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Introduction

For most countries, at an individual level, adopting specific measures to attract remote workers can be an unprecedented opportunity to drastically improve the economic quality of their tourists. This, by replacing the classic tourist, gone with the pandemic, by location-independents willing to expose much higher expenses in the countries they visit (higher medium salary and specific expenses for the needs of working remotely).

At a global level, countries that have the potential to become very attractive for remote workers will benefit from a positive-sum game. The legal flexibility and tax advantages that they offer, via digital nomad programs, for example, will increase the options and therefore the mobility of the average location-independent.

An alternative to mainstream tourism

Compensating the economic loss occasioned by the low level of tourism since the beginning of the pandemic is an absolute requirement for many countries: countries that were already considered as digital nomad hot spots as well as those that relied mainly on mainstream tourism.

As such, Thailand, as an established hot spot for digital nomads and tourists, recently decided to strengthen its position on the “digital nomad market” and announced its new digital nomad visa earlier this year. This decision has been precisely guided by the impact of the Covid-19 situation on their tourism but was also the opportunity for the country to refocus on more “valuable” visitors. Their program targets not only digital nomads but also wealthy foreign investors.

The Mediterranean island nation of Malta, ranked one of the top international destinations for remote workers and digital nomads, also welcomes remote workers and digital nomads. The Nomad Residence Permit enables holders to retain their current employment based in another country whilst legally residing in Malta. The Permit is open to individuals from outside the EU, who would normally require a Visa to travel to Malta.

Watch Island Innovation’s special webinar to learn everything about Malta’s Nomad Residence Permit, including the application eligibility requirements and where to apply.

Most countries for which the tourism activity represents an important part of their GDP, already adopted a digital nomad program to attract remote workers:

Countries Percentage of GDP coming from tourism before the pandemic Digital Nomad program
Maldives 59.6 % No
Palau 48.4 % No
Grenada 40 % Yes
Seychelles 32.5 % Yes
Vanuatu 25.1 % No
Cape Verde 24.9 % Yes
Saint-Lucia 23.6 % Yes
Dominica 23.5 % Yes
Belize 23.2 % No
Barbados 22.6 % Yes
Montenegro 21.8 % Yes
Antigua and Barbuda 21.7 % Yes
Cayman Islands 21.4 % Yes
The Bahamas 21.2 % Yes
Croatia 19.9 % Yes
Thailand 12.6 % Yes
Portugal 7.9 % Yes
Spain 5.2 % Yes
Indonesia 1.2 % Yes

Source: BigAtlas, 2018

Local legislation and quality of living

Those adaptations of the local legislation applicable to the digital nomads concern mainly the immigration rules, making it easier for the location-independents to enter and work from a territory. For some countries, such as Portugal or Saint Lucia, additional tax measures confirm the will of making the entrance of the digital nomads as smooth as possible, without tax obstacles.

However, even if those legal measures are a necessary starting point for attracting location-independents, the available data shows that they are not sufficient.

Particularly, based on the “Work from Wherever Index” recently released by Kayak, we identify many other criteria that condition the success of a digital nomad program:

  • Health & Safety
  • Internet speed and the availability of co-working spaces
  • Social life: activities and English-speaking community

Overall, those criteria summarize a “Quality of Living Index”, well-known by the global mobility professionals, with some useful adaptations to the specific situation of the remote workers.

And with regards to this quality of living, many of the countries that need to attract digital nomads and remote workers, based on the part of tourism in their GDP, are paradoxically not at the top of the ranking.

Countries Percentage of GDP coming from tourism Digital Nomad Program Ranking based on the quality of living
Maldives 59.6 % No 110th position
Palau 48.4 % No Not classified*
Grenada 40 % Yes Not classified*
Seychelles 32.5 % Yes 26th position
Vanuatu 25.1 % No Not classified*
Cape Verde 24.9 % Yes 50th position
Saint-Lucia 23.6 % Yes Not classified*
Dominica 23.5 % Yes 28th position
Belize 23.2 % No 99th position
Barbados 22.6 % Yes 51th position
Montenegro 21.8 % Yes 58th position
Antigua and Barbuda 21.7 % Yes 107th position
Cayman Islands 21.4 % Yes 104th position
The Bahamas 21.2 % Yes Not classified*
Croatia 19.9 % Yes 11th position
Thailand 12.6 % Yes 16th position
Portugal 7.9 % Yes 1st position
Spain 5.2 % Yes 2nd position
Indonesia 1.2 % Yes 20th position

Source: BigAtlas, 2018 / Kayak “Work from Wherever Index”, 2022

*Not classified – countries are considered below the 111th position, based on their quality of living

Strategy to attract digital nomads

If such a ranking can be considered subjective, based on the evaluation criteria, it still gives interesting perspectives for the elaboration of a strategy to attract digital nomads:

  • Countries without a digital nomad program do not make it to the top of the places considered as “good to work from” by the location-independents. This can mainly be explained by the fear of a difficult immigration process, as well as the tax implications.
  • The quality of living is an essential aspect that location-independent workers take into account when making their traveling decision, and would therefore be a rewarding angle both for future infrastructure projects (such as the announced digital nomad villages in Spain) and for the country’s communication.

At Heavnn, as a Global Tax optimization solution for location-independents, the necessity for the different States to adopt more attractive measures for the digital nomads is validated directly by the digital nomads we work with.

As we present the different financial options to our clients, making their traveling project real, in almost 40% of the cases they finally decide to integrate at least one country offering nomad-friendly legislation, into their traveling scenario.

This benefits the countries that have a structured digital nomad program. However, this penalizes the countries that do not offer legislation adapted to this population, and also the traveler, that expressed the will to travel to this country in the first place. The digital nomad will still travel to this country but will run away as fast as she arrived, before having to experience the disadvantages of country-specific immigration and/or tax legislation.

The stakes for the countries is to ensure that their legislation fits with the perfect digital nomad journey, to capture the optimum economic value from the location-independent population.

Once the financial aspect is settled, the quality of living is also an important point, especially the quality of the internet and the existence of a community of digital nomads.

Overall, besides a small core of veteran digital nomads, aspiring and current digital nomads are in the process of educating themselves about the best practices (nomad-friendly countries for their base or just for social interactions, least taxed options, immigration rules …). Some countries are already building their status as digital nomad hubs. Nevertheless, this ecosystem is still in the building process: immigration and tax legislations are still being adjusted, the economic actors are currently adapting their offer to better serve digital nomads, travel restrictions are being lifted everywhere.

Conclusion

2022 will be the year of consolidation, leveraging the experience accumulated throughout the past two years, both by the private economic actors and the states that already started such digital nomad programs.

By using this accumulated data, the countries that didn’t yet start a “digital nomad campaign” can still manage a successful entry into the game and start capitalizing on what is likely to become an important economic motor in the future, for the tourism industry.

From our side, we would be more than happy to be able to suggest always more diverse and interesting traveling scenarios to our customers, wherever they are and wherever they want to go on the planet.

Heavnn

Author

Heavnn is a borderless tax technology solution supporting the future of work and international movements. The company assists international remote workers with the design and implementation of their global tax setups.

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