Blue-sky thinking: new rules allow digital nomads to work in the sun | Money

Jhe pandemic has locked us in, but at the same time freed many workers from the office compound. A new breed of digital nomads has emerged – people who have taken their laptops, hopped on planes and set up shops in some of the most beautiful parts of the world. And with them came plans to make it easier for them to stay for months.

Barbados was one of the first countries to formalize the deals with its ‘welcome stamp’, launched in June 2020. To be eligible, workers must earn more than US$50,000 (£37,000) over the 12 months where they are in the country and pay 2,000 USD for the application. They will not be subject to income tax during their stay.

In June last year, Malta launched a nomadic residence permit, with which workers can live in the country once they earn €2,700 (£2,230) a month. Applicants pay €300 each, plus the same for each dependant.

Iceland has implemented a long-term visa for remote workers since October 2020, and Bermuda has a new “work from Bermuda” certificate. Spain and Sri Lanka are considering following suit.

The programs all work quite similarly: workers pay to apply and get the right to stay in the country while working for an employer based elsewhere. Visas usually last for one year, which can usually be extended after the time has elapsed. Once you have one in place, you can rent a property and travel in and out of the country.

However, there are some things to keep in mind before packing your bag.

Software developer Alex Lilburn now works in Barbados.

“Being a digital nomad can be made to work. However, it’s rarely as simple as people sometimes think,” says Lee McIntyre-Hamilton of Keystone Law, who specializes in global mobility. “Getting a visa is just the beginning of the process.”

Alex Lilburn, a software developer, moved from the UK to Barbados in January 2021 after applying for the welcome stamp.

“I saw an article on the BBC titled something like: Working remotely? You could work from heaven,” he says. The article mentioned Barbados, so he started looking into the practicalities. “I used to work from home, but suddenly clients weren’t expecting us to come once a month anymore,” he says.

“I spoke to my employer. They were very supportive and said if there were no tax implications, they would help make it happen.

If you are employed, you may be contractually obligated to work where your employer states, and being overseas may not be an option.

Moving could trigger obligations for your business, McIntyre-Hamilton says, such as paying social security taxes in the new country. “For example, if a British citizen and an employee of a British company were to live and work in Spain indefinitely, they would immediately trigger the requirement for their UK employer to register as an overseas employer and run a business there. pay,” he said. Your presence may also lead to a commercial presence of the company abroad and, with it, corporate tax claims. So it’s not something you can do without consulting your employer.

It’s easier if you’re self-employed, but you should talk to your clients, McIntyre-Hamilton says, because in some cases contractors — especially when they only have one client — might be considered. as employees under different rules in the new country.

Barbados offers a zero income tax rate for people on its welcome stamp, but you will pay VAT on goods and services. Lilburn is paid by his employer in the UK, and he takes income tax and National Insurance as if he were still working from home.

In general, residency tax rules are complicated, especially if you are traveling for a short period and may make return trips to the UK.

Whether or not you pay UK tax depends on your UK tax residency. Generally speaking, HM Revenue & Customs states that if you are in the UK for 183 days or more in a tax year, you are resident. But residency is complicated and travelers need to go through the statutory residency test for clarity.

“If an individual remains a UK resident while living and working overseas, HMRC will continue to tax any income the individual earns while living and working overseas,” McIntyre-Hamilton says. You may also be subject to tax in the country you are staying in, which may result in double taxation, although there are exemptions if you have a double tax treaty with the UK.

Even if you don’t live in the UK, any money from there – such as bank interest, dividends or rental income – will generally be subject to UK income tax. “I’ve seen evidence of digital nomads moving from country to country in hopes that it will avoid triggering problems in any given country. Generally, that assumption is incorrect,” McIntyre-Hamilton says.

Lilburn have no plans to move. It’s great for work, he says: the time difference is currently four hours, and he has meetings in the morning when his British colleagues are at their desks, then does his coding work in the afternoon. He recently renewed his Welcome Stamp for another year, which was slightly cheaper than the original app, at $1,500, and says he sees no reason why he won’t do the same the next year. next year.

“I came to Barbados for the scenery and the weather, but I stay for the people – whether it’s the other people on the visa, who are similar people at the same stage of life, or the Bajans I have met who have been so friendly,” he says. “It’s amazing, really.”

Bermuda visa says “welcome”

Lauren Anders Brown is a documentary filmmaker who was visiting her partner in Bermuda in March 2020 when the pandemic hit. She ended up staying, and that summer applied for the island’s digital nomad visa.

“It costs $285 to apply, but it was simple,” she says. “You must prove that your foreign company pays you into a bank account, that you pay your taxes and that you have health insurance.”

She is self-employed with Collaborate: ideas & images, UK. She wins accounts in the UK and the US, where she is from, and hires accountants to make sure she has paid the correct tax. Her partner is a doctor and has applied for a traditional work visa.

“It was a lot easier for me to stay than for him,” she says, “because the digital nomad visa is a new kind of immigration law.” Non-residents are not allowed to drive, but under the scheme she is. She was also able to rent accommodation while he was still getting his visa approved.

The only downside to Bermuda is that it is expensive. The visa lasts for a year and she renewed it. “There’s blue water, it’s dog-friendly – it’s really fine with us,” she says.

About Andrew Miller

Check Also

Cyprus sees increased interest in digital nomad visas

What are cookies As is common practice with almost all professional websites, (our “To …