The digital nomads or ’employees everywhere’, for whom since 2020, countries like Estonia, Portugal and Croatia have relaxed immigration requirements, encouraging employees to work locally and offering employees visas from work to tax exemptions, are now also required by Romania.
The Senate recently approved a bill that would give employees the possibility of obtaining a temporary stay visa, under certain conditions, some more bureaucratic and complicated to fulfill. The project is good news and a step forward, as the current legal regulations do not contain provisions concerning the possible residence of an “employee from anywhere”, in order to obtain a work visa; the existence of a Romanian employer or of a beneficiary of services is required.
What are the advantages and disadvantages of the legislative proposal and what changes should the Chamber of Deputies, the decision-making body in this case, take into account?
The Senate established that the digital nomad is a foreigner employed with an employment contract with a company registered outside Romania, which provides services through the use of information and communication technologies.
A digital nomad is also a foreigner who owns a registered company outside of Romania, in which he provides services through the use of information and communication technologies and who can work as an employee. or perform the activity within the company, remotely, using information and communications technology.
Thus, these nomads can obtain a long-stay visa, if they wish to travel and stay in Romania, while continuing to derive income from the exercise of remote activities.
To obtain a visa, applicants must meet several cumulative conditions, including having the means of subsistence derived from the activity they are carrying out, amounting to at least three times the average gross monthly salary in Romania for each of the last six months. preceding the date of filing of the visa application, as well as for the entire period recorded in the visa, and to carry out activities from which they derive income, remotely, using information and communication technologies.
However, the Senate draft does not specify how the nomad will turn out to use information technology.
Now comes the tricky part. Because every digital nomad needs a whole list of documents to obtain a visa: an employment contract concluded with a company registered outside Romania, through which to prove the provision of remote services, a document issued by the company that employs him or that he owns, through which to present all the identification and contact data, as well as the field of activity, information on the legal representatives of the company.
The nomad also needs a letter of intent, which must include the purpose of the trip to Romania and the activities they intend to carry out here. The series of necessary documents does not end there.
A certificate is also required indicating that on the date of the visa application, they or, where applicable, the company they own, have paid up-to-date taxes, duties and other mandatory contributions, and that they are not not registered with documents and acts that have or have had the effect of tax evasion and tax evasion.
Also, the reservation of a transport ticket valid to the destination or the driving license, the green card, proof of health insurance for the entire period of validity of the visa, with coverage of at least 30,000 € is required, and a certificate of the means of subsistence obtained from the activity carried out, amounting to at least three times the average gross monthly salary in Romania for each of the last six months preceding the date of submission of the visa application, as well as for the entire period recorded in the visa; proof of accommodation conditions.
The nomad also needs an extract from the criminal record or another document with the same legal value. Of course, if the competent Romanian authority deems it necessary to request something else, the nomad must also present other supporting documents.
If they want to extend the visa, again there is more bureaucracy. Because the nomad needs, once again, the employment contract, proof of remote work, using, of course, technology, a document from the employer to present all the contact details of the company, as well as the proof an income of at least three times the average gross monthly salary for the period for which the extension of the right of residence is requested (the first extension of the right of temporary residence is granted for a period of six months).
Although, as we have seen, the state plans to request all kinds of documents, the bill does not mention the family members of the digital nomad, the conditions under which they can accompany them and how they can enter. In Romania. In addition, obtaining a visa is not easy, as it can take up to 60 days from the date of filing the application.
The impact on the employee’s tax status must also be taken into account. Remote work in Romania, for any period exceeding 183 days, over 12 consecutive months, could, for example, lead to the employee being treated as a tax resident in Romania, but also in the country of origin at the same time, this which could cause many problems for the employee.
The employee may also be subject to local payroll tax. The terms of existing applicable double taxation treaties may override local rules depending on individual circumstances; for example, an international tax treaty generally provides for exemption from income tax in the host country for periods of less than 183 days, under certain conditions.
Problems could also arise in the area of social security contributions. Usually, a person has to pay social security in the country where they work. Therefore, the foreign employer should check whether he has local social security declaration and collection obligations and whether special arrangements have to be made in accordance with the regulations in force in Romania.
The submission of the bill to parliament was motivated by “Romania’s enormous potential for tourism and attracting professionals” – a rationale used by other European countries, which saw nomads as the way to counteract the decline of tourism, with the visa for digital nomads seen as a tool that can attract financial resources to the economy.
At the start of 2021, the index of digital nomads placed Romania in third place, after Canada and the United Kingdom, at the top of the “attractiveness of working from home” – with an average broadband Internet speed of 188 mb / s, an internet cost of € 7.5 and a rent of € 323.
Yes, there is potential, only that, as approved by the senators, the project does not succeed. In other words, if Romania is to attract digital nomads, the Chamber of Deputies, the decision-making body in this case, should also consider clarifying the problems that may arise in terms of social contributions.
Associate partner, EY Romania
Senior manager, EY Romania
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