If you are an international contractor who likes to work in different countries, you are now part of a movement toward remote work as a ‘digital nomad’. This term doesn’t apply to contractors who work directly in-country for a client. Digital nomads are those that rely on virtual work and communication across borders.
Who are Digital Nomads?
Digital nomads are remote workers with no fixed place of business, who are free to travel and work in multiple locations. Some will remain inside their own country, while others choose a more international lifestyle. Technology and internet connectivity contribute to its growing popularity for online work roles that can be performed anywhere.
The flexibility and variety of this lifestyle has increased the number of digital nomads worldwide, and the COVID pandemic only added to its appeal. A digital nomad can select any international destination based on personal preferences, safety and conducive local laws.
Governments are taking notice of the trend, and several even offer Digital Nomad Visas, usually valid for 12 months. These visas may limit or eliminate tax liability for nomads, as well as reduce business registration requirements. Most digital nomad visas do require either proof of a minimum income or personal savings, as one of the government’s motives is to bring revenue to their country.
Tools for Digital Nomads
Once you have embarked on the digital nomad journey, it’s helpful to have tools and resources to smooth the way. Many of these are the same used in office environments, but take on a new dimension of importance for remote work.
Productivity
You will need a collection of remote working software, such as video chat, messaging, cloud storage and remote team management apps. Tools like Zoom, Slack and Dropbox have become almost required for successful remote work and collaboration. Depending on the work role, much of your online activity will rely on visual and written material. You should have up-to-date versions of document production and presentation software and any apps used internally for collaboration with your client.
Taxation
Unless you are on a tax-free digital nomad visa, any stays beyond six months will result in tax residency in most countries. For example, even if you are an EU citizen and don’t need a work visa inside the EU, you could still end up owing local taxes on your earnings. If you want to learn more about tax residency in a specific country, you can use this website as a place to start.
The other option is to move countries every six months, and many nomads adopt this very strategy. Keep in mind that you can’t just leave a country, and then re-enter right away to avoid triggering the six-month limit. Many countries calculate residency using a cumulative 180 days in a rolling year to prevent that tactic.
Immigration
Many digital nomads will use 30-90 days tourist visas, and move from country to country, or leave and re-enter on a new visa. While not strictly illegal, this may not be ideal for those who want to remain in one location for a while without worrying about immigration checks. A few countries do have self-employment visas but it’s not common, or you could go directly to one of the digital nomad visa countries. Another option for longer stays is to use an umbrella company in the country to sponsor your visa and handle your client payments.
Living Accommodations
Some nomads will sometimes use long term hotels but eventually will want accommodation that is more home-like. For that, you can use sites like Airbnb and Rentpad, where local owners rent out rooms and apartments. You can rent for periods from one day to several months, with a minimal deposit. The owners can also help to orient you to the area and ease the transition into a new location.
Insurance
Your home health insurance won’t cover you in most countries, so some type of travel health insurance is advised. Policies can be purchased for anywhere up to one year, and can even insure against the cost of relocating home for serious health issues.
Payment
Getting paid and accessing those funds is always a process internationally. You can rely on credit and debit cards for many expenses or ATM withdrawals, drawing on client payments direct from your home account. If you stay long term in a country and set up a bank account you can use services like Wise and Xoom for direct transfers abroad at a minimal cost.
Tips for Digital Nomads
Communication
Communication with employers or clients is paramount and maybe the most important part of the nomad lifestyle. Part of this is managing differences in time zones, finding stable internet connections and having backup tools in case one method fails. While your accommodation may have wifi, it’s wise to also use a cellular data backup, or at least know of a reliable local café. The use of a VPN can add security to public wifi by encrypting your communication.
Productivity
While it’s appealing to think about the working seaside, productivity can be a challenge. This means having some way to structure your time and projects and setting personal benchmarks for progress. Some nomads will schedule time in shared workspaces that have more of an office-like environment. Spending time with other working digital nomads can also support productivity, as well as provide camaraderie.
Work/Life Balance
Although the digital nomad lifestyle sounds relaxing, the truth is that there can be a tendency to forget to take time off. When you couple the challenges of living abroad with the need to perform well, it can create an additional stress point. Even if you work at your favourite beach café, that is not really downtime.
Some nomads will overwork out of anxiety to keep their gigs going, but that may decrease quality and performance. Structuring leisure time is just as important as working hours.
Conclusion
The digital nomad lifestyle isn’t for everyone, and even experienced travellers might need support to succeed. Contractor Taxation has umbrella companies worldwide that can be a resource for you while navigating tax residency, immigration and timely client payments. Please contact us if you have a question about working remotely abroad.
