24th September 2020
Professionals looking for work internationally can face a real administrative headache with the applications they need to make, including applying for a contracting visa – whatever that may look like in the destination they are relocating to. But, as is increasingly common in the international contracting compliance landscape, new developments are announced regularly.
In fact, just last month there were several announcements relating to Digital Nomad visas which could impact contract professionals working in a more flexible manner.
What is a Digital Nomad visa?
Individuals who are able to deliver their work no matter where they are located have long battled with the blurred lines of compliance. Without a specific contract in place with a local entity, these experts often find that they can’t apply for the usual work visas when relocating overseas for professional or personal reasons. There have been occasions where tourist visas have been applied for instead to allow travel overseas while still working on an international contract. However, the legalities of this approach are often blurred.
That’s why Digital Nomad visas have become increasingly of interest to global authorities seeking to clarify an individual’s travel status. These essentially grant the holder the ability to travel while working remotely. Crucially, though, these are relatively easy to obtain and allow the holder longer stays in a destination. And contractors will be pleased to know that they don’t require extensive paperwork to be filled out.
This type of visa is likely to be more popular for ‘travelling professionals’ within the technology sphere who have the capability to deliver on projects and contracts from any location without the need to set foot in the country the work is delivered for.
With an increasing number of businesses allowing contractors to work remotely from their home country in light of the global pandemic, it’s highly likely that the uptake of these contracting visa options will grow in the near feature.
But which countries are leading the way in embracing Digital Nomad visas?
Estonia opens applications
At the beginning of August, Estonia became the first country to reveal that it had opened applications for its Digital Nomad Visa (DNV) which permits those engaged in jobs independent of location to work in the country. This followed amendments to the country’s Alien Act to permit the introduction of these new visas. There are a few caveats that individuals have to meet in order to be granted a DNV, though, including:
- Being able to prove that you are a ‘digital nomad’, i.e. your location doesn’t impact your ability to work and you can operate completely remotely.
- Demonstrating that you have a work contract in place with a business registered outside of Estonia, as well as proof that you are a partner shareholder or freelancer for clients across the globe.
- A minimum income of €3,504 gross of tax (this is the current threshold at the time of writing but is subject to change).
While residing in Estonia under a Digital Nomad Visa doesn’t give an individual the right to apply for permanent residency or Estonian citizenship, it does allow holders to travel to other Schengen countries on the same visa.
Croatia follows suit
Not long after the announcement from Estonia, the Croatian Prime Minister revealed that the country would also follow suit. This came following pressure from a Dutch Entrepreneur, Jan de Jong, who had called on the government to establish a visa that is suitable for Digital Nomads.
In his initial plea, de Jong highlighted the many advantages a DNV could have for the Croatian economy. He claimed that Digital Nomad tourism could provide a real boost to the country’s finances by filling the apartments and other places of residence that often remain empty outside of the tourist season.
“The main advantage for Croatia is year-round tourism and the arrival of highly paid workers who would not take jobs and spend their salaries in Croatia. There are currently 50,000 digital nomads in Bali, which has a similar population as Croatia. If these figures could be achieved in Croatia, assuming that each nomad would spend about ten thousand kunas a month for living, i.e., renting an apartment and a car, groceries, going to the hairdresser and dentist, etc., they could reach 500 million kunas, which goes directly into the budget monthly.”
And if, as de Jong predicts, the number of Digital Nomads globally hits a billion by 2035, Estonia and Croatia certainly won’t be the only ones to introduce a DNV.
Compliance is more than just a contracting visa
The introduction of Digital Nomad visas is certainly an interesting development to keep an eye on – particularly as more contractors continue to work remotely. However, this does also throw up numerous compliance challenges for individuals operating internationally.
Relocating for work internationally is, in itself, an administrative nightmare. But if you are moving across borders while working remotely for a company in another country, the complexity of your legal requirements intensifies. And the requirements you are subject to in one location can vary significantly in another area. So, while you may have nailed compliance in one destination (or believe you have at least), once you travel again your circumstances – and therefore your tax obligations – change. Depending on which countries are involved in the mix, you could face dual taxation if you remain in one location for a certain length of time. And that’s just a general outline of the complexities. The more you drill down into individual authorities, the more nuances you face.
That doesn’t mean that you shouldn’t take advantage of the opportunity to travel and work under a DNV. Instead, it is highly advisable that you have an expert on hand to ensure that you remain compliant no matter where in the world you choose to work from both now and in the future.
The 6CATS International team has a wealth of tax and compliance experience worldwide and is always on hand to help contractors seeking their next opportunity across borders. Contact them today to find out how they can help you – Digital Nomad or not.