7 Pros and Cons of Digital Nomad Visas

digital nomad visas are getting a lot of press these days and if you are a newly remote worker with the ability to work from anywhere in the world the idea of having a residence permit that allows you to spend anywhere from six months to five years in one place might seem pretty appealing but wait a second today i'm going to share with you the pros and cons of digital nomad visas [Music] so i've been living a nomanic lifestyle for a long time now and i've seen that in different iterations where for a couple of years i lived a fully perpetual traveler lifestyle where i would just go from country to country often in sequence i.e you'd move from a southeast asia from one country then extra from eastern europe one country the next and you drag a suitcase behind you there was a good amount of that time where i had a fixed base originally in the united states then i sold that house later that base was in malaysia where you just keep stuff and you would refuel there was a brief period of time where my stuff was in storage and i had no fixed base today i happen to be much more focused on places where i own homes places where i hold either citizenship or residence permits and so life is a little bit more certain and i'm going to talk about how the nomadic lifestyle has progressed since i started i want to talk about the pros and cons specifically of digital nomad visas and why you may or may not want that or you may want some kind of alternative if it's your first time here my name is andrew henderson the founder of now made capitalist we're a boutique consulting firm that helps seven and eight figure entrepreneurs and investors legally reduce their taxes diversify and protect their assets and yes hold residence permits citizenships and other tools to increase their optionality in an increasingly changing world we also host nomad capitalist live it's the biggest and best offshore event and it's open to everybody seven or eight figures or no so let's talk about pros and cons of digital nomad visas because if you are a remote worker if you're a freelancer if you have a small business you might have been looking at how this can help you you also might be someone who runs a business that is remote and you have remote staff and they're talking to you about digital nomad visas and you're debating like hey what how does that can affect my business let's talk about what a digital nomad visa is it is not as i indicated in the intro technically a residence permit what it does is it is a longer stay visa and so where indonesia is mulling over the idea of a five-year digital nomad visa for focused people to come there and live tax-free some countries will give you six months some countries give you a year sometimes there's an extension there are i think about 50 of these different things right now and as always the definitions are different there are some that are basically glorified tourist visas that already existed there are some that are brand new visa categories so digital nomad visa kind of like golden visa kind of like any term that comes out that catches the public's imagination is not always the same from country to country so you want to understand what that means but basically it's permission that if you apply and generally you need to show some kind of income you need to show generally that your income is not coming from the country where you want to live but it's giving you permission it's giving you a visa to stay in that country six months 12 months whatever it is and so therefore rather than being the perpetual traveler that i originally was where you may be limited to 30 days or 90 days or 120 days in the country you can spend more time there and therefore you don't have to deal with some of the challenges that i faced which is you've got to be super motivated super organized like super focused if you're going to be changing locations every 30 days especially in my opinion if you're going to be staying in like airbnbs or in hotels there is an adaptation that you really have to to work on if you're going to be moving from place to place i don't even care if you're moving from one country to the country next door in the same time zone that is difficult and so the idea for a lot of folks who just want to get work done six months 12 months 24 months one place i'm going to set down roots i'm going to get a lease leave me alone so the pros of a digital nomad visa number one is you're going to get access for a longer stay versus a tourist visa the idea of visa runs where you'll spend as much time as you can legally in the country whether that's you know 90 days in costa rica 30 days in thailand 180 days in mexico has largely changed since i've started this does it still exist sure but what you've seen is you've seen countries like thailand specifically say to their border officers don't allow visa runs to the extent where people just constantly come and go all right are there some countries where it's more flexible sure thailand in southeast asia is probably one of the less flexible places malaysia perhaps especially if you're western is maybe more flexible but eventually you're going to be asked like what is it why are you coming for 88 days leaving for a weekend and then coming back or you know why are you even going somewhere for the same day and coming right back i mean i think a lot of countries have looked at we don't want people to do that anymore on the other hand you see countries like mexico where it's 180 days visa-free they've started asking people even if you're american even if you're canadian even if you're european the countries where they've really never asked too many questions before hey when are you leaving and if the answer is i'm leaving in six months or i don't have a return ticket or i'm just going to hang out they're increasingly pushing back on that especially if you're not a westerner but really even now for westerners and so i think there's a security especially if you're trying to get work done and you want a certainty in your life of having some kind of status in a country so that you know you know you're not biting your nails every time you go back to the country like are they going to let me in am i going to get the wrong person and sometimes by the way it comes down to like are you wearing the right outfit and we can talk about you know men's issues versus women's issues versus the kind of country that you're in and all the different little rules but you know bottom line i think having certainty is important and so digital nomad visa easy access for long stays now there are some countries like georgia for example georgia being kind of the rare one you get one year for most citizenships uh just on a tourist visa and so they have a digital nomad visa but you know what's really the difference well that's an example of like what is really the difference uh if you are an american you can spend about the same amount of time in albania right and so um there are countries where you can spend longer amounts of time but again mexico uh the uk two countries that on the tin say 180 days visa-free it's really not that easy they're going to ask you questions i mean the uk more so but the idea that you can just spend as much time with just no fixed plans and just hang out they're going to ask you a lot of questions and so the digital nomad visa bypasses all their questions it gives you a certainty and you know you can stay there for x amount of time and potentially with an extension the other pro is lower requirements for residents or citizenship in some cases so for example if you want to come to southeast asia malaysia has a my second home program it now requires you to spend 90 days per year in the country now you get up to 10 years but you're spending 90 days per year theoretically could you do it for a couple of years and then cancel get your money out and go sure there's not a huge fixed cost for it but in the meantime you'll be tying up one million ringgit about 225 000 us dollars you'd have to show about nine thousand dollars per month in income and okay if you can meet the physical presence requirement because you want to be living in malaysia fantastic but you're tying up a lot of capital to do it thailand has investor visas that are similarly priced or they have an elite visa where you're just spending money from 15 000 on up for the privilege of living there that works for a lot of folks however if you don't have that capital or you don't want to deploy that capital whether it's in the form of a fee like in thailand or whether it's in the form of just parking capital at a high level like in malaysia then a digital nomad visa makes that easier for you where i find that to be less appealing is for example costa rica's digital nomad visa is live costa rica's requirement was always to show that you had two thousand five hundred 500 per month from certain sources and if you can't do that you can just put 60 000 uh up right away and so costa rican now saying hey our income requirements which are pretty similar to our residence permit requirements i don't really understand why you'd want the digital nomad visa seeing that costa rica has a relatively favorable tax situation it's not like the digital domain visa reduces the tax burden as indonesia's talking about where you get to basically skip the tax system on the digital nomad visa costa rica's tax system already works for residence permit holders and so uh you're really not getting anything extra but you're fulfilling the same requirements so if you want to go to a country um let's say in europe or let's say in asia where perhaps they don't have a clean residence permit regime unless you get a job or the requirements for residents are too high let's say you go to europe and you go to a country the only thing they have is a golden visa latvia recently came out if you've got a western passport you can get a go you can get a digital nomad visa and latvia latvia has a residence by investment program it requires 250 000 euros and up to be invested in the country plus you have to pay some fees and so the idea of just showing income obviously is a lot easier however you do have programs in countries like france like portugal and others where you can simply show income just to get a residence permit and so again what's the need for a digital nomad visa in that situation so look at where the countries where you want to go to and then compare what the requirements are just to simply get a residence permit okay now here's the third pro digital nominee visas as i mentioned what indonesia has been talking about may have some built-in buffers against tax for example or if you're an employer may have some built-in buffers against employment law right so if you're hiring remotely and you hire someone in germany for example there are some conditions under which even though your company is somewhere else you could be sucked into the german labor law system and so for everybody who's just like saying hey work wherever you want in the world i think i hope that they have protocols in place and they've thought it through to understand the tax consequences of having people working in other countries and the labor law consequences in many cases digital nomad visas basically are saying you're bringing in your work from somewhere else you have foreign income has nothing to do with our country you're living here just contributing to the economy you're not like selling stuff here you're not doing meetings here you're not you know selling to our people you're bringing an entirely foreign income which you wouldn't bring in any way and so hey we're happy to come and have you spend it and it's basically just a big long tourist visa um and so in some cases what i'm seeing from people in the employment law field not passing this along is legal advice by any means but what i'm seeing is some of these digital nomad visas work as a shield where it's like hey you are working here of your own accord and you're not entitled to use like our court system you're not entitled to the labor law provisions you're just basically bringing in a job from somewhere else and leave us alone and so that could have some some tax benefits in terms of a country saying some of the digital nomad visas don't require you to pay tax um i'll get to in a moment some do but i think also there's maybe some flexibility on other elements of the structural employment side or the structural freelancers side so those are three pros it's easier you can stay longer potentially lower requirements although not always and there may be buffers against tax and other kind of legal situations now let's get into the cons number one is some of the countries do have taxes in that if you become a tax resident of the country there don't appear to be any provisions to stop you from just being a tax resident and so there are numerous ways to be a tax resident depending on the country if you look at a lot of developing countries they'll have a pretty strict provision uh in just one regard strict as in only one way which is you spend time 183 days 180 days 181 days whatever that's it right and so uh more developed countries have often put in place protocols well uh you know do you have a car do you have a house like where are all your friends like all kinds of different tests uh and so in a case of you know you want to look at a digital nomad visa and say is there a built-in exemption from tax or is the country tax exempt in the first place so if you don't have to pay taxes uh because there is no tax or because you can qualify for some other um foreign you know income exemption which you may have to apply for separately or because it's a territorial system where if you structure everything properly like as long as you're not setting up local bank accounts or as long as you're not removing money or as long as you're not earning money from local sources then it could be exempt then those countries should be fine territorial tax does have some carvats that you may have to worry about um you know if you're going to a country with a non-dom regime that still may reply you know require you to do some tax planning so i think that if you're going to spend more than six months in a country unless there's a built-in carve out where hey digital nomad visa holders don't pay tax i would still do some investigation because the argument is even if you're running a business that does uh business entirely overseas and that's forward income is your being there in managing or working in the business contributing to at least your salary being subject to tax or subjecting your business attacks now again some of the digital nomad visas as in the pros are building in buffers against that but i don't think they all are and so you want to know what are the tax consequences by and large of what you're getting into and i don't believe that all of them have effectively handled that now if you go and spend three months somewhere then you'll probably be fine not giving you tax advice on that but you know just the average person spending three months that's basically a tourist visa why do you need the digital nomad visa the other con is these are really not going to lead to citizenship i've seen one example where they purported that would lead to citizenship but i don't see any basis for that um and so the idea is let's take costa rica for example if you want to spend a number of years living in costa rica even one or two years living in costa rica sure you can get the same tax benefits by living there on a digital nomad visa or just by getting a residence permit uh the residence permit may take a little bit longer but you still have the ability to live there while they're working on it and if you do it properly then it shouldn't take as long as some people talk about the qualifications aren't really that much more difficult if at all for the residence permit than for the digital nomad visa and so if you have the residence permit you may go through a few more checks but you're going to have the ability to start the clock ticking towards citizenship and so it wouldn't be a bad thing if you're already thinking globally why not work towards the citizenship and especially if you're going to spend some time in a country okay maybe you spend two years there and you decide it's not for you anymore and you go back home and decide to start paying a ton of taxes again or you know you just move on to the next place at least you have the chance to qualify for citizenship because it may take five years six years seven years in some of these countries to be eligible for citizenship maybe you like the place and wouldn't you hate to get in two or three years and say wow i'm loving it here oh you know what the digital nomad program doesn't exist anymore and so now i've got to switch over and i don't get to take credit for any of that time right so if you're gonna live somewhere you might as well at least start qualifying for citizenship by the way even if you're dutch or singaporean or whatever and you're not allowed to have dual citizenship you never know when your country could change the laws and so the ability to qualify after for example five years maybe something's changed in five years a number of countries are easing their their dual citizenship restrictions such as germany and africa liberia just did it right so you never know what will happen in five or six years when you're eligible you might as well at least have that optionality especially if it doesn't really come in any any higher of a cost or any higher qualifications okay another con is that the digital nomad visa may need to be renewed more frequently now again there's so many different ones out there versus so many different residence permits um i don't know that digital limited visas are that difficult and some of them are just doing everything online so or it's just one quick visit so i'm not trying to make it sound like it's that difficult however if it's a six month that's going to be harder to renew than let's say malaysia is my second home where here you go you're in for ten years and we'll see you then you know it's harder to renew something every six months than every 10 years what happens though after the six months 12 months 24 months whenever the extensions and the duration runs out is there going to be a digital limit visa one thing we've seen for example in estonia with the e-residence program it opened a great fanfare lots of infrastructure and companies were built around estonia residents it's the best thing since sliced bread what was it it wasn't a residence permit it wasn't citizenship it wasn't anything that people tried to make it out to be or misunderstood it to be it was basically a form of id where you could open uh companies in estonia okay it's a little bit easier but quite frankly it's not that hard from a paperwork standpoint to open companies a lot of places what's hard is the tax planning and all that and estonia was decent but it wasn't great but what people also thought it would do was help them open bank accounts and then the banks just said no we don't want you and so it became this much ballyhooed thing and then it eventually fizzled out like other countries were talking about doing that kind of thing and just you haven't seen it so do i think remote work and people traveling and working is here to stay yeah i do think some people are going to do it for a while and then just decide to go home and so you'll see the numbers swell for a while and then come back down certainly you'll see always new people coming to the fray but is the idea of digital nomad visas and and the proliferation of them in all these countries going to continue there are countries right now where people are upset that too many people are coming as tourists and driving up prices for locals and so politically speaking will some countries look at this as an easy thing to ask maybe now this is all speculation but the point is what happens if the country where you're living in number one you want to continue living and not just go on to the next place what if you want to keep living there and there is no more digital nomad program potentially you could get a residence permit as is the case in costa rica or most latin american countries have if you can show income you can get a residence permit but again the point is why wouldn't you just do that in the beginning and so i see digital nomad visas kind of like estonia's e-residence program where they serve a purpose and they're very valuable but i wonder if it's too much in the mushy middle in some cases and for some people between tourist visas and in between simple residence permits there are some cases where they're valuable where the residents permit qualifications require you to buy six figures of real estate or you know employ a bunch of people i see the value there but when it's you know in latin america in particular in parts of southeast asia and anywhere we could get a longer term tourist visa i don't really see the utility as much the other con is that because of that it's perhaps encourages transients that if you're going to go through on some of the ones that don't offer you as much time where it's six months or a year again is that really are we are we deluding ourselves into thinking that that's more of a residence situation than it is if you're moving every six months like i talked to a friend once about what does it take to live to say you lived in the country i'm always talking to folks like oh i lived in vietnam for a month you visited vietnam for a month and so if the goal is like i don't want to be transient i want to stay somewhere and live somewhere and get work done is six months long enough to do that before you potentially move on to the next place and so that's the issue to me this is trying to solve you can be the perpetual traveler and you can just go from country to country to country you may not necessarily be able to get into the same country repeatedly for an entire one two three year stretch but you can certainly go from place to place to place i think what the digital nomad visas designed to solve is to get people to stay in one place and if the countries you want to stay in only offer you 6 or 12 months then is that really a dramatic improvement over doing some visa runs it does seem to me to be a little bit the mushy metal compared to the fact that you're not getting necessarily tax benefits in some cases you do you're not getting citizenship benefits not that every country you would live in such as in asia for example would give you citizenship in the meantime but i i those are my thoughts so if you have a digital nomad visa and you want to leave a comment below i'd like to hear from you and what your experience is again you want to compare digital number visa to residence permit and see if there's any benefit over getting the digital movement visa versus just getting the full-fledged residence permit and having that greater level of certainty

Channel: Nomad Capitalist

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Keywords: nomad capitalist, go where you're treated best, dual citizenship, second passport, andrew henderson, best places to live, life abroad, travel around the world, investing, moving to another country, leaving usa, leaving america, taxes, Eastern Europe’s New Digital Nomad Visa, eastern europe, where to live, digital nomad visa, nomad visa, latvia, living in latvia, living in europe, europe, cbi, moving to europe, eu, nomad lifestyle, nomadic lifestyle, nomad life, remote job

Id: 6STsVkKg5IE

Length: 19min 13sec (1153 seconds)

Published: Tue Aug 09 2022