to handle the set up (title approval, visa application) as well as ongoing administrative processes (immigration, payroll, tax, social security). We have broad knowledge and expertise in Thailand employment law, finance, and administrative support and can act as a single point of contact for your back-office needs.

Our solution is by no means for everyone, but for remote professionals and entrepreneurs who meet the requirements, it can be especially appealing.

Our Pricing Structure

We charge a flat fee of $375 per month for our individual EoR service, plus taxes, which covers everything needed from a legal perspective to establish a reliable tax home in Thailand. (Read more about Thailand’s personal income tax policy on the Department of Revenue’s website.) We try to be as transparent as possible so that our clients do not see additional costs on top of this, and we are upfront on all taxes paid on their behalf by the company.

While the back-office fee might seem expensive out of context, when you consider the issue of tax residency for your business/work—how working with Shelter can exempt you from owing incoming tax in your home country—and the value of the managed services provided, our clients actually save considerably more after tax than the fee they pay to us. And that’s in pure dollar terms—not to mention the peace of mind of having a longer term solution for staying legally.

What’s Included

Shelter services include visa application, work permit for the duration of employment, drafting of employment agreements, corporate structuring consultation if needed, opening a Thai or overseas bank account, and obtaining a Thai social security card. We accompany our clients to Immigration when necessary, such as to obtain their work permit or renew their visa, and guide them through each step of the process. For 90 day check-ins, we collect our clients’ passports and complete the process for them. Finally, the bulk of our service consists in providing ongoing back-office services such as invoicing, tax and social security payments, and payroll processing.

What’s Not Included

What’s not included are incidental one-time costs such as visa/work permit application fees and multiple- or re-entry permits. If there are travel expenses incurred on a visa run, or if you need help transferring your visa without leaving the country, that’s a one-time fee as well. Our experience is that reimbursement for such minor costs is a payroll nightmare, and we try to offset that cost in the form of a reduced flat fee.

The Shelter Advantage

When comparing Shelter to other options such as the Elite Visa and Smart Visa, it is important to keep in mind the larger context of tax residency. Thailand has a favorable taxation policy on money earned outside the country, so if you are a startup owner, entrepreneur or freelancer looking to bootstrap or extend your runway, relocating your operations to Thailand can be a big money saver for those with an online income if structured properly. There are tax treaties and jurisdictional issues to be considered, and we consult with our clients to find the best option for their circumstances.

Shelter v. Elite Visa

Compare this to the Elite Visa—a one-time payment of 500,000 baht for a so-called “elite” experience which does not confer the right to work, nor basic social security benefits like healthcare, nor tax residency. While it is easy to see why this pay-to-stay approach makes sense for Thailand, it can ultimately be damaging for the working visa-holder in the event that they are audited by their home country and compelled to justify their stay in Thailand. Without tax records, they are up the proverbial creek. While the Elite Visa may be a good option for early retirees and those with tax residency already established abroad, it is not a solution for digital professionals.

Shelter v. Smart Visa

Nor is the Smart Visa a viable option for most location-independent professionals, unless you earn over $3,230 (THB 100,000) per month and are willing to undergo the lengthy screening process. Even if you meet the general criteria, there is a chance you will not be approved if you don’t pass screening by one or more government agencies. Additionally, with such a high minimum salary, you put yourself in a higher tax bracket—paying $300 and up per month on tax alone. While the Smart Visa does offer great benefits and tax residency, the target market for this option simply does not include the average digital professional or online entrepreneur looking to offshore and bootstrap their business.

In Summary

 

 

23 Jun
2020
Mark
McGinn