I’m still a long way from retirement but I’m just doing some planning and assessing my tax liability. I am a US citizen and my wife is a Taiwan citizen (and a naturalized US citizen too) both living in the US. Our plan is to retire in Taiwan. We will have non-taxable distributions from Roth IRAs, taxable distributions from 401k, and our Social Security income. I’ve been looking into Taiwan tax rate and cannot seem to find a good answer on the tax rate in my situation. Everything I read talks about income earned in Taiwan. Since my 401k income is derived from a US account, is it taxed as regular income in Taiwan? And how is Social Security taxed there? And am I safe in assuming that Roth IRA distributions will not be taxed in Taiwan at all? As far as US taxes do I fall under the foreign earned income exemption of $91.5K, or whatever it is now. Since these are investment plan distributions I don’t believe they qualify as earned income.
New tax rules just came in this year regarding overseas income. Under 1 million NT a year you do not need to even declare the income. I think no taxes are paid under 6 million a year. Check the latest TOPICS magazine from the American Chamber of Commerce in Taipei website.
Thanks Mucha Man. I doubt we would ever be over $6M NT so this is good news!
I have a similar situation. I am a naturalized US citizen originally from Taiwan currently in LA. My funds are also in SS, 401K and taxable accounts in US brokerage firms. I would think though I will stay much of my retirement years in Taiwan, I will continue to pay US taxes on those funds, capital gains, and California state tax regardless the total withdraw falls below the foreign earned income exemption. I don’t think I need to pay Taiwan tax unless I get a job and earn extra income. Am I right or wrong?
Pls note that foreign excluded income only pertains to salary and/or commission for work directly done by you. Does not pertain to investment income,or income derived from rent or the such. Only salary and direct commission paid for work done FAIK.
So basically seems that if you live in Taiwan and are considered a resident but you do not work and you have retirement income from some other country. YOu continue to pay taxes as appropriate in that country but as far as taiwan is concerned you only need to declare such income if over one million taiwan dollars per year. And no taxes are due if under six million taiwan dollars per year?
And if you were to work in taiwan you would pay taxes on that income and that income would be excluded on the foreign income (form 2555) up to the limit specified , provided you qualified under the physical presence, etc.
And lets say you operate a small business on the side as well on the wan. IN addition to working in taiwan and in addition to having an investment portfolio in the USA. Your income from this business in taiwan would be taxable under taiwan tax laws and also could be taxed as taxable foreign income by the USA. Unless the USA has signed a tax treaty with taiwan. Which im not sure it has.
pls correct if my perception is incorrect as im learning as we go too
Does anyone have a reference for this $1m undeclared income rule?
Not that I don’t trust you, but so many people repeat rumors that are not actually true (:
On the plus side, it means you could transfer $1m per year each year to avoid the paperwork (:
[quote=“pqkdzrwt”]Does anyone have a reference for this $1m undeclared income rule?
Not that I don’t trust you, but so many people repeat rumors that are not actually true (:
On the plus side, it means you could transfer $1m per year each year to avoid the paperwork (:[/quote]
I dont suppose declaring the money would be much hassle?
Even if it was six million ntd per annum?
The local tax office should have the regs written up somewhere I would imagine?
The taiwanese govt may be careless in many ways but its pretty good at accounting and collecting taxes from fixed income people. Just not good at collecting it from businesses who are notorious for tax evasion.
[quote=“pqkdzrwt”]Does anyone have a reference for this $1m undeclared income rule?
Not that I don’t trust you, but so many people repeat rumors that are not actually true (:
On the plus side, it means you could transfer $1m per year each year to avoid the paperwork (:[/quote]
It’s on one of Taiwan’s gov’t websites. My wife found it and read to me what it said (it’s all in Chinese). I’ll see if she can find the link again, but I can confirm the $1M/$6M levels are accurate. I’m sure I’ll be above $1M but nowhere near $6M.
Tommy’s explanation is very logical. Thanks very much, Tommy. Social Security is considered an income, right?
So, for two retired couple living back to Taiwan, it could exceed $1M NT. But that just means a trip to tax shop and file. No big deal, I guess.
I also have a similar question. My wife and I are planning on retiring more than 1/2 time in Taiwan where she is from and less than 1/2 time in the U.S. She has a dual citizenship NOW and I will also by the time we retire in 7 years or less. We will have retirement, Roth IRA, and Social Security (hopefully someday) income from the U.S. We will be between 1M and 6M NT. I doubt that we will work in Taiwan. I just want to be clear that we won’t have to pay any taxes while living in Taiwan unless we secure a job there. Any help is greatly appreciated!
Gosh it was so much easier when Taiwan simply did not tax anything not earned in Taiwan. But it shouldnt be much of a problem to declare income over 1M TWD / annum. And no taxes are due unless over 6M TWD/annum.
Income earned IN Taiwan will continue to be taxable. And if over the limit for salary/commission Uncle Sam may want his cut.
Please note income NOT from salary or commission Will NOT be TAX EXEMPT far as the Uncle is concerned. You will have to file and pay, but should be able to deduct the portion paid as income tax to the TW govt.
IIRC
[quote=“pqkdzrwt”]Does anyone have a reference for this $1m undeclared income rule?
Not that I don’t trust you, but so many people repeat rumors that are not actually true (:
On the plus side, it means you could transfer $1m per year each year to avoid the paperwork (:[/quote]
pwc.tw/en_TW/tw/publication … k-2011.pdf
pwc.tw/en/publications/taiwa … 012-05.pdf
deloitte.com/assets/Dcom-Tai … 151209.pdf
You can also search for " Taiwan AMT"
I also will be retiring in Taiwan. I am a U.S. citizen and my wife is Taiwanese and also a U.S citizen. We will not have a U.S. address after moving to Taiwan and I know U.S. banks don’t want expats to have accounts without a U.S. address. I have 401k and other accounts and am wondering if there are any U.S. banks I would be able to use to access funds from Taiwan (with credit/debit card)?
Where did you get this information? This has not been my experience. You might have an issue opening accounts from overseas but moving abroad when you already have an account shouldn’t be a big deal with many/most institutions.
Beyond the address issue, every single credit and debit card I have from US institutions has worked fine in Taiwan.
Citibank and HSBC are international banks with huge presence in both countries. When we move to Taiwan I’m planning to open US and Taiwan accounts with one of these (probably Citi)
Sort of weird how these really old posts resurface… maybe you’ve retired by now!
Anyway, regardless of the rules/law in Taiwan, keep in mind that Taiwan has zero power to compel you declare your ex-Taiwan income. Well, maybe they do, but they have no way to enforce it (ie. they cannot compel a foreign institution to provide financial information on a client that they suspect is living in Taiwan).
Think about all those Taiwanese business men who have set up factories in China. Do you think that they pay taxes to the Taiwan government? I highly doubt it.
As for the other comment about US banks requiring a US address, not 100% sure about this part since I’ve always been able to use a relatives address in the US. Try asking around at different banks in the US before leaving? You could also try using a brokerage that provides banking services (like Fidelity). Big international banks like HSBC and Citi are also good bets (I have a US HSBC account but again, never tried using my Taiwan address for it… though I use my Taiwan address for my HK HSBC account)
I’ve seen this discussed on other expats sites but don’t remember which ones. I won’t be retiring for another 10 years so just trying to research ahead of time to be prepared, have read so much about Taiwan banking issues hopefully it will change before then. Thanks to all for the info.