The Digital Nomad Visa Dilemma – To Visa or Not to Visa

With more and more countries launching a new ‘digital nomad visa’ it’s worth a closer look at whether digital nomads will make use of them or not. 

And if they do, which ones are more likely to be used, and why.

So, let’s start with a look at the near past.

Historically

Yes, historically.  You may laugh when I use that word, but you may not be aware that there’s been hundreds of thousands of digital nomads for decades now.

The web was designed over 40 years ago and became mainstream around 28 years ago now so yes, historically there have been digital enabled people working their way around the world since the mid-90s.

At Nomad Stays we profiled a business on about 3 million digital nomads when we launched in January 2020.  Who could have predicted the past 3 years though?  Now look at the huge numbers of people in the process of joining the digital nomad ranks.

But pre-covid, we DNs didn’t worry too much about being expressly legal.  While it’s true you are supposed to have a work visa in each country you go to, unless you have a waiver, say as many short-term businesspeople enjoyed as part of their ‘tourist’ visas.

Tourism Visas Usually Contains Some Business Rights

This short-term business usage was enacted all around the world a few decades ago to enable foreign businesspeople to attend conferences and market their products internationally.  I still remember back in 1989 having to get a US visa to attend a conference in Hawaii as these ‘business usage’ want available back then.

Of course, conferences and short-term marketing and negotiating doesn’t cover actually performing work in each country.  Generally, this wasn’t permitted unless you had a ‘work visa’, which tended to be hard, sometimes costly, and a real drag for someone wanting to earn a few bucks while spending their tourism dollars exploring a new country.

In reality, we were in each country for only a few months at a time and we weren’t taking anyone’s jobs away from them, so most authorities turned a blind eye.  Also, practically speaking most governments wouldn’t be able to move fast enough to prosecute anyone staying only a few months anyway.

This situation existed for years.

The Covid Impact

When covid-19 came along the world’s governments all took an amazing series of decisions to reduce the spreading of the disease by restricting the movement of billions of people. 

The term “Work from Home” became synonymous with employees who continued to remain employed but not from their offices, but rather from somewhere else which was typically their home during these restricted movement times.

These restrictions lasted for months and years.  Some countries still have them in force.  A lot of people became very used to working online, and from their ‘homes’.  And after so much time many didn’t want to go back to their old commuter ways. 

Hence the Great Resignation occurred.

Rise of the Work from Anywhere movement

These ‘I don’t want to go back to office’ people remained employed, causing stress to many employers who were faced with continued uncertainty of ongoing government restrictions (even today my cofounder requires covid testing every 3 days to visit her sick father in an Australian nursing home), as well as the job of keeping their businesses staffed and operating.

Many businesses have adopted a range of ‘work from home’ and ‘Work From Anywhere’ policies to try to retain their top talent.

In truth there are still very few true, global, ‘work from anywhere’ employers. ‘ Work from Anywhere in the US’ or ‘Work from anywhere in Schengen Europe’ or these limited countries are the more common policies at present.

Why is that?

The fact is that the tax and HR laws in many countries mean foreign businesses with an employee in a different country often need to register with the new country and do all sorts of paperwork to remain legal.  

It’s the dreaded ‘Permanent Establishment’ trap that catches them.

Permanent Establishment

The Permanent Establishment (PE) risk is one of those biggies that employers fear with WFA employees.

It’s also one of those issues that barely rates a mention in many DN Visas.

Basically, there is a risk for a company that has employees working in another country then that new country expects some taxes to be paid, social contribution to be paid, properly licensed business registration etc.  The employer is presumed to have opened an office in a new country, even with just 1 employee.

If you’ve not seen the overhead and confusion firsthand believe me that it’s a nightmare with so many different administrative and taxation systems.  (e.g., our monthly payroll report in Australia is 3 lines of info per employee and 1 click lodgment whereas the same thing in France is 145 lines of info and 50 click lodgment, of course done in the French language)

Still each country tends to have its own rules for determining where a PE exists.

PE Rules Vary Between Countries

The better countries have determined clear rules and even inserted them into their Double Tax Agreements between countries.  This makes certain countries a lot more dependable from an employer’s perspective.

(Check out John Lee’s work at WFATeam to learn more)

But these hassles notwithstanding, the range of double tax agreements between countries has enabled many employees to work remotely in a range of other countries for short periods of time.

And so, we have the rise of the ‘digital expat’.

The Digital Expat

A digital expat (my term) is not really a digital nomad.  They don’t ‘travel constantly’ like nomads do but rather move to one of the countries they either wish to semi migrate to or is permitted by their employer and stay awhile.  Maybe for 6 months or a year whereas a typical tourist/business visa is limited to 3 months.

Expats classically had many hurdles to jump through which takes a lot of time and sometimes costs a lot. 

My expating in the Solomon Islands years ago took about as long to arrange my visa fully as I was there.  My cofounder’s French Tech Visa a few years ago took 18 months to achieve too. 

The bottom line is that governments are not really set up for processing short term work visas, especially those that have future citizenship rights attached.  They want to ensure they are accepting only the best migrants.

Nomads and Expats Now growing by Millions

But now in 2022, the numbers of Digital Nomads and Digital Expats is numbered in multiple tens of millions.  Governments really need to step up or miss out on our spending resources.

Collectively we DNs control a significant amount of purchasing power and can make a significant difference to a country’s economy. 

Check out Madeira’s success in keeping its economy going on the back of DNs during covid with its range of open borders, extended visas and good time zone cross overs for both Europe and North America work hours.

We DNs and DEs can add some much-needed tourism dollars to an economy and many countries are now chasing this spending.

At the same time that we now number in the many millions it’s hard for governments to turn a blind eye to blatant avoidance of work visas.  Similarly, there’s always some local pushback from voters that working tourists will somehow take jobs from locals or push prices up.

Hence there became a real need for government to find a medium ground that accepts and expenditure from longer staying foreigners without upsetting the culture of the country.

And so, we get the rise of ‘Digital Nomad Visas’.  Usually, a non-migration visa for 1-year Digital Expats.

Emergence of The Digital Nomad Visa

While named ‘digital nomad visas’ most of the current range of these visas are really designed for digital expats more than nomads.

Typically, no-one is really worried about a few extended tourists stopping for a few months, especially in the off-season. People that stop for a year or most of a year (expats) are more likely to come to the attention of voters and politicians. They can have greater effects on local cultures and prices for good and bad. 

Expats tend to take out longer residential accommodation rentals, use more local transport, and it becomes harder for service providers to cater for the sudden extra demand.  It can have the impact some locals get resentful as they start missing out on a table at their favorite local restaurant, or the price of local services go up too much. 

Check out Lisbon at present for example.  12 months ago, at Nomad Stays we were renting apartments to digital nomads for as low as €550 a month and now it’s hard to find something at €1500 a month.  Lisbon is experiencing a double whammy of an influx of foreign students at the same time as foreign digital nomad/expats, and there are protests from the locals against being edged out my ‘rich tourists’.

60,000 people forced to leave Lisbon in past 3 years – Portugal Resident

So, governments are looking for a way to manage this extra supply of visitors in a more orderly way.

Setting minimum requirements of wages & earnings, or having higher fees is one way to limit any sudden boom in residents.  This may be behind the Portuguese government’s recent change of visa handling for instance.

This means on one hand some governments are marketing themselves as cool, and hip, and all things digital nomady to try and attract more longer staying foreigners.  But on the other hand, it’s, well ‘we want only the rich nomads please’.

Some of the Gotchas

Considering the commonality of tourist visas throughout the world, it’s somewhat strange that there’s quite a range of different contents in the various digital nomad visas rolling out around the globe today.

• When we get below the marketing gloss into the detail you find things like:
• You must stay in the country a certain amount of time
• You must have a pay slip to prove you’re employed
• You must prove you don’t have a criminal record
• You must have a fixed place of residence even for a 1-year visit (please arrange before you arrive)
• You must apply only from your home country
• You must have a current tax status certificate
• You must prove you have residency in the next country you will go to after your visit finishes here
• You must have health insurance but still pay local social contributions including health taxes

Key Issues for Digital Nomads and Digital Expats to Consider

There’s clearly a range of things a digital remote worker needs to consider as they look at signing up for some of the new digital nomad visas.  Apart from the gotcha’s there’s all the usual decision criteria:

• Where shall I live?
• Where will I be taxed?
• How much does it really cost to get the visa?
• How much time will it take me to get the visa?
• How easy to understand is the paperwork?
• Is it easier to remain a tourist and stay for shorter and come back alter in the year a second time?
• Where’s my closest consulate?
• What will the boss think, and do I even tell them?
• Is the internet good enough?
• Will my VPN work?

What About Your Employer?

Having a digital nomad visa to apply for is one thing but have you considered what your employer will permit?

They may not even be aware of all the issues of your moving to another country, even if that country wants you.

Your employers will want to be aware of any consequences of your working in another country.  For example, it’s quite common for many government contracts to require all access to government data to always remain in the country. 

But what about other issues for your employer?

• Can you even operate outside your own country? 
• Will your employer lose or breach contracts?
• Are there other data security issues with you working abroad?
• Is your visit triggering a Permanent Establishment flag?
• What tax and double tax arrangements have been put in place with your digital nomad visa country and your own resident country?
• Are there employee health and safety issues that need to be addressed when working at home or abroad (ergonomic furniture, meal breaks, after hours work)
• Are you even allowed to work after regular work hours in your new country? (Several countries in Europe have laws about this at least)
• How can you get an exemption from these working hour laws?  How?
• Are the time zone differences too great to keep productivity up?
• What’s the impact on team morale and cohesion when some employees are remote and others in the office?

You can see there’s quite a lot for you and your employer to think about for each country you wish to visit to.  The more senior position you hold, then the harder it becomes as the risk of being seen to set up a ‘Permanent Establishment’ grows.

Bilateral Visas – are they better than Digital Nomad Visas?

Many people aren’t aware or have forgotten that there’s a range of Bilateral Visas between countries around the world.  So many were established in the aftermath of World War II.

Many in Europe for instance supersede the Schengen Visa for instance.

Some of them allow a ‘visa run’ once every 90 or so days which resets the visa time clock again.

As I write this post from Albania, I’m aware that many US citizens can stay in this country for 1 year without a visa.

It is worth keeping in mind the Bilateral Visas may have different rights than general tourist/business visas, or even the new range of digital nomad visas.

And to complicate matters further some countries ‘borrow’ other countries visa. For example, several Caribbean countries don’t issue a separate visa if you already have a US visa.

These Bilateral Visas can really the ‘grandaddy’ of visas as their scope of permitted activities and time in country is wider and they are generally older, therefore have precedence, around the world.  Maybe that’s why governments don’t talk about them much.

Plus, their poor border guards and immigration people now have to deal with myriad visa options to manage from people coming from 200ish different countries in the world.  Standard tourist visa, economic zone visas, bilateral visas, business visa, student visa and now digital nomad visas.

No wonder they often don’t spend much time assessing every single person coming into a country.

Visa Crackdowns

Are we likely to see much of a crackdown on classic digital nomads visiting a country for 3 months or less under a tourist/business visa?

Probably not I’d say. 

Sure, Mexico had a bit of a go this year with scores of US citizens arriving with their laptops but that was reasonable unusual around the world and did depend on which border crossing you used.

With the advent of digital nomad visas there might be a bit more focus by some countries on forcing DN arrivals to get the new DN visa but it’s quite common for tourists and business reps to travel with laptops.  So, if you’re not looking too much like a digital migrant when you cross the border it’s hard for the border guards to determine your real status.

Again, many countries want the increased spending of longer staying visitors.  After all which country would prefer spending by a tourist staying 1 week versus a digital nomad staying for 3 months?

Any crackdown is likely to be more of a ‘warning shot’ than a serious deterrent, I’d say, to ensure the right signals are telegraphed to the traveling world.

How will Digital Nomad Visas morph in coming years?

Will we see the current range of short-term expat visas transform into true digital nomad visas?

My guess, probably.

Some countries won’t get their digital nomad visa right the first time.  They won’t attract enough nomads or expats.  This will force a rethink of their strategies.

With so much choice now available to digital expats there is quite a level of competition between countries, and while the threat of government covid restrictions remains the long-haul travel typical of digital nomads is still subdued.  Which means some countries won’t hit their targets in the next year.

They may find they have to reduce the barriers to adoption and/or increase the attractiveness of the visa to get the resulting digital nomad arrivals and expenditure.

Already one government I spoke with was lamenting the fact that they’d only had 20 applications for their digital nomad visa.

Will Digital Nomads Flock to the New DN Visas?

True digital nomads will probably not I’d suggest.

Its too much hassle for too little.

Right now, there is significant hassle and barriers for people to acquire these new DN visas, yet the classic tourist/business visa or bilateral visa serves them well for a few months with low chance of prosecution if they breach any work laws.

Will Digital Expats Take Up the New DN Visas?

Probably yes, I believe.

A year on a Caribbean Island, for instance, is maybe more like a sabbatical than a holiday and energizes your career.  It’s going to be worth pursuing by many to keep their careers advancing without leaving their employment.

Besides, as an expat you may find your employer may insist on you getting a visa before letting you work remotely too, for their comfort and risk minimisation.

Finally, the Dilemma Now

So, after all of that are the new range of digital nomad visas that latest gold rush?

I believe for some that it will be. 

One example. Many US based employees will grab the chance for that tropical sabbatical and still earn a world leading salary. Especially when it’s only 1-2 flights away from ‘home’ on a similar time zone.

And they will do it soon. One thing that covid taught us is that we can’t expect travel freedom to last forever. Who said these visas will last forever too?

Will the global adventurer and explorer that also works or runs a business clamor for a visa – nah.  I just can’t see it yet.  There’s another round of refinements for most of the current crop of digital nomad visas needed before they meet the needs of the classic DNs.  Once these new range of digital nomad visas become more like a formality than a marathon their uptake will take off.

My summary

While many of the new DN visas are provided a benefit to both digital nomads/expats and countries they’re probably relevant to a smaller group of people than many believe.