Why digital nomad visas?
 

Seems like several countries are offering 1-year digital nomad visas to non EU workers who can do their work online.

Latest is Malta.

Why though? Sure it must help local housing markets. But do they collect income taxes from people on these digital nomad visas?

It’s not like he 1 Euro homes in depopulated villages, which are trying to bring some long term foreign money to their communes.

And in locales geared for tourism, where the ratio of vacation homes to longer term rentals are higher, it may even be disadvantageous to landlords to lease for a year instead of a week at a time.

would digital nomads have to sign up for utilities, local bank accounts, Internet, etc. for a 1-year visa?

and unless these countries try to collect income taxes, why workin people instead of retirees? True, the odds are that younger people will spend more eating out, entertainment, etc. retirees may have more discretionary income though or have as much as some digital nomads.

but in general, what motivations do countries have in trying to lure foreign workers with temp visas?

Estonia is one of the leaders for this. They’re trying to build their rep as a tech hub. Offering this kind of visa helps them do this and hopefully some of those people stay in Tallinn and establish their business there.

I don't know the country-by-country regulations, but if you're resident (especially with a work visa) somewhere for a year, you are usually subject to the same taxation as other residents are. (then comes the exciting subject of tax agreements between the two countries, if any) As for utilities - depends on your rental agreement. Bank account - not necessarily needed, might be useful, though.

Retirees can get into being “digital nomads” too. “Digital nomads” spend money locally, usually spend more than most locals, and can act as lures for others to come and do the same or visit and act as stimulus to the local tech services scene and economy.

Signing up for local, accommodation-related services may not be necessary as renting a furnished unit/room with utilities included can work; international roaming for data/phone services may work; and even a local bank account isn’t necessarily needed to make payments.

Digital nomads bring in quite a bit for the local economy - they buy groceries/go out locally (20%+ VAT), they spend on local real estate (renting) which brings in taxes and pours money into the local economy. Yes, they won't be paying income taxes, but they're only there temporarily now. Maybe they fall in love with the place and later in life they invest in a property there.

Many countries are still experimenting with this.

But how is it any different from any other foreigner who would want to get a residency visa, to go beyond the Schengen 90-day limit?

They'd be spending money too. Unless there was some data showing that digital nomads spent x % more than typical visa holders, not sure why that would be an advantage to these countries.

Of course they wouldn't compete in the local labor market, because they have been vetted for having jobs and enough income, probably their own health insurance too.

But I thought every residency visa applicant had to meet these requirements.

If the “digital nomad” were subject to the traditional income tax rules applicable to “typical residency visa applicant”, the attraction of shifting to the locality — especially when it’s a relatively high-tax locality — wouldn’t be the same.

For the “digital nomad” host country, they import a local spender who probably isn’t taking jobs away from locals and is instead spending more than average locals on supporting local jobs during the period of relevance.

Yeah it's a question of who'd sign up to have these temporary locales impose income taxes on them.

Especially if the country of the nomad's citizenship doesn't have a tax treaty with these locales.

It would be too obvious though if this was an income tax grab. That would take away a lot of the appeal of these offers.

A digital nomad may very well (most of which you noted):

• pay taxes to the host country,
• come with their own health insurance, and
• spend money in the local economy through typical life expenses like rent/mortgage, dining, entertainment, etc.

But they probably don't receive (or need) access to social/government services like education, healthcare, and childcare. Also, this type of visa probably has no path towards residency or citizenship: it's a short term, "you come to our country to work, you're already educated enough to have your own job, you pay some taxes and spend some money without utilizing too many social/government services, and experience the soft power of our culture." What could be better [for the host country]?

Of course, the terms vary for each country's form of this kind of visa. E.g. Maybe maximum duration is different, or maybe income requirements differ, etc.

So how is this different than a residency visa? IMO, it's essentially a longer-term visitors visa where there are guarantees the applicant can support him/herself through working at a non-local job. Then, at the end of the visa, the country and the visitor part ways (unlike a resident visa), no strings attached (probably). So there are fewer obligations on each party, and presumably that serves a growing need.

(My two cents.)

As a digital nomad myself, my view is that countries who are creating 'digital nomad visas' are doing so more for marketing purposes than anything.

Digital nomads tend to be, well, nomadic. Spending an entire year in a single country is pretty much the opposite of nomading. The only exception IME are Schengen Days. We always have to keep careful track of those while nomading in Europe in the spring/summer/fall. But that's for an entire continent, not for a single country.

But it IS clever marketing to say 'hey, we are a digital nomad friendly country - come check us out instead of going back to Thailand or Bali or Bulgaria or Mexico or Colombia!'

And they DO attract what I'll call 'temporary digital expats.' That is, people attracted by the notion of geoarbitraging for a year in a single place.

IME, countries are always keen to have visitors who have $€£. Digital visas typically come with an income requirement and a promise not to be a burden to the local social services. That's a win-win.

I guess I could have been considered as digital expat - used a SEA nation as base (rented apartment for 7 months) to explore the whole region for my employer, while on tourist VWP. This way I remained on my home country's social insurance and pension schemes.

Yeah, I think the thing that distinguishes the nomad from the expat is use of local insurance and pension. And, of course, permanency.

In some countries they 1-year DN visa is just accomodating people who are doing 'border runs' to extend visa exemptions anyway. And collecting some dough in the process.

What is the difference between this and a retired person who has more than ample income, their own health insurance, and will also spend money? Many of these countries make the retiree jump through far more hoops. It's not really very logical.

is there any reason a retiree can’t get a digital nomad visa?

Other than retirees want visas longer than a year?

Some of the countries want to see proof that you are working for a company (even your own). A retiree (obviously) can't provide that.