U.S. Immigration Law Limits International Digital Nomads – Work … – Mondaq
The adoption of significantly expanded remote work policies is expected to be one of the most permanent and prolific changes to the global economy and workforce following the response to COVID-19 worldwide. With this widespread adoption of fully remote work policies comes an increased interest in the digital nomad lifestyle. A “digital nomad” is a member of the workforce who has no permanent address and moves frequently around the country or the world while continuing to earn an income remotely from wherever they are. This lifestyle also presents a unique opportunity for long-term international travel. Many digital nomads are using this opportunity to explore the world, spending several months in each country while continuing to work for an employer in their home country.
As a result, many countries have expanded opportunities to accept these foreign travelers, creating new visa types specifically for these international digital nomads. Some visas may not explicitly mention “digital nomad” in the name, but accommodate remote work for an international employer. The benefits and requirements are generally different than traditional tourist visas. The visa requirements and benefits vary slightly from one country to the next, but in general, these visas require the applicants to earn a minimum income to ensure they can support themselves during their stay. Additionally, the visas generally require that all or most of the applicant's income is sourced from outside of the country. In return, visa holders are admitted to the country for up to twelve months (with options to renew) and are granted authorization to work without joining the local workforce.
Many countries have established visas specifically for digital nomads. These visas provide opportunities for remote workers to establish short-term residence in nearly 50 countries around the world on every continent, from tropical destinations in the Caribbean or South America to dozens of destinations in Europe, Asia, and Africa. These digital nomad visas allow the flexibility for foreign nationals to enter the country for a period of up to six or twelve months without authorization to seek employment in the target country while allowing them to continue to work remotely for foreign employers during their stay.
Spain recently adopted a new digital nomad visa with provisions that are typical for this type of visa. The “Startup Law” was approved by Spain's legislature in December 2022 and is expected to go into effect in early 2023. Among the provisions of this new regulation is an expansion of Spain's immigration policies, now allowing digital nomads to live in Spain for up to twelve months if they meet specific income requirements and at least 80% of that income is sourced outside of Spain. With the adoption of this new immigration policy, Spain has joined the growing number of other countries around the world that are benefiting from the tax revenue and economic stimulus of new income earners, without introducing additional competition for employment opportunities available to their citizens.
This emerging type of tourism remains an untapped resource in the U.S. hospitality and tourism economy. Current visa options for foreign nationals entering the U.S. in visitor status generally prohibit work conducted while physically in the U.S. and do not deal explicitly with remote work. Under current U.S. immigration policies, the lack of work authorization for the B-1 business visitor and B-2 tourism visas limits the opportunities for foreign nomads to spend time in the U.S. to those with either passive income or enough assets to support themselves without working during their stay. These policies exclude many would-be travelers who are working remotely for their home-country employers and would otherwise be able to travel to the U.S., continue their foreign employment, and contribute to the U.S. tourism and hospitality industries at rates that are not currently possible. If the U.S. were to adopt a new visa type, it would increase the number of income earners in the U.S. without increasing competition for U.S. workers or requiring sponsorship from U.S. employers.
The benefits to the tourism and hospitality industries that would result from the U.S. adopting a similar visa option are obvious, but these changes would have implications beyond the scope of immigration law. Digital nomads, particularly those traveling internationally, must be aware of income tax laws in both their home and target countries. For example, in Spain, digital nomads will be subject to Spain's non-resident income tax rate in addition to any taxes owed in their country of citizenship. Of course, these policies will impact the companies employing these individuals as well, and attorneys advising corporations whose employees are seeking to adopt a nomadic lifestyle should be aware of these implications. Indeed, U.S. employers have already found themselves struggling with tax implications of their employees adopting nomadic lifestyles within the U.S., as maneuvering state income tax laws for multiple different states in a single year creates a level of complexity that is particularly onerous for the smallest employers.
It remains to be seen how popular the digital nomadic lifestyle will remain over time as employers, workers, and governments continue to adjust to the sudden expansion of remote work policies resulting from the COVID-19 pandemic response. Expansion of immigration policies to allow for international digital nomads is not as simple as merely adopting a new visa type and reaping the profits of increased tourism. Many long-term effects remain to be seen when it comes to tax regulations impacting not only individual travelers but their employers as well.
The material contained in this article does not constitute direct legal advice and is for informational purposes only. An attorney-client relationship is not presumed or intended by receipt or review of this presentation. The information provided should never replace informed counsel when specific immigration-related guidance is needed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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