Building your roadmap for digital nomads

As the number of countries offering digital nomad visa options continues to increase, more and more people are being tempted to pack their bags and work remotely. And many companies are benefitting. Per CitizenRemote, there are now 66 digital nomad visa countries around the world, most offering a 12 month duration with the possibility to extend. Visa schemes for these employees vary, with some more restrictive than others when it comes to process and eligibility.  According to The Guardian:

One recent report said digital nomads “have moved from eccentrics to mainstream in less than a decade”, with one in nine (11%) US workers now describing themselves as one. Another said it expects the global number of digital nomads to top 40 million this year, and rise to about 60 million by 2030.

Additionally, almost a third (31.5%) of self-described digital nomads are now in full-time employment, according to a recent Flatio survey of more than 1,000 such workers. Many workers over the last couple of years have requested to keep their current job but live outside of their country of original employment, becoming permanent international remote workers.

With that said, this World at Work article asks, “… how can organizations craft policies and processes that capture and capitalize on the benefits of digital nomads — those world-traveling workers?” The reality is that according to WTW’s 2023 “Dynamics of Work" survey, only 21% of organizations were allowing globally remote work and had set up policies and frameworks around the concept. And as this phenomena continues, more and more companies will have to design an approach that is efficient and protects the company from compliance risks. Some of the items on the list to address are:

• Compensation. Will pay be based on a market geography or work value? 
• Nomadic schedule rules and options. Will the options be open or defined with duration ceilings for working in different locations? 
• Reimbursable expenses. What is the company willing to coverage for travel and bringing the employee into offices periodically? 
• Taxation. Probably the one that scares most companies. What is the employer or worker obligations for the tax costs, especially when there may be multiple jurisdictions at play?

That's where this article from GTN’s Jennifer Stein, published in Small Business Currents, can help. She points out first that tracking them is a major and critical first step, not just for dealing with the tax risks but for duty of care too. And the borders do not necessarily need to be international country borders, as she shares an example of a U.S. domestic state issue.

In an all-too-common situation, remote employees will work from multiple states or countries without alerting HR or payroll. In turn, the employee may end up owing extra taxes in multiple jurisdictions, or the company may misreport taxes. In a recent case, one remote employee may end up costing a company an estimated $500,000 because the worker didn’t disclose their working situation in Texas and California. If remote employees work across borders freely, they may risk losing benefits. For example, a remote employee will often move to a new state without informing their employer. As a result, they may end up working in an area outside of their healthcare coverage network.

On the international side, she points out that issue of considering and dealing with equity compensation. Those rewards may end up maturing within different country tax jurisdictions—and may trigger a higher tax bill than the employee expected. This surprise of lost benefits frequently frustrates employees and ends up hurting employee retention. 

Her three key requirements for the program: 

• Track employees really well, 
• Revisit your remote work policies 
• Institute rules that protect the company, and build out cross-departmental processes. 

For further reading and consideration, also check out these other related articles:

HR Professionals' Blueprint for the State of Remote Work: Discussing 2024 & Beyond

The Rise of Remote Work: How Companies Are Adapting to the New Normal

20 Tips For New Employees Navigating The Remote Work Environment