What Visas & Tax Incentives do Digital Nomads & Remote Workers need?

Is it true that Remote Workers need Visas, Permits, and Tax Incentives more than Digital Nomads do? I also want to examine what we can do to help Governments design Remote Work Programs that genuinely work. And yes, I mean Programs, not just a visa or permit but a complete strategy that attracts any type of remote worker. Let’s get right to it!

I have recently stumbled upon an interesting post by Victor Borg, who explains why he believes most so-called Digital Nomad Visas have been designed & promoted to the wrong audience. I’ve covered what I think about the differences between Digital Nomads and Remote Workers. Now, I want to dive into something else.

Disclaimer: just a reminder that this is an opinion and by no means should be treated as legal or tax advice! If you need help filing your past tax returns, optimizing your international taxes, or fully designing your remote setup don’t forget to check out our partner Heavnn. We would also love to know what you think! Please scroll to the bottom of the page to post a comment.

Tourist Visas vs. Work Visas

What’s the deal with the visas? Here is a quick summary. 

You have probably already heard that you can not work on a tourist visa. Sure sending a few emails or calls while you are on holiday is not going to be a problem. But, when you work remotely full-time, it gets more complicated. Generally speaking, it’s illegal to work on a tourist visa, and sometimes it can even result in a criminal offense. Most of the time, you are operating in a legal grey area. 

You might ask how does a country tracks and enforces this? Well, it is a million-dollar question. There is no one answer. It depends on a country’s resources, its internal systems, and the implementation of the CRS (Common Reporting Standard). However, nowadays it is almost impossible not to leave a trail behind. You pop up somewhere on the system whenever you cross the border or when accommodation hosts register you with local authorities.

It also gets riskier the more you earn and the more public your business becomes. For someone who spends a few weeks in one and a few weeks in another country, this might not necessarily be a problem straight away. Yet, it might catch up with them after a while. The difficulties also start when someone stays in a country for longer or gets stuck there due to an illness or accident. If a few weeks turn into a few months, it might become an issue. 

Some sources claim that only remote workers need visas; digital nomads don’t. That is not true. It’s just that digital nomads, who might move more often, hope to fly under the radar. They usually hope that they are too ‘small’ to make sense for a country to go after them. Or that it would not be a good PR for a country to put tourists in jail. We hear about cases when that happens. Even if this is, just to make an example out of them. Most of the time, they would let them out or deport them back to their home country. Still, you would not want to be that ‘example.’ 

Either way, you always operate in this risky grey area. Various people have different appetites and tolerance for risk, but most people, if they have an option, would love to do the right thing. 

Where do digital nomads and remote workers pay their taxes?

Some sources claim that only remote workers need tax exemptions; that digital nomads don’t. Again, that’s not true. It depends, on a number of things. For example: How long are they staying in a country (and let’s be clear the 183 days is a myth)? Can the country they visit be called their ‘habitual abode’ or ‘center or vital interest’? Are they traveling with their spouse or kids? What type of remote work do they do there? Or do they still have their tax residency back home or not? The list goes on. 

Generally, there are four main ways in which Remote Workers, including Digital Nomads (see the definitions), pay their taxes:

1. They have their tax residency back home, only pay the taxes there, and ignore local taxes. That’s a popular approach among remote workers, including Digital Nomads. It makes sense, especially if you have a lot of ties with your home country; your spouse or family are back there, your finances, or you still own or rent a home there). Yet it doesn’t exclude you from the potential obligations of paying the tax in the host country. A proper Remote Work Program could solve many of these headaches and spell out the local tax requirements and exemptions for those remote workers.  
2. They pay back home and also pay taxes locally. That’s more popular with Remote Workers & International Assignees (see the definitions) that have strategic positions within their companies and create Permanent Establishment risks (e.g., managerial or sole owners). That doesn’t mean they end up paying taxes in two places. Usually, this is solved with Double Taxation Agreements (DTAs) between countries that dictate where and how much tax must be paid. Ideally, Remote Work Program should clarify if remote work is conducted for a foreign employer or foreign registered company (self-employed or freelance); local taxes would be applicable. 
3. They become non-tax residents back home and hope to avoid paying taxes anywhere. That is not a good long-term strategy. Most of the time, you must pay taxes in the host country; the 183-day rule is a myth, especially if you are not paying taxes back home; chances are you should pay them locally. The DTA’s won’t come to your rescue here, so you want the Remote Work Program to clarify if you need to pay anything locally. Especially if you are not spending just a few weeks but more like a few months there. Check out the Nomad Capitalist’s Nomad Tax Trap Living Nowhere.
4. They become non-tax-residents in their home country and move their personal and/or professional tax residency to a preferential jurisdiction (e.g., low tax). That’s a huge subject in itself, but it doesn’t require Remote Work Programs, so we won’t dive into that. If you are interested in this area, Jean Galea has an excellent article about this and about the best European Corporate and Personal Tax Structures in 2022.

By no means is this an exhaustive list. And I am not saying one option is better than the other. It always depends on personal circumstances. Also, any form of tax evasion is bad and illegal! You should always get a professional Tax Advisor to help you out. If you need any help finding one, let us know, and we can put you in touch with one.

That’s where an excellent Remote Work Program comes into play and can elevate most of the risks digital nomads, remote workers, and their employers face while also benefiting the country that creates it.

Difference between ‘Digital Nomad Visas’ &. ‘Remote Work Programs’

Great Remote Work Programs are not just about providing a visa or residency permit and tax incentives. They are about having a complete strategy and following through with it. Among many other things, it’s about:

• deciding who needs a quick nomad work visa, so they can work while they are there for a short time, and 
• who need a temporary residency permit because they will stay there for longer than a few weeks.

It’s also understanding:

• who needs a tax exemption because they still pay tax back home, and have strong ties to it, and 
• who just needs permission to work remotely temporarily while traveling for a few weeks to a couple of months even though they might be non-tax-residents back home and are just passing by on the way to a new country; and
• who would actually like to stay for a bit longer, become a long-term resident, work with local businesses and maybe find a way to have the tax residency there and later become citizens?

When we take this cohesive approach to Remote Work Programs, maybe instead of Nomads getting a tourist visa, they will get a short-term remote work visa. If getting it would be as quick and easy as getting a tourist visa and would assure that you don’t run into any legal issues, everyone would be happy to apply for it.

Any other remote worker could, during the application process for temporary residency, pick how long they want to stay there if they’re going to move their residency there, or maybe work with local businesses and pay taxes there. 

The benefit for the country would be enormous, plus they could then actually differentiate between tourist and remote workers and measure the effectiveness of their programs appropriately.

Let’s take Malta as an example. There are several things that they did get right. You can apply for the ‘Nomad Residence Permit’ if you are staying for longer, but if you are staying under 180 days, you only need to apply for the “National Visa.” You can also provide services to Maltese companies and customers; you just need to pay local taxes on the income from that.

It’s just good that there are options. Plus, I can’t stress this enough: Remote Work Programs (not just ‘digital nomad visas’) could solve, at least some, compliance nightmares that employers of all the remote workers face. And in turn, employers would be more likely to let their employees work remotely from a country with the Remote Work Program. 

What is the best Remote Work Program?

At Global Nomad Guide, we conduct in-depth analyses of all Digital Nomad Visas and Remote Work Permits and verify the information at the source with various Government Agencies (Tourist Boards, Immigration, Taxes). 

We have created the Global Nomad Index©, the first of its kind ranking of Digital Nomad Visas and Remote Working Permits, which analyzes almost 50 indicators organized in 13 different categories. We aspire to create a peer-reviewed Benchmark for Best-in-class Remote Work Program that serves Global Nomads everywhere and provides an easy-to-follow framework for Governments trying to attract Remote Workers and Digital Nomads alike. 

Last updated November 22, 2022.