There's momentum building to make remote work a reality at some of the more progressive multinational companies, but the question of travel policies and tax liabilities could prove too much of a headache.
Countries dependent on tourism wasted little time in promoting themselves as ideal destinations for the new wave of companies with work-from-anywhere policies. But their calls are likely to go unanswered by bigger companies, despite their media-friendly announcements they’ve embraced this brave new world.
Sunnier climes including several Caribbean islands and Dubai, as well as countries like Iceland, Estonia and Georgia, launched dedicated “digital nomad visas” to stimulate local economies during the pandemic.
They’re targeting “knowledge workers,” as well as freelancers who traditionally fall into the nomadic bracket, with longer stays of up to two years in some cases.
Paradise comes with strings attached in the form of a salary threshold (or healthy bank balance), plus proof of employment and medical insurance. Iceland, for example, requires a minimum monthly pay of almost £8,000. Estonia asks for at least $4,200 a month. Barbados stipulates an annual salary of at least $50,000.
It’s a dream scenario for salaried workers whose organizations haven’t just embraced the work-from-home concept, but went all in with work-from-anywhere. But bosses may not be ready to let them go just yet.
The Evolution of Mobility Platforms
“We believe that the time to start transitioning into becoming a flexible/distributed-first company is NOW and we’re pleased to introduce our Work From Anywhere program for all employees,” Spotify wrote on its blog.
The noise generated corresponds with a similar buzz in emerging talent and mobility platforms that want to tap into the global hiring and employment trend.
In April last year, human resource platform Oyster raised $4.2 million in seed funding, and earlier this month secured $20 million in Series A funding. “There will be 1.5 billion new knowledge workers entering the workforce over the next 10 years, the majority of whom live in the developing world. These digital-native workers can work from anywhere with an internet connection,” said founder Tony Jamous.
Employees Are ready
A recent survey conducted by Topia, a human resources technology company specializing in global talent mobility, found that 79 percent of employees would consider moving abroad by the end of 2020 compared to 68 percent of employees at the beginning of the year.
Meanwhile, 28 percent of employees worked outside their home state or country during the pandemic, but only a third reported it to their HR department. Topia polled 1,250 employed adults across the U.S. and UK between Dec. 11, 2020 and Jan. 12, 2021.
One digital nomad told Skift that in Costa Rica, where he’s currently based, he has met a lot of remote workers. The country is currently drafting its own digital nomad visa, and National Assembly deputy Carlos Ricardo Benavides has presented a bill that aims to attract foreign visitors to the country.
“I’ve met tons of people,” said Mark Bresnahan, vice-president and general manager at travel data platform Prime Numbers Technology. “I’m in Tamarindo, which is a surf spot, and there are a lot of Americans and Canadians here.”
Through his work, Bresnahan is in regular contact with many corporate travel agencies and travel managers who use his company’s software, and said there’s currently a lot of talk about this going on, in particular among technology companies.
“Travel managers are trying to figure out how to deal with their travel policy, and the cost for their organziation in this post-Covid world, because generally everyone used to live around this office hub. They’re anticipating a shift in the locations of their employees, so for recurring meetings, what will it cost to bring them in?” he said.
Several companies are looking to implement work-from-anywhere for at least some sets of their employees on a permanent basis, he added.
Meanwhile, on the accommodation and supplier side, there are calls for governments to relax their rules to foster better relationships with larger companies.
“From a corporate point of view, it’s not as easy as the media is saying,” said Vivi Cahyadi Himmel, founder of corporate accommodation specialist AltoVita at a recent webinar on short-term rentals. “From a human resources perspective, it creates a challenge. Many companies have expressed that they can’t allow remote working without a legal presence or entity in that region.”
She said governments need to focus on this trend, and create a working environment that works for the talent and the corporates.
“Immigration laws have not kept up with technology and the regulations of most countries still assume work must take place in a physical office,” said global immigration consultancy Newland Chase.
Trouble in Paradise
While there’s understandably interest in the remote-work lifestyle, could it also have been a knee-jerk reaction from tourist boards and destination marketing organizations? Despite the rise in countries touting these new visas, one relocation expert said tax legislation can’t be rewritten overnight.
“Spotify won’t be able to solve the tax rules. They’re great at creating music apps, but they won’t take the risk,” said Nitzan Yudan, founder and CEO of human resources technology company Benivo, which has been helping to house Google employees for seven years, and has other clients including KPMG, Bloomberg, Allianz and Hertz.
“Tax rules between countries are not just too complicated, but too established. I don’t believe in work from anywhere — I’ve done a lot of research with companies, and it doesn’t exist … It requires 100 companies to agree on a new tax treaty, that’s a 10-year project,” he added.
A significant risk is employees risk establishing permanent residency, so the country could claim they are generating revenues and need to start paying taxes on all that revenue. Countries will be keen to get their hands on as much money as possible following the economic hammering from Covid.
“The investment banks in London are telling staff, if you don’t return, you’re taking the liability of the company taxes,” Yudan said, adding that a mix of different time zones can hinder collaboration among colleagues. Goldman Sachs boss David Solomon has reportedly rejected remote working as a “new normal” and labelled it an “aberration.”
It Takes A Village
However, there are efforts being made by some countries to relax their tax rules.
“Estonia’s visa allows people fully employed outside of the country to live in Estonia without the normal work permit, local employer and other compliance headaches,” said Steve Black, co-founder and chief strategy officer at Topia. “With this visa, you don’t have to file Estonia taxes, you keep your home country pension, and it lasts for six months.”
It’s also difficult to assess the impact of the countries’ visa efforts at this moment in time. Many launched in the summer, before the second and third waves of coronavirus. In the past few months it will have been challenging to travel.
To date, Iceland has received just 65 applications for its remote work long-term visa, according to figures published by its Directorate of Immigration on Tuesday.
“Most applicants appear to be freelancers, although this is purely my estimation,” said Parker O’Halloran of Business Iceland. “I am not aware of any plans to extend the visa scheme to large organizations. From the Directorate of Immigration’s perspective, this would be a lot of work. They really do not want to touch the tax concerns of international workers or companies, I believe,” he added.
O’Halloran said he has spoken to people who are frustrated by the tax issue because their company’s human resources policies do not allow them to work from a foreign country, or classify them as contract workers.
Since last summer, more countries have been developing their digital nomad propositions, with one destination in particular putting the “remote” into remote work: Madeira.
The autonomous region of Portugal, located hundreds of miles off the northwest coast of Africa, launched a Nomads Village in Ponta do Sol at the start of this year, with a dedicated website plugging into local accommodation suppliers.
It is running from February 1 until June 30, and offers free working spaces.
“As more countries accept this new reality and adjust to allow foreign nationals the opportunity to work remotely inside their borders, expect an increase in the number of governments warming up to the idea of new immigration categories that meet today’s reality,” consulting firm Newland Chase added.
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Photo credit: Ion Adventure Hotel in Iceland. Roan Lavery / Unsplash