Working Online Illegally in Thailand: Why It’s Just Not Worth It
In this post, we explain why it’s just not worth it to work online illegally in Thailand in the long term, and what you can do to avoid the pitfalls of doing business online while living in Thailand.
Play the Long Game
Before getting started, let’s make one thing clear: We are not saying that if you work online illegally in Thailand, you will get “busted” or otherwise harassed by Thai Immigration. As of 2022, online workers are not a high priority on their hit list.
Sure, you may encounter some questions as you pass through Thai Immigration with your newly-minted Education Visa or Volunteer Visa, but if all of the required paperwork is there, you will most likely make it through. (I have been there.)
No, the real downsides of working remotely illegally in Thailand are in the long-term consequences. If your goal is to live long term in Thailand, you don’t want to spoil your welcome in the Kingdom by staying beyond your allotted time.
You don’t have to overstay your visa in order to overstay your welcome.
Don’t Overstay Your Welcome
Suppose you are just starting out as a freelancer or digital nomad in Thailand, or you recently moved here and intend to stay and work online for a time. Chances are, you’re not worried about the long-term tax and residency implications of working without a work permit.
That’s all well and good – for now. Immigration has larger concerns than what are essentially long-term tourists spending money in their country and promoting a crucial industry sector.
However, after six months or more, the situation gets somewhat murky from an immigration and tax residency point of view. There is a world of difference between one tourist visa and three back-to-back tourist visas – even if they’re spaced throughout a year. Along the same lines, one Education Visa is okay, but two or three back-to-back ED visas is pushing it. Especially if you don’t have the Thai language skills to back it up.
The Truth About Working Online Illegally
Thai Immigration is becoming increasingly impatient with visa applicants clearly only looking to extend their stay in Thailand beyond the time allowed by the current visa options available. In their eyes, you are gaming the system to live the high life in Thailand without paying taxes or otherwise participating in the system.
The fact is, it is illegal for foreigners to work in Thailand without a valid visa and work permit, even if it’s done online. You may be able to go two or three years without any consequence, but you must eventually face the music.
In the worst case, this can mean steep fines or even blacklisting. Most often, however, it simply means having a tarnished passport and a track record of abusing student and volunteer visas, which can be just as bad.
A Tale of Two Digital Nomads
At Shelter, we have heard hundreds of stories from digital nomads and online entrepreneurs based in Thailand. Sometimes they are new to the country; other times they are veteran expats with established lives in Thailand.
Almost always, they are looking for a way to get everything “above board”—sometimes early in the process, sometimes too late. Let’s look at two examples of typical cases we see often, both based on real people we had occasion to speak with recently.
Meet Chad. Chad is a freelance software developer living and working remotely (illegally) in Thailand on his second consecutive Education Visa, which is set to expire in two months. And three Education Visas is the limit. Or is it two? He has no way to tell for sure.
In the eyes of Thai Immigration, his time in Thailand has come to an end. He has a passport full of Tourist Visas followed by two Non-Immigrant Education Visas (sponsored by shady language schools no less). As already described, Immigration does not like to see this kind of track-record.
But Chad also has a cat, a Thai girlfriend, a lease on a condo, and a motorcycle. His whole life is in Thailand. Now, he faces the possibility of having to rethink everything — all of this, at a critical point in time for his new business.
How did Chad get himself into such a predicament? In short, he had long-term aspirations in Thailand but he pursued a short-term strategy, based largely on what other digital nomads were doing. (Incidentally, most of those people have moved on to other countries by now.)
Next, meet Tom. Like Chad, Tom has been living in Thailand for the last two years. Unlike Chad, however, Tom sought out a legal solution that would allow him to work remotely from Thailand legally — months before he even stepped foot in Thailand.
He researched and found a local company to sponsor his visa and work permit for a monthly fee, and now he just needs to show up at Immigration once per year for his annual renewal. No yearly visa runs, 90 day reports at Immigration, or counting the days until your visa expiration date.
Not only does Tom have complete peace of mind about his future in Thailand — next year he will be eligible to apply for Permanent Residency, allowing him to stay in Thailand permanently without needing a visa.
What’s more, Tom saves tens of thousands each year by basing himself in Thailand as a legal tax resident. Before relocating, Tom was living and working remotely as a freelance digital marketer in the United States. His rent was $1,200, and monthly living expenses added another $2,000. On top of that, he was paying 26% of his annual earnings in personal income tax.
After relocating to Thailand, his monthly living expenses – including rent and discretionary spending – are now just $1,500. And as a legal tax resident of Thailand, his yearly tax bill is less than $1,000.
That’s an annual savings of more than $25,000 – including the monthly fee he pays to the company sponsoring his work permit.
On top of these savings, Tom also pays into and participates in the Thailand Social Security system, which gives him free government healthcare at public hospitals as well as some dental.
How did Tom get himself into such an enviable position? In short, he had long-term aspirations in Thailand, and he pursued a long-term strategy that aligned with his personal and professional goals.
Why It’s Just Not Worth It
Here are 5 main reasons it’s just not worth it to work online illegally in Thailand in the long term — the pitfalls you want to avoid when doing business online while living in Thailand as an expat.
No Tax Residency
If you are a digital nomad who is a tax resident “nowhere”, then you are most likely actually a tax resident in your former home. This can cause problems down the road, in the event that you are audited by your home country and compelled to provide proof of your tax residency in Thailand.
Every country has different laws in this regard, but the good news is that most developed nations have treaties with Thailand to avoid double taxation. So if you can find a way to pay tax in Thailand, there’s a good chance you won’t need to pay income tax back home.
Visa Stress and Uncertainty
To say that the vast majority of people living and working illegally in Thailand find the visa renewal process stressful is an understatement. Imagine having to do visa runs every year and in-person reports every few months, not to mention figuring out how to bring money into the country.
I have personally experienced this continual stress myself, and I remember how much mind-space my next visa expiry date occupied for me. There was the constant uncertainty of whether you would be able to stay another year in the country you have come to call home.
No Social Security
If you are working in Thailand as a digital nomad, then you probably don’t have a work permit. That means you are not paying into the Thai social security system, which is the safety net which you could rely on should you ever find yourself in need of medical services.
Thai healthcare is good, even by international standards, and there is an assurance that comes with belonging to the system. With a social security card, work permit, Thai ID, and Thai credit card, you feel less like a “foreigner” and more like someone who has assimilated to a new culture.
Blacklisting / Graylisting
The “blacklist” in Thailand is a list of people who have been banned from entering Thailand by the Immigration Department. Usually the main culprits are overstayers, and the penalties can include imprisonment and large fines before you are deported.
However, you do not need to overstay in order to land on the “graylist” – the unofficial list of foreigners with immigration track records in Thailand. These are the people with maxed out Education Visas, pages of back-to-back Tourist Visas, those associated with fraudulent or otherwise shady language schools or non-profits – in other words, the people whose free ride in Thailand has come to an end.
No Path to Permanent Residency
Ideally you want the time you spend in Thailand to add up to something. Without a work permit, however, the time you spend in Thailand is not invested into longer-term residency options such as Permanent Residency or Thai Citizenship. When your visa expires, you are back where you started.
That’s why, for those with long-term aspirations in Thailand, it makes sense to pursue the path to Permanent Residency, which is essentially “visa exemption” status. Residency options such as the Education Visa, Volunteer Visa, or Thai Elite Visa do not include a tax number or tax return, and thus do not qualify you for Permanent Residency or citizenship applications.
How to Become a Legal Tax Resident
As you probably guessed, we recommend that you pursue a legal and compliant solution as a digital worker in Thailand. Currently there are four Thai visa options suitable for some digital professionals. Most digital workers are not eligible for every option, but if you already have clients or income, there is a good chance you are eligible for at least one option.
Ultimately, what you want is to become a legal tax-paying resident of the country, with a valid visa and work permit, and participate in the Thai system. This way you can apply for a credit card, auto loan, or mortgage in the future, and begin building a credit score in Thailand.
Depending on your country of citizenship, you may even be exempted from paying income tax in your home country (like Tom). Factor in Thailand’s low effective tax rate and territorial stance towards foreign-earned income, and you can make relocating to Thailand a great way to save thousands each year for your business during the critical stages of growth.
Finally, depending on your corporate structure (or lack thereof), you may consider setting up a company in a tax-friendly jurisdiction such as Estonia, Hong Kong, or Singapore. Doing business as a legal entity rather than an individual can be a great way to optimize your fledgling business, increase your bottom line, and achieve more professional freedom.
Thailand has a relaxed position with territorial tax, so only the money you bring into Thailand is taxed here. That means your foreign-earned income can be brought into Thailand completely tax free, provided you don’t bring it into the country within 12 months of earning it.
The Good News for Overstayers
The good news is, Chad’s story has a happy ending. He is now in the same position as Tom, working with an EOR on the path to Permanent Residency, showing that it’s never too late to get everything above board.
If you’re like Chad, with a passport full of Thai tourist visas or education and volunteer visas, you can talk to Shelter. We’ll set you on the right path.