Digital nomads: the world is your oyster?

Imagine seeing the world while you work, without having to take time off.

That's quite the dream, isn't it? With the technology enabling remote working perfected during and after COVID-19, we've seen a rise in digital nomads, those who work remotely from whichever country they travel to. According to a 2023 report from MBO Partners on State of Independence: Nomadism Enters the Mainstream (the report), the digital nomad workforce in America alone expanded by an astounding 131% from 2019 to 2022. Back in 2019, there were 7.3 million American workers who identified as digital nomads. After COVID-19, there were 16.9 million American digital nomads in 2022 and 17.3 million in 2023. This workforce comprises both traditional job-holders and independent workers such as freelancers, self-employed and independent contractors who work across professions including information technology (19%), creative services (14%), education and training (9%) and sales, marketing and PR (9%).

The nomadic life

The report also showed that digital nomads are among the most satisfied in the workforce. Instead of working in a cubicle from nine to five, a digital nomad enjoys freedom, flexibility and autonomy with work both in terms of location and hours, and therefore a better work-life balance. They can also take advantage of geoarbitrage, that is to work in a country with lower cost of living while maintaining the income level of their home country. Popular destinations include Portugal and Thailand, and countries such as Spain, Argentina and Romania are ranked best suited for digital nomads to be in in terms of the cost of living, minimum income and internet speed.

Today, around 50 countries issue a 'digital nomad visa', a temporary visa that allows individuals to live and work legally in that country. The requirements range from having an overseas employer, to demonstrating knowledge of, or qualifications in the relevant discipline with a university degree or relevant work experience.

Legal implications

There are, nonetheless, legal implications digital nomads and their employers ought to be aware of. One such implication would be on tax. For digital nomads, they may become a tax resident in a country that they spend more than 183 days per calendar year in, after which their worldwide income will be taxed in the country they are working. It is therefore possible for them to be taxed in both the country they are based and their home country if a double tax treaty does not exist between the two countries.

As for businesses, they may be deemed to be a resident of the country in which their nomadic employee is based and therefore considered a corporate presence. As such, the business can then be considered as operating from that country too and be subject to corporate tax obligations.

Double liability can also be an issue which applies to digital nomads' social security contributions. Without a social security agreement between their home country and the country they choose to work remotely from, digital nomads may cause a double charge for social security contributions from both themselves personally and their employers. 

Nomadic employees

There are also employment considerations. Digital nomads should pay close attention to the terms of their health insurance or employee life assurance policies provided by their employer, as working from a location other than the one specified in their employment contract could potentially void these policies. For employers, they should note that the governing law which applies to their nomadic employees is usually that of the country in which their employee is currently residing. Employers should pay attention to, for example, minimum wage and holidays stipulated by local laws where their nomadic employee is based and which could override the terms of their employment contract.

Data risks

Last but not least, businesses may face data privacy risks and ought to pay attention to local laws regarding the transfer of data, especially when it comes to client information, and implement the measures required to safeguard this information. Digital nomads should adhere to such measures if available, and take steps to protect any sensitive information they are handling. For instance, they should avoid using public Wi-Fi where cybercriminals can easily eavesdrop. They are also recommended to set up a Virtual Private Network (VPN) to encrypt their data and secure their internet connection.

The life of a digital nomad isn't all rainbows and luxury and there are certainly hurdles to jump to make it work. Nonetheless, it is not impossible. If you are eager to set on an adventure and meet new people every day while maintaining your career and having regular income, digital nomadism may be the way.