How to become a Digital Nomad – and if it’s right for you

So, you want to be a digital nomad. You’re tired of the daily grind and want a career change. Perhaps you’ve read up on the digital nomad visas on offer and have a country in mind.

Becoming a digital nomad is a big decision. It’s not as simple as throwing a dart at a map – there are plenty of legal, financial, and personal factors to consider. As digital nomadism is still a new concept, it’s smart to read up on what the lifestyle entails before you jet off.

We’ve pulled together the below guide on what you need to do to become a digital nomad this year. We’ll cover everything from how much money you’ll need to how you’ll pay tax, giving you the know-how you need to turn your dream into reality.

What to consider before becoming a digital nomad

It’s easy to picture a digital nomad as a relaxed, hawaiian shirt-clad worker, sipping a cocktail on a beach somewhere with the laptop lid down. But it’s important to remember that, in reality, the definition of a digital nomad is not as glamorous as it looks on Instagram.

Before you decide to become a digital nomad, we recommend asking yourself a few key questions to figure out if this is really the lifestyle you want. Sometimes, people who think they want to work remotely will discover that what they’re really chasing is some time off.

1. What work experience do you have?

Most people in a digital nomad job recommend it is done remotely. While not impossible, it would be a logistical nightmare to start selling cleaning services while travelling, for instance.

Consider your CV. If you are a barber, you might be better off retraining for an in-demand digital nomad job. For example, copywriting, web development, or graphic design.

2. Do you actually just need a holiday?

Many people are turning to working as digital nomads because they are experiencing high levels of stress and burnout in their office-based roles. If you feel you need a break, try going on annual leave instead. Taking a few weeks off work might be a less drastic solution.

3. Do you want to be a digital nomad, or a remote worker?

There is a lot of overlap between remote work and digital nomadism, but also one key difference. Remote employees move abroad for short periods of time (also known as taking a workation) but they will usually stay in one base long-term, rather than globetrot.

Digital nomads move out of their home and travel the world on a permanent basis, without anywhere to go back to, which can be more stressful. It requires a bigger commitment than just taking a remote job.

4. Where do you want to go?

Experienced nomads can make last-minute travel decisions. When you’re just starting out, though, it’s smart to plan the first few stops.

Today, over 50 countries offer nomad visas. Examine each option individually, considering things like internet speed and safety. Debate if the place aligns with your personality, goals, or budget. If you’ve not travelled much before, carry out test runs in European countries.

5. What resources do you already have?

It’s possible to be a digital nomad with minimal savings, but not advisable. Knowing where you are planning to travel will help you with budget planning before you take the leap.

Aim to have enough money in the bank to sustain yourself for three to six months without work. Do your research as well – some countries, particularly those in the Caribbean, require digital nomad visa applicants to have a minimum income or savings amount.

How to switch to a digital nomad job

The process of becoming a digital nomad will depend on your employment type. Let’s break down the key differences, and how they might influence your path.

If you’re an employee:

If you’re someone who needs financial and job security, working for a company full-time is a smart idea. It ensures you will have a guaranteed income and set work hours.

If you are already in a remote role, and your company is happy to employ a worker based abroad, you might be able to transition smoothly. Otherwise, you will need to look for jobs at companies with a flexible organisational culture and that are willing to hire digital nomads.

This route has its challenges. Time zone differences and work-life balance can be hurdles if you’re having to meet deadlines and attend virtual meetings while on a different continent.

If you’re self-employed:

Working as a sole trader, whether freelancer or contractor, will give you full control over your work location and hours. But, like any transition into self-employment, it requires planning.

Starting a stable income stream might be challenging initially, so establish your client base first. Networking is paramount to helping you find potential leads from experienced nomads.

Similarly, take the time to build a professional website or portfolio that showcases your work and skills. This will make it easier for international clients to find and contact you.

Read up on each country’s legal and tax landscape. International freelancers may be subject to double taxation, and you may need to file a local tax return to correct this (more on this below).

Finally, make sure that good infrastructure is at the top of your wishlist for each new country. If you need to fulfil briefs and meet deadlines, you will need a strong Wi-Fi connection, plenty of desk space, and a stable supply of electricity.

If you’re an entrepreneur:

The best route to becoming a digital nomad is to start your own business. This may sound more daunting than it needs to be. Depending on the idea, you can earn a passive income (where your earnings require little effort to maintain). For example, nomad dropshipping.

Whatever the idea, ensuring the business can operate remotely is essential. Establishing the right systems and tools for remote management is time-consuming, and it may take months to start earning a steady income, so take care of the setup before you buy your plane tickets.

Tax implications of being a digital nomad

Dip your toe into online tax forums and you’ll end up submerged in a cesspit of conflicting and confusing advice. That’s because so many of the rules are contextual. Where, and how much, you’ll pay in taxes each financial year will depend on:

• How many days you spent in the UK
• Which countries you visited
• How many days you spent in each country
• Your employment type

It’s also essential to note that digital nomad tax laws are extremely volatile. Nomads are still a relatively new concept, and governments change their stances on the practice every day. Staying informed about tax changes is a must-do for digital nomads.

1. How many days you spent in the UK

Currently, if you spend fewer than 183 days in the UK per year, you may qualify for non-resident status. That means you only pay UK tax on income arising from UK sources (for example, rental income from a UK-based property or interest from a UK bank account).

If you spend six months in the UK and six months in another country, you might be classed as a dual tax resident. The UK has double taxation treaties with most countries to ensure Brits don’t pay tax twice. Examine the treaty to determine which country you’ll pay tax in.

2. Which countries you visited

Some countries have special tax exemptions, full or partial, for digital nomads, which means you won’t pay tax in that country on earnings from a foreign source.

For example, Malta tweaked its tax rules at the start of this year. As a result of the change, the rate of tax for Nomad Residence Permit holders has lowered from 35% to 10%.

3. How many days you spent in each country

Alongside tax treaties, length of time spent in a region can also affect your tax bill. Most countries allow you to spend a set number of days within their borders with just a tourist visa.

If you plan to stay in the country after this period of exemption is up, however, you will need to apply for a digital nomad visa, which will mean you are eligible to pay tax somewhere.

4. Your employment type

Tax laws for digital nomads differ depending on the individual’s employment status. If you are a full-time staff member, you will pay UK tax on your salary as it originates from a UK source.

If you are running a registered limited company, you will be subject to UK corporation tax on its profits, and you will also be charged UK tax if you pay yourself through dividends.

Things are more confusing for freelancers, as you may be working with clients from all over the world. Talk to a financial advisor who knows the local jurisdictions and can advise you on how much tax you’ll pay, and how long you could spend in each country to lower the bill.

Is being a digital nomad hard work?

Digital nomadism is an exciting opportunity for Brits to unchain themselves from the desk and have greater freedom over their career. It is not as simple as booking a holiday, though.

You’ve likely spent years working in a structured setting, and it may take time to master the skills required to thrive in a decentralised workspace. UK employees who are interested in making the move must weigh up the pros and cons carefully.

Pros and cons of being a digital nomad

The earlier you start, the better you can set yourself up for success. Don’t aim to become a digital nomad overnight. By first building the necessary skills, setting up an income stream, and researching destinations, you can likely turn many of the above cons into positives.

For example, exploring what coworking spaces are available in the area will ensure you move to a town or city with a proper work infrastructure. Choosing a well-trodden region for nomads is advisable to help you forge new friendships and balance work with play.

Whether you dream of a café in Lisbon, or a poolside Bali villa, by putting the hard work in now, you can curate the digital nomad lifestyle that works best for you and your working pattern.

Read about three new digital nomad visa schemes which were unveiled this year:

• Italy Digital Nomad Visa
• Japan Digital Nomad Visa
• Destination Thailand Visa