Digital nomad vs. Self-employed expat: what’s the difference?

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By Su Guillory

The idea of ​​showing up to the office every day is quickly moving towards the dodo, thanks to a certain pandemic that will not be named.

The advantage? Those free-spirited people now have more opportunities to work and live abroad.

If you’ve fantasized about pecking away on a tropical beach somewhere in the world with your laptop, that may not be such an unattainable dream these days.

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The emergence of the digital nomad visa

Countries around the world, especially those that could benefit from a little extra income, are starting so-called a visa for digital nomads. This visa allows a person who works remotely to stay in a country temporarily. In general, a digital nomad visa does not allow you to conduct business in your country of residence. You may be able to extend the visa if you meet certain qualifications.

Portugal is one of the most famous countries that offers a digital nomad visa, but it is by no means the only one. Other countries in Europe that offer them are Georgia, Croatia and Iceland. In other parts of the world, you can find digital nomad visas in Grenada, Panama, Dubai, Sri Lanka, and more.

Sometimes the visas are actually called a “digital nomad visa”. Sometimes they are called different things, but they come down to the same thing.

The self-employed expat

This is the category I fit into. I own a remote content writing and expat coaching company, and I live in Italy. I am here on a self employed visa.

A major difference between the digital nomad visa (which is not currently available in Italy, although legislation has been passed approving it) and a self-employed visa is that the latter allows expatriates to participate in business activities in their new country. have to pay taxes there.

The self-employed expat more than likely plans to stay in her new home rather than flitting from one digital nomad-friendly country to another every few months. The self-employment visa also does not require you to work online, although in many countries you are better off making money in your home country as it can be difficult to find a job in another country. country due to job availability, qualifications and language barriers.

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More differences between the two

Another difference between a digital nomad and a self-employed expat is that a digital nomad is not necessarily self-employed. If your employer is willing for you to work in another country, you can become a digital nomad as an employee.

Self-employed expats must register their business in their new country. This may include getting them some sort of corporate identity number (in Italy, this is called a Partita IVA) so they can report income and file tax returns both in their own country and in their home country. (My advice? Get an accountant as soon as you settle so you understand what kind of reporting and billing you need to do to comply with tax laws.)

Typically, digital nomads only refund income tax in their country of origin. However, self-employed expats may be required to pay in both countries. Tax laws are murky between the lines, so I won’t go too deep here. But as an example, there is an agreement between Italy and the United States that states that I will pay self-employment taxes in both the US and Italy, but my US taxes will be reduced by the amount I paid in Italy (I think I’m right, I haven’t filed a tax return yet!). I continue to pay Social Security in the United States, although I had the option of paying the equivalent here in Italy.

The ease of obtaining both types of visas will vary depending on the country, how many people are applying, and whether there is a quota or not. I was told that the self-employed visa was very difficult to get in Italy because there is an annual quota of the number of people they approve for it, but then I got it without any problems. Some countries seeing a deluge of digital nomad visas may start slowing down the number of applications they approve.

Is a self-employed expat a digital nomad?

There is a lot of hype surrounding the term digital nomad. It’s sexy and Instagrammable. If I dig into what I think is the ethos of the term, I envision a digital nomad as someone in their twenties who can work anywhere, choosing to live in Bali for three months, then India, then Panama, and so on. Of course, that’s stereotyping, since digital nomads can be of any age, and they don’t necessarily have to go to the countryside.

For me, I identify as a self-employed expat. I am in Italy for the long term and I am establishing my roots here, both professionally and personally. I wade through the complexities of accounting and tax filing because I want to make a meaningful contribution to the country I’ve chosen to be my home for the foreseeable future.

About the author

Su Guillory is an expat coach and business content creator. She helps women through the transformational process of moving abroad so they can live happier, more authentic lives. Su has been published on AllBusiness, gotechbusiness.com, SoFi, Lantern, Nav and more.

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