By Dr Anthony Lewis, Chair of Windsor Humanists and Chair of the South Central England Humanists Network
The pandemic led to a surge in the number of professionals who work remotely from anywhere in the world. 'Digital Nomad' visas are now available from 50 countries reflecting the fact that the number of digital nomads is increasing by 18 per cent annually. Anthony describes what it's like to be part of this growing global community. It's not for the disorganised!
One unintended but positive consequence of the pandemic for my husband and I is that we now own a villa in Gran Canaria, which we run as a standalone rental business via Airbnb. We had always enjoyed watching the television programmes A Place in the Sun and Bargain Loving Brits. We often dreamed of perhaps buying somewhere in Spain when we both eventually retired, but we never imagined it would actually happen. The advent of the first lockdowns and being forced to ‘work from home’ (WFH) changed all that when we realised that the technology was mature enough to allow both of us to operate and literally ‘work from anywhere’ (WFA). We now spend up to three months of the year in Spain, and rent out our new property for the rest of the year using a local rental agent to manage both the property and the guests on our behalf.
Why Gran Canaria?
Buying a house as a rental business in Spain is not for the fainthearted, especially during a pandemic! As an essential first step, my partner had to check with his employer that they were happy for him to work overseas for short periods. The whole venture would have been a nonstarter without this. We chose Gran Canaria as it's where we met nearly twenty years ago. Also, it's an all-year-round tourist destination due to its climate, so our property can be rented out throughout the year. In addition, it also has one of the largest and most vibrant gay communities in Europe - an important factor for us as a gay couple. But it's still essential to get professional legal and financial advice both in Spain and the UK to ensure you meet all the legal and tax obligations across both jurisdictions. The UK and Spain have a well-established reciprocal Double Tax Treaty which does make things easier. By law, you have to submit tax returns in both Spain and the UK, keep two sets of accounts and secure all the appropriate property business licences and citizen registrations. For example, in Spain you can't open a local bank account or buy a property until you have an NIE number (Número de Identidad de Extranjero – Foreign Identity Number).
Tourists, Snowbirds and Digital Nomads
The number of tourists visiting Gran Canaria in 2023 is back to pre-pandemic levels of over 4.5 million visitors per year and our rental business is now well-placed for this return to normality. After three years, we also have a better understanding of our customers. About a third of our guests are holiday-makers (both young families and gay couples) who tend to stay for one to two weeks at a time. A third are older, mostly retired, ‘snowbirds’ who stay in Gran Canaria for a month or so to escape the worst of the Northern European winters. We now have some regular ‘snowbirds’ who book our place every winter. The demographic of the final third - the ‘digital nomads’ - was a complete revelation to us. These are often younger professionals, both couples and singletons, who rent our place for up to two months to live in and to work from there. These Global Nomads often stay in similar properties in three or more different locations around the world in any one year. My husband is one of these digital nomads and I am effectively a semi-retired ‘snowbird’. We had not realised we were part of what is a rapidly growing global phenomenon, which was boosted by the pandemic.
Digital Nomad Visas & Demographics
Nearly fifty countries now offer specific Digital Nomad visas, which were introduced in Spain in January 2023. Most require the applicant to show proof of income and private health insurance, and to have a minimum level of professional qualifications or experience. These visas typically allow the holder to stay and work in the country for from one to five years, but the details and the visa registration fees vary from country to country, and many come with restrictions about earning money or trading in the host country. Again, for anyone considering becoming a Digital Nomad, it is essential to get appropriate legal and tax advice for each country that forms part of their planned itinerary. The countries that are most attractive to digital nomads have low living costs, enough properties to rent (usually via Airbnb), an attractive climate and, most importantly, modern high-speed global communications infrastructure. Our villa has 1 Gigabyte per second broadband. Gran Canaria and Berlin are the leading European destinations, with Medellin in Colombia and Rio in Brazil top of the list in South America. The crowded UK, with its high housing costs, wet climate, and high cost of living at present, is an unattractive prospect for most digital nomads!
Previously, the international lifestyle of a Digital Nomad was only available to those employed by overseas international employers, national diplomatic services, non-governmental aid agencies, or the very rich and famous. There are various websites dedicated to the Nomadic lifestyle: Planet Nomad and Nomad List are just two examples, and links to these are provided below. According to the self-reported statistics on these websites, the average age of a Digital Nomad is mid-thirties, but there is a significant older tail, with 35 per cent over forty years of age. This is because most need to have established themselves in their career or profession before being able to work remotely. Just over half are male, and about 30 per cent work in the IT sector as programmers; the rest are freelance journalists, writers, employees like my partner ‘Working from Anywhere’, or successful entrepreneurs. The number of digital nomads is claimed to be increasing globally by 18 per cent annually. There is no official data on actual numbers and the statistics on the various sites are inconsistent and confusing, but Nomad List claims there are some 17 million US digital nomads with about 4.8 million of these working internationally. This represents about 48 per cent of the total number of global digital nomads. The number of UK nationals working as digital nomads is reported as the next highest, and is estimated to be about 7 per cent of the total. UK newspapers such as the Telegraph, Times and Guardian have recently run stories on Nomads with some interesting direct personal accounts (see links below).
Tax Traps for the Unwary Nomad
Living as a global Digital Nomad is definitely not for the disorganised. It is the responsibility of the individual to adhere to all of the multiple residency rules, employment regulations and legal requirements in all jurisdictions where they plan to live and work. Most importantly, everyone needs to maintain a tax residency in their home country, as we all now have to be resident somewhere in the world for tax purposes. For example, in the UK this means that you have to be resident in the UK for a minimum of 183 days every calendar year. Also, if you are employed you must keep your employer informed if you intend to ‘Work from Home’ from an overseas location, as you might inadvertently trigger significant legal requirements on your employer to pay social security, or even force them to register their business in your planned overseas country at great cost. The rules and regulations are always in flux and changing, and as already emphasised it is absolutely imperative to get accurate and up-to-date advice before heading overseas to work. There is no escape from your tax liabilities by becoming a Digital Nomad and you will likely have to pay tax in each country where you work. The exact requirements are complex and often triggered by the length of time you plan to stay in any one country. Here are just a few pointers based on our experience in Spain, to illustrate some of the issues that have to be considered:-
1 month (30 Day Rule). Rentals lasting more than 30 days are not beneficial for UK tax purposes for UK-based landlords, so quite often the length of stay, for example in Spain, are limited to a maximum of 30 days on Airbnb. In addition, most travel insurance cover is often limited to a maximum of 30 days for any single trip. It is a fairly safe ‘rule of thumb’ that keeping any individual stay to less than a month allows the Nomad to remain legally ‘under the radar’ in most countries for tax purposes.
3 months (90 Day Rule). Social security contributions in the host country in the EU are often triggered if a stay exceeds 90 days in any 6-month period. The requirements in France are particularly onerous in this regard. In Spain, non-EU nationals have to apply either for a residence permit or a work visa, if they plan to remain in Spain for longer than three months.
6 months (183 Day Rule). If your stay exceeds six months, most countries require you to either become tax resident, which can have significant financial implications, or to formally apply for an appropriate work visa such as the Digital Nomad Visa described above. It is a general rule that if you plan to stay for longer than six months in any country it is essential to obtain proper legal and financial advice, as there can also be long term implications for statutory state pension benefits and related contributions in both your home and host country.
Despite all the potential pitfalls and administration, it is getting easier to live as a Digital Nomad. There is now a plethora of international organisations such as WISE and Revolut that allow you to easily manage your income, payments and transfers on line at low cost using competitive currency exchange rates. Governments are increasingly aligning their tax and employment laws to streamline things for doing business and living overseas which should progressively make it easier for the nomadic lifestyle. It remains to be seen if the growth in the numbers of people living as digital nomads is sustained as employers begin to require their employees to return to their offices.
Learning Canarian Spanish
Our experience of being digital nomads in Spain has been very positive. We are both learning Spanish as we are in this adventure for the long term. Being able to speak Spanish has helped us enormously in dealing with the Spanish authorities, and has also helped us feel more connected with the local Canarian community and culture. We are committed to enjoying to the full everything that living in both the UK and Gran Canaria can offer us.The experience has already changed our perspectives and broadened our outlook about many things. We certainly have no regrets about having taken the plunge three years ago during the pandemic, but we will not be doing anything like it again anytime soon. The rewards are huge but it's been quite a journey!
Links to some sources
Nomad List and Digital Nomad Statistics 2023 - https://nomadlist.com/digital-nomad-statistics
Planet Nomads - https://www.planet-nomad.com/en/
Nomadic Visas Guide - https://www.planet-nomad.com/en/digital-nomad-visa/
Blog on US digital nomads published Mar 2023 - https://blog.gitnux.com/digital-nomad-statistics
Multi-lingual legal advice for buying property in Spain - https://www.judicaregroup.com/site/country/lawyers-in-spain/
ELE Internacional Guidance for Spanish Digital Nomads - https://eleinternacional.com/blog/las-mejores-ciudades-para-nomadas-digitales/
Recent Digital Nomad Articles in UK Papers - Times August 2022 - https://www.thetimes.co.uk/money-mentor/article/how-to-become-a-digital-nomad/
Telegraph January 23 https://www.telegraph.co.uk/travel/activity-and-adventure/rise-midlife-digital-nomad/