Unlike their parents, millennials and centennials are much more determined to balance their work life with relax time.
The famous “American dream” embraced by previous generations, which included a stable job for years in the same company, no longer appears on the menu of priorities of younger people. At the top of the latter’s preferences, however, is the aspiration to travel.
If anything positive can be taken from the coronavirus pandemic, it is that it has accelerated, as never before, the digitalization of processes. From one day to the next, companies all over the world, in all sectors, were forced to adapt to remote working.
It is said that the form of remote work was born in the United States around the 1970s, as a response to the oil crisis that made it more expensive and difficult for workers to commute to their place of work. Since then, telecommuting or home office has been gaining ground slowly but steadily.
About remote work
Forbes magazine published in 2016 the results of a report reflecting that remote work increases companies’ productivity by 28%. Even so, only a handful of companies implemented home office as a benefit for their employees at that time.
It was only with the arrival of Covid-19 to our lives, in 2020, that the remote work modality was extended to the bulk of the sectors.
Almost two years after the irruption of this “new normality”, a study prepared by the consulting firm Adecco, published in November 2021, showed that 57% of the people surveyed still consider the home office modality as a benefit and only 32% consider it a disadvantage. In addition, 63% say they spend much less money than when they used to go to their workplace.
The study, in which some 8,000 workers and employers participated, also showed that 8 out of 10 managers of large companies believe that flexibility will be a benefit for their companies. Among the employees, 88% prefer to do their work in a mixed manner, 7% would like to return to full face-to-face work and the remaining 5% choose to work 100% remotely.
Although there is still a percentage of people reluctant to change, home office is now “on the table” when it comes to negotiating a contract or accepting a job offer for the younger generations.
This represents a great opportunity for digital nomads. That is, those professionals who use new technologies to work leading a nomadic life, i.e., without settling in any particular place.
Traveling around the world, traveling from one place to another and keeping the same job is now a more affordable alternative than it was a few years ago. But doing so requires a certain amount of organization.
Those who embark on it will have to resolve a variety of pitfalls. From the limits or benefits imposed by working in different time zones with respect to the place where the boss or employer is located, to tax or cash management issues.
One of the first doubts that arises is how and where digital nomads are taxed. In general terms, there are two types of taxes that you will have to face: the tax when you spend, such as VAT, and the tax on the profit you earn from your work.
In the first case, the situation is simpler. The digital nomad will pay the VAT of the country where he is at any given moment every time he makes a purchase. But in the second case, in order to determine in which country he should be taxed on the profit he earns from his work, his tax residence must first be defined.
But tax residence is not the only variable to consider. It can also influence whether the company you work for is located in another country. Which one prevails? It depends on several factors as there is no sort of universal rule for these cases. On the other hand, there are several bilateral agreements between countries and for different taxes.
The 183-day rule and double taxation
If a person spends more than 183 days within a single tax year in a given country, that nation is likely to claim that he or she is a tax resident there. Why 183? That is just one day more than 50% of the year, so in many countries it is considered that if one is there for more than half of a year, it is appropriate for the person to be taxed there.
Other countries, on the other hand, will claim that a person is a tax resident if they have declared their main residence there, even if the person can prove that they were physically outside of that country for the entire tax year.
Another issue that the digital nomad will need to keep an eye on is double taxation treaties. This consists of bilateral agreements between countries in order to prevent a person from paying the same tax twice.
In the event that no such double taxation treaty has been signed between two countries, the person could be obliged to pay taxes to both countries.
Another of the great uncertainties that arise when freelancing, traveling around the world, is how and where to receive monthly payments.
More and more digital nomads are turning to open accounts with online payment platforms such as PayPal or Payoneer, which allows making or receiving money transfers between users and serves as an electronic alternative to traditional payment methods.
Another popular way is to open an account in a virtual wallet or within a platform enabled to operate cryptocurrencies.
Ping, is a great alternative for digital nomads, as it solves in a single platform everything related to billing and receiving payments from remote workers.
Once these issues are resolved, the digital nomad will only have to choose between beach or mountain, winter or summer, and choose from which heavenly place to work in the coming months.