Digital Nomad Visas – A New Solution to Working Abroad?

Alex Christen of Capital Law explains the legal perspective around digital nomad visas and what employers should look out for before accepting requests from employees who want to work this way.

The status of working abroad for digital nomads has traditionally been uncertain. Many individuals had previously worked from their destination of choice without realising the need for immigration permission, leading to legal and tax implications. Historically, countries have required individuals to obtain specific work visas where they would be sponsored and employed by a local company or business. Employees on work visas often must be paid a minimum salary and must satisfy basic skills, but this concept does not always suit nomads who run their own business or who are self-employed. Equally, the idea of sponsorship suggests anchoring transient individuals to one place when they would otherwise hope to travel to other countries while still being able to work.

An increasing number of companies, such as Twitter, have begun to offer remote working as an option for employees whilst retaining a physical office space. In 2021, Google introduced a ‘work-from-anywhere’ policy for employees. Digital nomads are taking this concept and running with it, allowing themselves to combine travel and work from tropical beach destinations across the globe.

The gap in the market was spotted and acted upon by some countries, included Dubai and the UAE, who were some of the first countries/emirates to offer a remote working visa for high-earning employees. Employees can work within the emirate for up to one year providing they satisfy certain minimum salary requirements, but there is no need for sponsorship or a local employer. Italy and Brazil followed suit soon after, offering similar schemes. Since then, Indonesia, Thailand, Germany, Spain, Aruba, the Cayman Islands, Barbados and Brazil, amongst many other counties, have begun offering this type of visa.

The status of working abroad for digital nomads has traditionally been uncertain.

What are the benefits for digital nomads and host countries?

The concept tends to appeal to younger generations, who often harbour the desire to travel while maintaining an income, allowing them to extend their time abroad. Many individuals who may otherwise have been travelling throughout the pandemic feel they have been ‘robbed’ of their chance to travel the world. The visas therefore offer employees the ability to travel the world while maintaining a stable job and steady income. Although tourist visas typically apply to short stays, the appeal of digital nomad visas is that they allow visitors to remain in their chosen country for an extended period of time, such as one year or longer, making it more appealing for those that wish to settle for longer.

Many countries recognise the economic benefits digital nomads can bring. Following the COVID-19 pandemic, countries across the world experienced a hit to their tourism sectors. This was particularly felt by those countries whose income centres around tourism and the revenue it brings, such as Barbados and Thailand.

The benefits are twofold; digital nomads can extend their stay, as they are able to generate incomes whilst travelling, which in turn increases their expenditure in the host country. This allows for a potential influx of high-earning individuals to provide local economies with an injection of wealth. Equally, individuals in host countries may arrive with a wealth of knowledge and skills in areas which may not be as abundant to their host country. This could act as a catalyst for the sharing of knowledge and resources between people and cultures alike, benefitting everyone.

Many countries recognise the economic benefits digital nomads can bring.

Employers may also experience benefits from such a scheme. Employing staff on a virtual basis can result in reduced overheads and is also appealing to attract new staff looking for a more flexible balance between work and life – and travel. Offering the ability to work remotely is attractive for potential employees who have grown accustomed to the concept of remote working throughout the pandemic.

What are the requirements and key considerations for employers?

Usually, an employee will need to be employed by a company outside of their host country. They are usually not permitted to take up employment in the country they are staying in, but there may be tax and social security implications. An individual may have a right to work remotely in Italy, for example, but their employer must check how the employee’s pay should be taxed to ensure that the employee does not fall foul of local tax and social security requirements.

Similarly, the employee could be entitled to Italian employment rights from day one of their remote working, despite what their contract may state about the law that governs the employment relationship. It is therefore important to check local legislation and guidance before authorising a request to work remotely and ascertain whether the employee may be afforded additional protection under local employment laws – and, if so, what these are. Other considerations include whether there are any local H&S compliance issues, whether the employee would need to be registered with local authorities and whether cross border data transfers are protected. Employers must put safeguards in place and ensure compliance with GDPR where appropriate.

The visa is not a free pass for everyone; employees still need to meet eligibility and visa requirements. Each host country has their own requirements and policies which should be consulted carefully before applying, with some countries requiring applicants to attend interviews. The processing time varies, although it can take up to one month before it is approved. The required documents may include any of the following:

• A valid passport;
• Proof of remote work/employment contract;
• Valid health insurance;
• Proof of COVID-19 vaccination;
• Background checks, and/or
• A fee.

Employers may decide that they wish to offer the option of international remote working in their organisation. If so, I recommend putting in place a clear policy and process to ensure that employees understand the requirements for the visa and how and when an application should be made. Employers will need to make it clear that responsibility (including the fee, unless agreed otherwise between employer and employee) lies with the employee if they wish to work remotely, although the employer may need to provide supporting documents in some cases.

The employee should also be aware of any impact remote working could have on their ability to settle in the UK permanently if they do not already have an indefinite right to work here. For example, if an employee is sponsored in the UK under the Skilled Worker route, after five years’ continuous residence they can apply for indefinite leave to remain in the UK. However, lengthy absences from the UK may impact that application.

Overall, the digital nomad visa is a forward-thinking immigration solution which provides flexibility to employees in light of the rise in remote working following the pandemic. As more and more countries continue to follow in Dubai’s footsteps, it seems this new visa concept here to stay – and will therefore require consideration amongst employers and employees alike.

Alex Christen, Senior Associate

Capital Law

Capital Building, Tyndall Street, Cardiff CF10 4AZ

Tel: +44 02920 474423

E: a.christen@capitallaw.co.uk

Alex Christen is a senior associate in Capital Law’s employment and immigration team. With over six years’ experience in providing businesses and individuals with immigration advice and praise from The Legal 500 for her professional approach, she supports clients across a range of industries on all manner of employment law.

Capital Law is a full-service commercial law firm with offices in Cardiff, London and Paris. Its clients include businesses of all sizes, from start-ups to large corporates. It also works with a growing number of not-for-profit organisations in education and social housing, as well as with regulators and governmental bodies. As a member of several international legal networks, its lawyers often advise overseas clients and general counsel in global companies.