Digital nomads – are you fully compliant?

digital nomad compliance

3rd March 2023

It’s an exciting time to a be a global contractor, with many countries around the world looking to entice remote workers to their shores by promoting the digital nomad lifestyle benefits. Yet for those individuals looking to take advantage of these opportunities and the recruitment agencies placing them, there are many compliance considerations – from obtaining and qualifying for the digital nomad visa to paying the right amount of income and other taxes. In our latest article on the digital nomad scene, we update you on some of the key global remote and flexible working developments that contractors and staffing companies need to be aware of.

Spain joined the ranks of the many countries offering digital nomad visas in early 2023 as it seeks to  provide a timely boost to the economy following the ravages of the pandemic. Originally motioned in January 2022, the approval finally came from the Government in November of the same year as part of the country’s Startup Act. Valid for up to 12 months but with the possibility of renewal for five years, the visa is for highly skilled and qualified non-EU nationals with at least three years’ experience who must earns at least €28,000 per year (albeit this threshold could rise).

Among the requirements needed for the visa are health insurance as well as proof of no prior criminal convictions in the five years before the application, either in Spain or the country where they resided in last. As well as evidence of earnings and qualifications, applicants must also prove that they have an employment contract plus a letter of authorisation from their company to live and work in Spain. On top of tax breaks, one of the big perks of the Spanish digital nomad visa is that holders can apply for a residency card which means that that they can travel freely across the EU and its member states.

Of the many other countries that offer digital nomad visas, some of the most popular destinations for global contractors include the Baltic state of Estonia, which introduced its visa – valid for 12 months –  back in July 2020 at the peak of the pandemic. The beautiful archipelago of Malta followed suit a year later for third country nationals who must earn at least €2,700 per month with Iceland also offering the possibility for remote workers to obtain a visa, albeit earnings must be nearly €7,000 per month. Meanwhile, Hungary’s ‘White Card’ lasts for two years with a minimum monthly income of €2,000.

Further afield, there are quite a few destinations that are bound to prove popular if requirements are met. Thailand, whose LTR visa is valid for 10 years, although annual salary threshold is high at almost €75,000. Similarly, if you earn a minimum of $3,500 per month, then the United Arab Emirates city of Dubai’s year long visa could be a fantastic option (individuals must have health insurance cover).

Global contractors must be tax compliant

Like its Iberian neighbour, non-EU only digital nomads have been able to live and work in Portugal since October 2022 (proof that an individual works for a company outside the EU is needed). According to Lusa, the Portuguese news agency, the city of Lagos in the Algarve is proving to be a hotbed for EU digital nomads, particularly IT workers in the 30-40 age bracket given lower accommodation costs in winter. While the area is especially popular with German and Dutch digital nomads, there are a growing number of local Portuguese freelancers who are also opting to live and work in Lagos given the more relaxed pace of life and work-life balance compared to bigger cities like Lisbon and Porto.

Opportunities for digital nomads to work overseas are plentiful with a rich diversity of countries offering visas for contractors and freelancers to sample an incredible quality of life and associated cost of living benefits. Other exotic destinations that have introduced digital nomad visas include the idyllic Seychelles which offers the possibility of staying for 12 months and the stunning volcanic islands of Cape Verde or Cabo Verde, its remote working visa valid for six or 12 months. Barbados, Panama, Mexico and Brazil are four other incredible countries to choose from.

 

The excitement surrounding Indonesia’s digital nomad visa had been building since it was first mooted by Tourism Minister, Sandiago Uno, the aim being to make Bali a ‘workcation’ destination for remote workers who could work tax free and stay for up to five years. The visa, which was launched in December 2022, has caused consternation given the financial criteria to qualify, namely $14,000 in funds with the further stipulation to buy a property worth $128,361 (or deposit a similar amount into a bank account). Objectors argue that such a move would lead to a neo-colonial service economy,  resulting in lower wages for locals with increasing property prices driving them out of the area.

The popularity of digital nomad visas has continued to grow post-pandemic, with many countries offering the golden opportunities for global contractors and remote workers to experience an amazing working experience. Those wanting to take up these opportunities must not only apply for and be accepted onto the programmes, they must also remain compliant and ensure they pay the right taxes. And global recruiters placing these contractors must also adhere to all local rules. Should you need any advice, our experts can advise you on more than 80 global countries.

6CATS International is part of WorkwellTM Group

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