What Are the Legal Requirements To Get a Digital Nomad Visa?

The term “digital nomad” refers to people who work remotely without being tied to a specific location or home country. Digital nomads include freelancers and employees of U.S.-based companies who have remote work agreements and work from other countries for limited periods of time. Digital nomad visas are the legal permit that lets employees live in a foreign country while they work remotely.

People who want to work remotely in a different country must navigate visa work permissions, tax regulations, and work restrictions. Workers can face legal problems for non-compliance. For legal advice about global employment options, talk to an international law attorney.

Benefits of Digital Nomad Work Arrangements

In the wake of the COVID-19 pandemic, many U.S. employees started experimenting with overseas remote work. Employees, employers, and host countries find many benefits in remote work opportunities:

• Employees benefit from freedom of travel and living in and exploring new places
• Host countries can attract an influx of workers with disposable income to boost local economies
• Employers can use remote work as a benefit to attract new talent and retain quality workers

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Understanding Visa Laws for Remote Work

Working remotely has a lot of freedom, but digital nomads are still subject to the laws of the country where they work. Each country has different laws for visas, work authorization, and income taxes.

In most countries, a tourist visa does not allow working in the country, whether locally or for a company in the U.S. Taking a meeting or two, responding to emails, or attending a conference is generally permitted. However, working full-time remotely for a longer period of time is generally not included under a tourist visa.

Remote workers should know that they can face immigration problems if authorities do find out they are working in violation of their visa permission.

Fortunately, many countries are adopting digital nomad visas as a way to attract foreign workers beyond a tourist stay. In countries without a specific digital nomad visa, long-term stay visas may also allow remote employment for qualifying workers.

Eligibility for Digital Nomad Visas

Digital nomad visas are a relatively new concept, specifically aimed at remote employees who want to spend an extended period in other countries while working remotely.

Tourist visas only allow travelers to stay for a limited time (often up to 90 days) and for a limited purpose (non-resident). With a remote work visa, you can enter the country and work for a more extended period without needing a regular employment-based visa. Digital nomad visas generally allow for stays of a few months to two years or more, with optional renewals. Some digital nomad visas also allow you to bring your spouse or partner.

Eligibility requirements for obtaining a digital nomad visa vary by host country. It’s imperative to check the requirements of the country you want to work in. Generally, qualifying will require:

• Visa application fee
• Proof of income and savings (minimum thresholds will vary)
• Proof of employment by a foreign company
• Health insurance coverage
• Criminal background check
• Proof of accommodations

Self-employed workers may need to show income history or current work contracts.

Tax Obligations in Foreign Countries and in the United States

Taxation is one of the most common and complex issues facing digital nomads. Tax obligations in a foreign country will depend on several factors, including:

• Your amount of income and source of income
• Whether you’re employed or self-employed
• How much time you’re spending outside the U.S.
• How long you spend in the foreign country

When you are working outside the United States, you are subject to the tax residency laws of the foreign country where you are living. You also have to follow U.S. tax laws. You may face double tax liability under the tax laws of the host country and U.S. tax laws.

U.S. citizens have to file a federal income tax return for any income earned, whether inside or outside the United States. The U.S. has tax obligations based on citizenship. Other countries generally assess income tax based on residency.

According to the Internal Revenue Service (IRS), “You are subject to tax on worldwide income from all sources and must report all taxable income.” This does not mean you’ll necessarily have to pay U.S. taxes just because you are a citizen, but you will have to file. Americans living abroad can qualify for some tax benefits, including the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit.

If you are self-employed or a freelancer, you are generally subject to self-employment taxes, including Social Security and Medicare.

Many countries also have tax treaties with the U.S., including most of the European Union, Canada, Mexico, and Japan. In tax treaty nations, you will not have to pay international taxes if you pay your income taxes in the U.S. Talk to your tax professional about filing U.S. taxes while in another country and navigating foreign tax compliance.

Navigating Employment Law for Remote Workers and Freelancers

Many freelancers abroad ignore local employment laws because their work is all online and done in the privacy of their apartment or hotel room. However, local employment laws may still apply to digital nomads. Workers may also lose out on local employment benefits, including vacation time and healthcare coverage.

Employment visas are generally more difficult to acquire and take longer than tourist visas or digital nomad visas. A remote worker’s employer may also not sign off on the employee’s visa application.

U.S. companies are wary of giving workers permission to work abroad, even for fully remote workers. Employers have legitimate concerns to make sure the work performed abroad does not subject them to permanent establishment in a foreign country, resulting in the assessment of corporate taxes.

Get Legal Guidance as a Digital Nomad

Working and living abroad is a great opportunity for many workers with a flexible remote schedule. However, you must follow local tax and local employment laws to avoid legal problems.

Know what you need before you start your digital nomad experience to get the most out of your remote work opportunities. Talk to an international law attorney about any legal issues you may encounter with remote work laws.