Digital Nomads Are Here to Stay
Dany Caissy, a freelance software developer, was already working remotely when the pandemic caused many businesses to shutter their offices and send employees home.
Caissy’s job isn’t done from a home office or a shared co-working space, however. Instead, he works from Airbnbs rented for months at a time while he travels the world. In the past couple of years, he’s hopped from Canada to France to Malaysia to Panama to the Philippines to Mexico.
“I don’t have a home base,” Caissy said. “I’m not an actual resident of any country at the moment.”
He’s what is known as a digital nomad, a type of professional who has enough flexibility to work remotely while traveling the world, often staying in hotels, hostels, rental homes or recreational vehicles for short bursts of time.
What Is a Digital Nomad?
When Caissy embraced digital nomadism six years ago, many people he met viewed his lifestyle as exotic or eccentric. But lately, as millions of professionals have worked without a physical office space for the first time, it’s “become normalized,” he said. “They don’t think you’re an alien anymore when you do it.”
Digital Nomads Aren’t New, but They Are Newly Popular
The term digital nomad was popularized in the 1997 book Digital Nomad. In the book, authors Tsugio Makimoto and David Manner anticipated the inevitable rise of itinerant virtual workers. The acceleration of technology, they wrote, would eventually untether one’s occupation from one’s location, eliminating the need for people to live near their jobs. Given the chance to work from anywhere, people would take it.
The ubiquity of wireless high-speed internet, the proliferation of remote collaboration tools and the emergence of platforms that help freelancers cobble together gigs have brought the book’s prediction within reach.
Each year, the number of digital nomads grows. According to a 2020 report by MBO Partners, which provides support services for independent workers, 10.9 million American workers consider themselves digital nomads. That number is up from 7.3 million in 2019, and 4.8 million in 2018.
The upward trend may have started before the pandemic made remote work temporarily mainstream. But it’s not a stretch to say that the taste of virtual work recently given to millions of office professionals will likely accelerate digital nomadism’s rise.
If technological advancements made digital nomadism possible, a year of working remotely has, for many people, made it finally seem realistic.
Tech Jobs Are Popular Among Digital Nomads
The nature of the digital nomad lifestyle limits what jobs people can hold down while pursuing it.
The report by MBO Partners revealed that the most common field of work for digital nomads is information technology (12 percent), followed closely by education and training (11 percent) and consulting, coaching and research (also 11 percent). Still other digital nomads work in public relations (9 percent) and creative services (8 percent), along with a smattering of numerous other professions that can be done with a laptop and a decent Wi-Fi connection.
Kate, a long-time member of the r/digitalnomad subreddit who surveyed the community’s 300 most-popular posts, discovered similar results. According to her findings, the most frequently held jobs of digital nomad posters include photographer/videographer, software developer, graphic designer, writer and teacher.
Earning a passive income is another common way digital nomads make their livings. That’s often done through activities such as affiliate marketing, investing and renting out property.
“It’s important to have multiple sources of income, to have a little bit more security.”
Kate (who asked her last name be withheld for privacy reasons), said she’ll be able to pay half her bills each month when she moves internationally later this year through a “set-it-and-forget-it thing” she established online.
Caissy, too, supports his digital nomadism through multiple revenue streams. He invests in stocks and crypto, in addition to his freelance software development work. And lately, he’s been helping companies interview applicants for open software development roles.
“Online jobs are not always as reliable,” Caissy said, “so it’s important to have multiple sources of income, to have a little bit more security.”
The World Is Accommodating to Digital Nomads
In the wake of a devastating year for the hospitality industry, several hotel chains are hoping to capitalize on the remote work boom, advertising special offerings to lure digital nomads to their properties.
High-end hotel chains all over the world have rolled out monthly membership subscriptions that specifically target digital nomads, Inside Hook reported. These subscriptions often include food and beverage discounts, fitness and co-working amenities, and the ability to freely roam between the multiple properties managed by the same company.
The award-winning Zoku Amsterdam, which launched in 2015 and features loft-apartment-style rooms and a co-working space instead of a lobby, recently declared its intentions to expand into new locations in response to the sudden influx of remote workers, Digiday reported.
It’s not just hotels that are trying to cash in on the digital nomadism trend. The tourism departments of entire nations are too.
In January of 2020, Estonia announced a “digital nomad visa,” which lets qualifying non-European digital nomads stay and work in the country for a full year. (Applicants must make at least $4,100 per month and prove they have work contracts or businesses registered outside of Estonia.) More than 10,000 people have signed up for more information about Estonia’s program, the Washington Post reported.
Not long after, Barbados unveiled the “Barbados Welcome Stamp,” which allows foreigners to live and work there, tax-free, for a year (the stamp costs $2,000 per individual; $3,000 for families). And Bermuda created the Work From Bermuda Certificate, letting people who have “substantial means” or a “continuous source of annual income” work there for up to 12 months.
These are just a few of the several examples of places looking to be the digital nomad’s next destination.
Why Digital Nomadism?
Take a look at the r/digitalnomad subreddit and you’ll see that roughly half the posts contain a picture of a laptop foregrounding an idyllic beach and scenic waves. Why someone would choose to work somewhere with warm weather and a beautiful view doesn’t require deep analysis.
But beyond the obvious perks, the digital nomad lifestyle is attractive to many people because it provides a feeling of independence.
Researchers behind a 2019 ethnographic study of digital nomads noted that the biggest theme that emerged from their data was “the individuals’ quest for flexibility and autonomy at work,” adding, “participants referred not only to professional, but also technological, geographical, and temporal independence.”
It’s not just the cubicle and the commute to the office park that digital nomads want to be liberated from. They also want to be freed from the trappings of the nine-to-five timeframe, the always-on synchronous communication, and the outdated idea that productivity is measured by time spent at a desk, rather than output alone.
A year of working from home has shown many professionals just how location-agnostic their jobs are — and how many of their responsibilities can be accomplished in a shorter timeframe than the 40-hour work week.
Kate thinks that’s why digital nomadism has exploded in popularity recently. Remote work finally has enough people asking: “‘Why can’t I be doing this from Vietnam? Why can’t I be doing this from Thailand?’” she said. “I think COVID has made people re-evaluate.”
“Everyone’s doing it for different reasons,” Caissy said. Some love to travel. Others want to work in the mornings and surf in the afternoons. But the unifying motivation for people who become digital nomads, he said, is “they want to escape the current system they are in.”
How Do Digital Nomads Pay Taxes?
Money is a big hurdle for would-be digital nomads. Not everyone can afford months-long hotel subscriptions or Airbnb reservations, let alone accrue enough savings to cover a big move or travel expenses.
And even if they could, many jobs, such as blue collar and service industry ones, require workers to stay in a fixed location. And plenty of people have responsibilities as caregivers for which they have to stay put.
Those cases aside, a lingering issue that remains for many aspiring digital nomads is the complexity of the U.S. tax code.
Even for Americans who want to travel within their country’s borders, different states treat taxes differently. So knowing how to report your income if you travel to different states for months at a time quickly gets confusing.
“There are some states where as soon as you start working there, you’ll owe money,” Eileen Sherr, the senior manager for tax policy and advocacy at the American Institute of CPAs, told CNBC. “Those states will make you file a non-resident return and have withholding.”
For Americans who want to travel internationally, the situation gets even more complicated. And U.S.-based employers aren’t typically keen on wading through a tangle of international tax codes.
The New York Times reported on the story of a tech company employee who traveled to Canada to work after her office closed. Several months later, the tech company gave her an ultimatum: Return in two weeks, or resign. (The employer didn’t want to be on the hook for foreign taxes.)
Freelancers aren’t able to avoid complicated tax issues either. U.S. tax policy requires citizens to pay income taxes, even if they’re living and working outside of the country year-round. And while the U.S. does have some treaties in place with other countries to limit double taxation, it still does happen.
Many Americans who move overseas won’t be able to take their banking services with them either. But opening a foreign-based bank account is considered offshore and reportable, according to Marylouise Serrato, the executive director of American Citizens Abroad. That’s one of the “tentacles” of the problem of citizen-based taxation.
The potential headache of dealing with international tax codes is enough to keep most American workers from making the leap into digital nomadism. Untangling a complex web of legalese and paperwork doesn’t sound like independence.
Like many aspects of the digital nomad lifestyle, it’s not always smooth sailing. But some find it worth the hassle anyway.
For Caissy, the logistical challenges of digital nomadism are a small price to pay. I asked him if he thinks he’ll ever quit the lifestyle, set down roots.
He said he’s open to someday having a home base while still traveling several months each year.
“But in terms of staying in one place without leaving? That’s probably not going to happen.”