Marie Tuason, who works for a German medical company on the Portuguese island of Madeira, is your typical digital nomad.
After a day spent in front of his laptop, the biomedical engineer from the Philippines will participate in either an evening yoga session, a salsa class or perhaps sea kayaking.
It is part of the Digital Nomads Madeira project, presented as the first digital nomadic village in Europe.
Developed in partnership with the regional government, the initiative offers access to a community channel, free high-speed Wi-Fi and a workspace, all with sea and mountain views on the Portuguese volcanic island.
A die-hard surfer, she planned to then travel to the Canary Islands in Spain, in search of better waves, and was thrilled when the Spanish government announced a new ‘digital nomad visa’, designed to attract remote workers to the country. . .
But, as the details emerged, she remained disappointed.
The visa looks good at first glance. It allows people working remotely for foreign companies to come to Spain for one year, then extend for a second year, via a residence permit.
The trap ? Remote workers will have to pay 24% income tax for their first 183 days in the country, and if they stay longer, their tax rate will be determined using double taxation agreements.
It does not compare well with other European programs to attract digital nomads. Of the six new digital nomadic visas to appear on the continent, that of Spain is the only one to fully tax people from the start (more details below). Meanwhile, Portugal’s D7 residency program, which has been in existence since 2007, allows tax exemptions for most foreign income.
“Wow, this is totally different from what I thought,” she said, reacting to the detail. “I mean, of course, it’s less attractive. I’d rather go somewhere else than stay in Spain and pay double tax.
Ana Marie Ghita, another digital nomad staying at the Digital Nomads Madeira project, agrees: “The 24% tax does not seem so attractive. I think Spain has huge potential to attract digital nomads… It would be a shame if they missed the opportunity to attract people.
It’s not that digital nomads like Tuason and Ghita don’t want to pay tax at all. Most people in this category of workers will pay the full tax as a self-employed person in their country of permanent residence.
To avoid being taxed twice, most tend to rely on tourist visas for travel, typically lasting 90 days in Europe, to avoid having to pay double tax.
“Usually they’re all trying to get around taxes. So if they can move and not have to pay taxes, then, you know, that’s kind of their mindset, ”says David Nichol, co-founder of NomadX, a digital hosting platform. and nomadic community.
“I would like taxes to only affect local income. At present, it is very important for countries to woo nomads, not only through strong tax incentives, but also through community-driven public and private initiatives.
A new generation of “digital nomad” employees?
While the new Spanish visa isn’t particularly appealing to the typical digital nomad, it appears the pandemic is changing our understanding of the term.
Gonçalo Hall is the founder of the Digital Nomads Madeira project and says he has noticed a change in the profile of people joining his community.
“Before Covid, I will say that full-time employees were less than 10%, and they were a little intimidated within the community because most of them were freelancers and business owners,” explains- he does. “Now in my data we have over 50% of the people who remain who are actually full-time employees. That’s a lot of people.
If the remote working revolution is not stifled as bosses demand their staff return to the office, it is possible that this new generation of digital nomads will be more inclined to stay longer at their destinations.
This could be a welcome change for locals who believe that digital nomads are not contributing to the community they reside in.
Barcelona-based housing activist Martí Cusó last year Said Tamisé that he criticized digital nomads for having driven up real estate prices, without really adding to the city: “Spend only two months a year [in a place] is not taking root and generating community.
But could the effect be more positive in places where rising house prices and overcrowding are less of a problem?
A recent piece in Wired explored the potential of digital nomads to rejuvenate the depopulated rural towns and villages of Spain, which have suffered tremendously from mass urbanization in recent decades.
Nacho Rodríguez, founder of the Canary Islands-based remote working community Repeople, says he’s already seen the benefits digital nomads have brought to the region.
“The key here is to integrate and not to create bubbles,” he says. “The opportunities that these highly skilled people offer – once you connect them to the community and make sure they share their knowledge and share opportunities – are very important today. “
Spain is not the only country to have launched a “digital nomad visa” in the wake of the pandemic. Other countries particularly dependent on tourism have also jumped on the trend.
The first was Barbados in July 2020, and while that might have seemed like a good deal for a slice of Caribbean paradise, many were put off by the application fee of $ 2,000 to $ 3,000.
A number of European countries now also offer visas to digital nomads who wish to extend their stay beyond six months. We looked at the options and their different requirements, to see how they stack up against each other.
Croatia launched its digital nomad visa in January and allows successful applicants to stay for one year, and can be extended for a second year.
The conditions include a background check issued by the government of your home country, proof of health and travel insurance, proof of address in Croatia and proof that you are a digital nomad.
Applicants must be able to prove that they earn at least € 2,261 per month, but will not be taxed by Croatia.
Georgia’s digital nomad visa was announced in August 2020 and will allow remote workers to stay in the country for a period of 180 days to a year, without paying local taxes.
Visa applicants need a monthly income of $ 2,000 and travel and health insurance.
Greece’s new digital nomad visa is still in the works, but was tabled as a bill in parliament end of August. It will allow people working for foreign employers to stay 18 months.
Digital nomads will need prove that they will work for the duration of their stay by producing an employee contract and declaring that they will not work for Greek employers.
The minimum income required is € 3,500, and one thinks that only 50% of this income will be taxable.
Estonia launched its digital nomad visa in August 2020, and the new program allows successful applicants to stay for one year.
They go need to prove monthly income of € 3504 per month, and must be self-employed or work for a foreign company. For the first 183 consecutive days in the country, digital nomads will not pay any taxes, after which they will be considered Estonian tax residents.
Iceland’s digital nomad visa, announced in November 2020, is perhaps the least attractive of the bunch, with an income requirement of 1 million Icelandic Kroner, or more than € 6,600 at current rates.
There is also an application fee of $ 83, and successful applicants will be able to stay in the country for up to six months and pay no local taxes.
These are Europe’s latest options for digital nomadic visas. But other countries have existing visa and residency options, which are well covered in this Expert Vagabond blog.