Dozens of countries have launched digital nomad visas in recent years, but with very small take-up. The reason for this mismatch spells big risks for employers
Ben Sookia | 6 September 2024
In 1997, a Japanese scientist and a British journalist together coined a term that would take almost 25 years and a global pandemic to really catch on.
Tsugio Makimoto and David Manners’ book Digital Nomad first introduced the world to a new kind of worker – globally mobile, footloose, sustained by wanderlust and an internet connection.
When the book was first published in the dial-up age, very few people fitted that description. But fast-forward to our era of cheap travel and ubiquitous broadband, and tens of millions are tapping away on laptops a long way from home.
Quantifying the digital nomad boom
In 2023, the number of digital nomads was estimated to have topped 40 million. What was five years ago generally seen as a quirky lifestyle choice pursued only by fortunate freelancers now pumps $787 billion into the global economy annually.
As anyone who has visited nomad hotspots like Lisbon or Tbilisi can attest, Americans are over-represented among this cohort. In fact, an astonishing one in ten US workers now chooses life on the road.
Clearly, there was a wellspring of demand bubbling away for a more flexible life routine than anyone might have predicted before the pandemic. Now that the dam has broken, countries have been queuing up to tap the flow. After all, digital nomads tend to have ample disposable income to spend on accommodation, hospitality and cultural experiences. What national exchequer wouldn’t welcome them?
The dawn of the digital nomad visa
Estonia introduced the world’s first official digital nomad visa in June 2020, allowing remote workers to stay in the country for up to a year.
This legal innovation opened the floodgates. Since this point, over 60 countries from all corners of the earth have launched their own equivalents. In Europe, sunny spots like Spain, Portugal, Malta and Croatia have thrown their doors open to nomads. More northerly climes like Norway, Iceland and Latvia are similarly accommodating.
In Asia, Japan, South Korea, Thailand and Malaysia are among the countries to launch digital nomad visas. They’re joined in the Americas by a select few Caribbean nations, plus bigger Latin American states like Argentina, Colombia and Brazil. On the African continent, nomads can qualify for visas in South Africa, Mauritius and the Seychelles.
Typically, these visas will be valid for a short period of time, normally six months to a year, though Thailand’s offering entitles workers to stay for five years. By permitting the holder to work in the host country without local employment, these visas are precision-designed to attract employees at big Western companies.
A damp squib? Digital nomad visa uptake in numbers
So after four years of nations retooling their immigration systems to accommodate mobile workers, have nomads heeded the call?
In a word, no. A quick look at the stats tells a disappointing story.
Nomads Embassy has compiled digital nomad visa approval numbers from a sample of the most popular destinations: Croatia, Cyprus, Ecuador, Estonia, Greece, Hungary, Malaysia, Malta and Portugal. Across these countries, a total of 9,277 visas have been issued.
Thailand, another hub country, has approved approximately 1,200 of its Destination Thailand Visas.
It’s hard to put any precise numbers, but we can reasonably estimate that around 10,000-15,000 digital nomad visas have been officially granted worldwide. Not a small number in itself, but a drop in the ocean of the tens of millions of people pursuing this lifestyle.
But why have countries been so unsuccessful in capturing all this demand for the nomad way of life?
Why digital nomad visas haven’t caught on
The answer may well be that the vast majority of nomads simply don’t feel any need to jump through the hoops of acquiring a formal visa.
Most nomads need little more than a laptop and an internet connection to do their jobs. Many have taken advantage of the strong network of visa-free travel agreements between many countries worldwide.
For instance, a UK passport holder can travel without a visa across most of Europe for up to 90 days, plus countries further afield like Japan and Brazil. Many other countries, such as Canada, Australia and New Zealand, only require travel pre-authorisation.
In most of these cases, they aren’t permitted to carry out any work during their stays. But if all your work involves is sitting for eight hours a day at your laptop in your Airbnb or at a local cafe, the risk of detection is almost nil. Border officials are highly unlikely to be monitoring travellers’ internet activity. They’re certainly not patrolling tourist hotspots, peering over people’s shoulders to ensure they don’t have any telltale spreadsheets open on their MacBooks.
Why would a traveller accustomed to working like this commit to the expense of a visa application?
Why this is so dangerous for employers
If you work at a big company, chances are you have a few digital nomads on your payroll. And as we’ve seen, it’s highly unlikely they’ll have a formal visa for wherever they’re currently working from.
If they were caught, the consequences wouldn’t just fall on them. Employers have just as much to lose from their workers’ compliance violations.
The penalties can be severe. In some countries, an employee working remotely from a fixed location can trigger a Permanent Establishment. This would make your company liable to pay taxes in that jurisdiction. A makeshift home office is unlikely to qualify. But if your remote employee regularly logs in from a co-working space, this might tip the scales against you. You can learn more about Permanent Establishment risks and how to avoid them in our full explainer here.
If a digital nomad is found to be working without the proper authorisation, their employer might face fines and even criminal liability.
Digital nomads might also accidentally become bound by the labour laws of the place they’re working in. If your policies aren’t aligned with these, you’ll suddenly find yourself in breach of employment regulations for territories you didn’t even know you were operating in.
Given the current low chances of detection, this might not cause you to lose much sleep. But as border technology catches up with modern working patterns, non-compliant employees will become more likely to get caught out.
Take the EU’s new border management system, EES/ETIAS. Once implemented, it will digitally track everyone passing in and out of Europe’s borders, and how long they stay for. If workers overstay, as is easy to do, they will face questions about what exactly they were doing in this time. In this scenario, it is easy to imagine a scared traveller cracking and letting slip that they’ve been working nomadically, in breach of the law.
Such systems will proliferate globally over the next decade and collide with normalised digital nomadism. Employers can’t be complacent.
How employers can tackle these risks
It’s time for companies to take action. The first place to start is your flexible working policies.
You need to make very clear to all your employees that working abroad without the appropriate work permits will not be allowed. The promise of ‘working from anywhere’ was always a convenient fiction, suited for the vagaries of the immediate post-pandemic period but unfit for a time of mass automated border compliance technology.
Sadly, you can’t just proceed on trust. The second step is to put rigorous monitoring in place. You need the right technology to keep tabs on wherever your employees are, and what the rules they need to abide by are. Tools like our own AI-powered platform can give you an instant view of the visa rules for any country on Earth.
Without a plan to mitigate the risks of employees’ appetites for adventure, you could run into the pain of compliance breaches.
