How to set up as an independent contractor in Thailand

If you’ve decided to go it alone as an independent contractor (or you just love exotic street food), Thailand is an ideal place to set up.

Whether you want to invoice your clients from the charming old town of Phuket, the stunning beaches of Koh Samui, or the hustle and bustle of urban Bangkok, this paradise destination is a great spot to merge lifestyle and work.

Before you can start living the self-employed dream, though, you’ll need to know how to:

• Register your business in Thailand

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

This article breaks down everything you need to know about how to become a freelancer in Thailand. 

First, it’s important to clarify how Thailand defines independent contractors.

What is an independent contractor in Thailand?

Independent contractors are workers who provide paid services (or products) to another party. They’re classified differently from employees and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.

In Thailand, the country’s Labor Protection Act of 1998 clearly outlines the legal boundaries of employment relationships. Based on these definitions, you are generally considered to be a contractor if you:

• Determine your own work schedule and working hours

• Perform work for other companies

• Set your own rates and scope of work

• Provide your own tools or equipment

• Are not integrated into one specific company and its operations (i.e., you don’t have an internal email address)

• Can delegate or subcontract work

• Work without direction or supervision

When you work with clients, it’s important to be correctly classified to avoid penalties and fines and to make sure that you are paying the right taxes.

Business registration in Thailand

The first step when learning how to become an independent contractor in Thailand is choosing a formal structure for your business.

The most popular model for sole owners is the sole proprietorship structure, as it’s quick and easy to set up and maintain. In this structure, you have full control of the enterprise. However, there is no legal separation between you (the owner) and the business — you are personally responsible for all its debts and liabilities.

If you want more legal protection, you’re working with other partners, or you anticipate generating a large amount of revenue, you can also incorporate a formal company or enter into a partnership. If you’re unsure which structure is most suitable for your business, it’s a good idea to speak with a registered solicitor or accountant.

If you do opt for the sole proprietor model, it’s likely that you will need to register for a commercial certificate. Thailand’s Office of SME Promotion (OSMEP) provides a detailed list of business activities that require registration, including:

• Brokers or agents who conduct business of “any one kind, or several kinds,” which can be sold for more than ฿20 (around 58¢) per day

• Persons who conduct sales business of “any one kind, or several kinds,” with income of more than ฿20 per day (or if such items have a total value of ฿500 (around $15) or above)

You can obtain this certificate at your nearest district (or sub-district) administration office.

Do I need a work permit to freelance in Thailand?

A work permit is typically required to freelance legally in Thailand. This is an official document issued by the Thai government that allows foreigners to work in the country.

In certain cases, the Smart Visa and the Long-Term Resident (LTR) Visa can be more flexible alternatives. However, you must meet specific qualifications to go this route.

The Smart Visa offers several benefits for independent contractors. It grants access to a work permit and visa valid for up to four years, eliminates the need for a traditional work permit, and simplifies the application process. Qualification categories include the following: 

• Talent: Professionals in skilled industries, such as science, technology, and healthcare. 

• Investor: Individuals who have invested a set amount of capital in targeted industries within Thailand.

• Entrepreneur: Entrepreneurs establishing a business in a targeted industry in Thailand. 

• Startup: Entrepreneurs aiming to start a business in a targeted Thailand area. 

The LTR visa is suited for people who want to live in Thailand for the long term. Qualification categories include the following: 

• Investment: Individuals who have made substantial investments in Thailand, such as purchasing property or buying government bonds.

• Employment: Skilled professionals in specific industries who meet income and education criteria. 

• Family: Reserved for spouses, children, and other family members of LTR visa holders.

Thailand also just announced the launch of its Destination Thailand Visa, which will give digital nomads the opportunity to stay in the country for up to five years.

To apply, you must be at least 20 years old and self-employed or working for a non-Thai business. The application fee is 10,000 Thai baht (around $272 USD). There is no specified minimum income at the moment. Approved visa holders are able to bring their spouses and children without the need for separate visas. 

The Destination Thailand Visa’s effective date is pending confirmation at this time of writing. Once the visa is officially available, you can apply via the Thai e-visa website or through an appointment at a Thai consulate or embassy.  

How to apply for a work permit in Thailand 

To apply for a general work permit in Thailand, there are certain steps you need to follow.

After registering your company, obtain a non-immigrant visa. You can usually get this from a Thai embassy or consulate in your country. 

Next, apply for a work permit by filling out the application form. Submit it to the Thai Ministry of Labour, along with any necessary supporting documents. Additional documents might include your passport or proof of company registration.

The application process typically takes seven to ten business days in Bangkok or up to two months in Phuket. Once your application is approved, you can get your work permit from the Ministry of Labour or your nearest Labour Department office.

Thailand work permits are usually valid for one year. After that, they need to be renewed on an annual basis. Plus, in some cases, you might need to report your employment to the Thai Immigration Department periodically. 

Also, note that the work permit application process varies based on specific situations. Sometimes, it can be extra tedious and complicated. That’s why it’s best to reach out to a legal professional who is knowledgeable about Thai labor and employment laws. They can give you reliable guidance and ensure that you’re following all legal requirements correctly. 

Independent contractor tax obligations 

After navigating how to become a freelancer in Thailand, it’s important to understand your tax obligations. 

The good news is that, as a sole proprietor, you pay personal income tax on your business profits (using your personal tax number). This means that you do not have to fill out extra returns or pay additional corporate taxes.

Like most countries, Thailand has a progressive income tax rate system. You can expect to pay anywhere between 0% and 35%, depending on your level of income.

Currently, social security contributions are voluntary for self-employed people. You can contribute to one of three schemes, depending on your desired coverage. There are flat rates of ฿70, ฿100, and ฿300 per month.

However, it’s important to note that the Thai government is in the process of drafting a new Independent Workers Protection Act. This act is designed to offer greater rights and protections for independent contractors and self-employed people, including mandatory social security payments. This draft is expected to become legislation in 2024 or 2025.

You can claim tax deductions for nearly any business expense. You may also be eligible to claim a standard deduction of between 10% and 60%, depending on your business activity.

You must submit your tax return — and settle your tax bill — by March 31 each year (or April 8 if you file online).

VAT information for independent contractors in Thailand

As a sole proprietor, you must register for — and charge your clients — VAT if your annual income exceeds ฿1.8 million (around $52,000). To do this, you will need to fill out Form VAT 01 at your nearest district or sub-district tax office.

The standard VAT rate in Thailand is 7%. 

Liability considerations for independent contractors in Thailand

As a sole proprietor, you are personally liable for finance and tax debts. This means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates for both Thai and international clients.

Accounting requirements for independent contractors in Thailand

As a sole proprietor, you do not need to publish financial statements or accounts.

However, you should still keep organized, accurate records of all your income and expenditures (including client invoices, purchase orders, bank statements, and receipts). This helps you correctly file your taxes and provides a stronger picture of your financial situation. It also generally makes life easier if you’re audited by tax authorities.

You can either manage these records yourself using an accounting or bookkeeping tool or hire a professional bookkeeper or accountant.

Independent contractors vs employees in Thailand 

When working in Thailand, it’s important to be correctly classified. There are several differences between independent contractors and employees in Thailand to be aware of.

Benefits

If you’re brought on as an employee, you’re entitled to certain benefits, including health insurance, public holidays, maternity leave, and overtime or sick pay.

Employees also receive protection from certain labor laws, such as minimum wage, safety in the workplace, and termination coverage.

As an independent contractor, you likely won’t receive benefits or protection beyond what’s included in your contract.

Control

Full-time employees have pre-determined hours and job duties that they’re expected to follow. They’re hired to work for one employer exclusively, and a boss oversees their work.

If you’re an independent contractor, you have flexibility over how you work. This means you can determine your own schedule and processes. You also don’t report to a direct manager and can choose to work for multiple companies at once if you wish.

Payment

Employees receive a set salary on a recurring basis. This amount stays consistent each pay period, regardless of the extent of the work performed.

Independent contractors aren’t included on the company’s payroll or given a salary. Instead, payment is usually provided per project based on the work completed. There is also no extra compensation for working overtime.

Supplies

Employers equip employees with the tools and equipment they need to do their jobs effectively. This includes handling costs, coordination, and maintenance needs.

As an independent contractor, you’re responsible for buying your own equipment. In addition, your clients aren’t obligated to reimburse you.

Taxes

Employers manage tax compliance for their employees. This means employees don’t have to worry about deducting income tax and social security contributions from their salaries.

When you’re an independent contractor, it’s up to you to handle tax deductions, filing, and payments on your own.

The dangers of contractor misclassification in Thailand

As we’ve mentioned, independent contractors are classified differently from employees in Thailand. Many of the protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, employee misclassification can result in penalties or fines for both you and your client.

As an independent contractor, you can work with your clients to make sure these legal consequences don’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

How do I ask the company I’m working with to convert me to an employee in Thailand?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by handling key HR functions (like payroll management and benefits administration) in line with Thai law.

How do I get paid as an independent contractor in Thailand?

Learning how to become an independent contractor in Thailand requires you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick but often come with hefty service fees. And if you have clients in other countries besides Thailand, the payment collection process can be even more complicated.

Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in Thai baht — and with no hidden fees. Learn more about how our platform can help.

Managing self-employment with international clients

If you have clients in other countries besides Thailand, it can be tricky to manage all their different invoicing, approval, and payment systems. Handling these tasks manually also increases the risk of fees, errors, and delays. That’s why it’s best to leverage a platform you can trust.

Remote’s secure, streamlined dashboard simplifies invoice management and international payments, making the process more cost-effective and efficient.

Designed to eliminate mistakes and delays caused by traditional processes, the platform allows you to easily set up invoices and receive payments in Thai baht without any hidden fees or needing to switch to another software.

Drafting independent contractor agreements and contracts also carries the risk of non-compliance with local labor laws — especially when you work with international clients. Instead of relying on your own research and hoping for the best, turn to an expert.

Remote provides localized contracts, helping you stay legally compliant no matter where you work.

Tax management also gets extra complex when you’re working with clients in multiple countries with different laws. It’s important to fully understand the requirements to avoid any penalties down the road. Remote helps by quickly compiling your income data from invoices and received payments.

Simplify the independent contractor process with Remote

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract you from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Thai and foreign clients

• Enhance your invoice management and avoid manual processes

• Follow local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.