Digital Nomad Visas, the challenges and complexities for recruitment firms

Digital Nomad Visa

18th August 2022

The compliancy complexities and risks involved when working with digital nomad visas

Before the Covid-19 pandemic it could be said that so-called ‘digital nomads’were operating in sometimes difficult and unusual circumstances. However, since the dramatic growth of more flexible and remote working, with a 600% global increase in just two years, more than 25 countries are offering digital nomad visas as a way of attracting new ideas and talent to their shores, as well as injecting foreign capital into their local economies.

These visas offer greater stability to contractors and a chance to spend longer periods of time in countries instead of treating them as short-term hosts.

Compliance requirements

Minimum earning requirements vary from a maximum of £4182 a month in the UAE to £1255 in Brazil – this is the minimum amount being earned to ensure visa holders can support themselves without taking local jobs. There’s also usually a one-off fee to apply but, in some places, like Argentina, this can be earned back through perks using differential rates on accommodation, co-working spaces and internal flights with national airlines.

Italy is one country looking to seize the opportunity to benefit from the skills and financial stimulus provided by digital nomads. The country’s government is looking to combine other elements of digital nomad visas to develop its own, which is aimed to launch by September, and may help to tackle the growing workforce issue caused by having Europe’s oldest population. Parliament minister, Luca Carabetta, said, “a digital nomad can bring us skills in everything from architecture to engineering, so it’s a good way to open up our country to skills from abroad. […] Our ultimate goal could be to have them as guests in Italy, yes, but also to possibly establish themselves here.”

Prithwirai Choudhury, a lecturer at Harvard Business School on the changing geography of work, predicts that even larger economies could soon begin to offer digital nomad visas to stay competitive and to provide opportunities for contractors to stay with them for longer. And, he believes the countries that provide the best opportunities and ecosystems for remote workers will see the biggest benefits. “You need to help them during the duration of the stay by connecting them with likeminded people and entrepreneurs. Once they leave, you need to set up an alumni programme so that these people keep contributing to the community and keep coming back.”

The challenges of working with digital nomads

There’s no doubt that digital nomad visas are an attractive proposition for contractors looking to broaden their horizons and to find locations away from their home country where they can live and work with a lower cost of living, however the status of these workers also potentially provides significant compliance challenges for agencies and individuals alike. As the concept is still in its relatively early stages, there are still numerous areas of compliance where the landscape varies significantly from country to country and where regulations are still unclear. It’s critically important, particularly when moving to different places on a regular basis, that you understand the differences between the likes of digital nomad visas, freelancer visas, temporary residences, digital visas, permanent residences, tourist visas and more. That’s before we even get to differing regulations around travel insurance, bank accounts, health insurance and so the list goes on. This sounds complex, because it is.

For agencies this new world presents possibly even more challenges. They’re usually not at the point of contact, or operating in the countries that many contractors are working in as digital nomads. Many may not be familiar with the various new locations popping up around the globe that act as nomad hotspots. Last year, the top two fastest growing locations for digital nomads were Curacao and Kho Phagnam. How many agencies would have regularly placed contractors in those locations even five years ago? And some countries aren’t as receptive to the idea of remote workers as others. Norway, for example, is going against the worldwide trend. Even if you are on holiday in Norway and want to work from your hotel, it’s potentially illegal. The only way to work from the Nordic country is to have a (tax &)ID permit that gives you the right to do so. And the rules vary dramatically like this around the world.

This is a challenging landscape for agencies to remain compliant and, since the introduction of the Criminal Finances Act and other pieces of legislation designed to crack down on law-breaking behaviour, it’s really not worth taking the risk. If you’re at all uncertain about remaining on the right side of the law when working with digital nomads, contact 6CATSPRO for advice. 6CATSPRO provides the expertise needed to help recruitment firms find the right solutions, wherever your contractors are working around the globe.

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