What nobody tells you about being a digital nomad

It’s been about a year since our lives descended into chaos and we didn’t have a permanent address in any continent. We had just exited the Schengen area as our work visa was up. Within the span of a few months, we had traversed Albania, Belgium, Romania, France, and the Netherlands (3/5 with a cat in tow). I kept wondering what the hell we were doing with our lives. There’s a simple answer: We had become digital nomads.

Maybe now that we’re back in a stable place, I’ve had time to process this hellish period that I put behind me and rarely discuss. These are some thoughts about our time as “digital nomads,”  the culture surrounding digital nomads, and how to be a responsible digital nomad. I don’t expect everyone to agree, but it’s based on my experiences.

A lot of people dream of having the flexibility to move anywhere on the drop of a hat and being able to untether themselves from the constraints of their lives: the bills, the commitments, and the contracts that are too hard to break. Sometimes life feels suffocating and you want to get out.

A lot of people often include dreamy luxury villa images, laptops on the beach, and smiling selfies in a post about digital nomadism. Maybe for them, that’s what their life is actually like, but I’m not particularly good at being able to see my laptop with glare from the sun.

Passport privilege

However, there’s another side to digital nomadism: privilege and visas. A lot of people tell others not to worry about visas and just go.   I’ve written previously about passport privilege and the ability to head up to another country without looking at the visa requirements is an immense privilege given the difficulty that many applicants with weak passports face in simply securing a one week visa.

Many people with powerful passports choose to ignore the line that states that you cannot work under your tourist visa.  I asked a lot of people how they dealt with visas while moving around. Most people that I talked to told me that they didn’t worry about it or hoped that nobody would ask.

One of the things that really bugs me about digital nomadism is that it’s for such a small fragment of the population. It’s for people who have the ability to work online AND who have passports good enough to enter countries without questions. The visa process for many people from developing countries requires showing massive amounts of documents to prove that they won’t try to work and actually promising not to work with the threat of deportation.

Why? A lot of countries not surprisingly want you to play by the rules if you’re going to work under the table. My current home of the Netherlands and a growing number of countries have an actual process for folks with online businesses. Simply, they want a cut of the pie and for you to pay taxes for the infrastructure that you’re benefiting from while living in their country.

As someone who believes in sustainable travel and giving back to communities, I realize that it’s unfeasible to establish a company in every country that you pass through, but if you’re based in a country for months on end, I think that it’s only fair to move your business over. I realize that it’s annoying tax-wise and bureaucracy wise, but if you care about where you are, it comes with responsibility.

Being a “responsible digital nomad”

What bothers me a lot about the digital nomad mentality is that people don’t want roots and they often want to reject the responsibility that comes with having a business abroad and living in a country where the average salary is a fraction of theirs.  It’s easy to say that Bali and Lisbon (and similar digital nomad hubs) are so cheap, but it’s due to the fact that local people need to afford to live too.

The average income in Indonesia (where Bali is located) is 183 USD monthly (CEIC data) while the average income pre-tax in Lisbon is €1,107. I often see people discussing how they spent $500-$1,000 USD monthly per person on accommodation in Bali or discussing how “cheap” €1000 on rent alone in Lisbon is.

I wonder how the locals feel and increasingly, we hear locals speaking out about the housing markets in many hubs spiraling out of control as rents are pushed up beyond the threshold of regular people who aren’t on Western salaries.

To be honest, I still feel bad when we snapped up a whole apartment in the center of Bucharest, Romania for what seemed like nothing to us. We paid ~200 euros for most of a month. 

Our host insisted it wasn’t an issue as she mostly lived with her boyfriend.  I still wondered if it would be better if that apartment was actually available to a local Romanian who wouldn’t need to commute in the terrible traffic. (I’ve since tried to stop using Airbnb.  It’s hard as temporary apartments are often thrown on Airbnb rather than on the housing market.) 

Paradoxes of a global economy

One of the paradoxes of a global economy, for now, is involved in the fact that there is massive inequality between developed and developing countries.

In fact, many digital nomad experts, such as the writer of the 4-hour work week recommend outsourcing to local vendors paying local rates while living for a fraction of your income while earning a Western salary.  (I wonder how long it is until clients use services like Fivver to outsource the labor directly. )  This aspect has been heavily dissected in the digital nomad community yet nobody wants to talk about the fact that locals are becoming wiser to this phenomenon by raising the prices for Westerners.

There’s no doubt that spending on the ground by digital nomads is great in places that could use the money. However, I wonder how closely it can be tied to trickle-down economics, which has been shown to increase income inequality on societies overall. If a digital nomad comes to an inexpensive hub, rents a house for $1,000 monthly, takes yoga classes, goes out to local restaurants daily, and hires a housekeeper, does the money truly make an impact in terms of making that place better?  

I argue no as those with the capital to invest in these businesses benefit most from these consumption-level services. Even if prices increase at locally-owned restaurants and services that cater to digital nomads, does it result in an increase in wages for the local employees? Does it make that society fairer and better? I hope so, but it’s not a given.  Sure, that digital nomad might be happy and living the dream, but what about the society around them?   That’s the crux of paradox here.

A lot of digital nomads want to keep their money local (a noble goal), however, it’s hard as long as we depend on the top 1% in another society to invest socially to create a society where the working class equally benefits as much as the wealthy from the presence of tourists and digital nomads. There’s no denying that more work is good in places with high unemployment, but generally service-sector work isn’t well-paying.

When I was in Lisbon, I met up with a friend who showed me around her neighborhood. She told me how increasingly restaurants and shops raise prices because those flocking to Lisbon for its affordability can afford it, even if those in the neighborhood can’t on their daily wages. In many parts of Lisbon, a nice cup of coffee is becoming a luxury item as the prices for an espresso triple.

Unfortunately, we’ve seen a similar trend in many digital nomad hubs where prices continually increase and locals are increasingly being pushed out of apartments to make space for high-spending nomads.

Local is a big keyword right now. Simply patronizing a local business isn’t enough to write off the impact of the digital nomad footprint.  It’s important to look more in-depth.  Is this business pricing out locals to cater to foreigners? Are those working at an establishment paid good wages for the region? Is your temporary home displacing locals?

I increasingly see people talking about local living. However, at the end of the day, are you truly a local if you eschew responsibility in terms of learning about a culture (e.g. language) and paying taxes to create a better society where you live?

Increasingly companies like Airbnb, WeWork, and other programmes with head companies in the United States are investing in creating new experiences for digital nomads.  They make it possible to book a month in Bali or Lisbon in one click.

I looked into living in a room in a luxury villa (owned by one of these companies) with unlimited coworking, air conditioning, and a community of nomads.  It costs $1043 USD per month for a room in Bali.  For some context, I pay less to live in the Hague, the Netherlands in a spacious two bedroom apartment. 

If you want to truly live local in a place, I believe that you have a responsibility to not just spend money on the ground, but also to ensure that your footprint doesn’t stomp over another’s.  Look where your money is actually going.  

Solutions to digital nomadism?

There are some solutions thrown out in terms of overtourism.  I don’t have a Ph.D in Economics, but I studied it.   There’s unfortunately not enough empiricial studies in terms of the impact of digital nomads, but I’ve read some related work to understand some solutions for creating a better world for locals and digital nomads.  (It’s speculative work and I’d love to read any follow-ups!)

Economists have widely discussed consumption-level taxes. These are taxes imposed on consumer-level goods, e.g. food, alcohol.  It can come in the form of sales tax or value added taxes.  

For developing countries, consumption-level taxes imposed on the general public can have negative impacts. However, what if a low to moderate consumption-level tax is focused in terms of services that cater to foreigners who stay for extended periods that account for individuals’ usage of public space/resources, would it work to make cities that are digital nomad hubs better? 

In Turkey, there was a paper published by several economists who surveyed tourists on whether they’d be willing to pay tourist taxes. Most tourists said yes if it meant improving infrastructure.  The average suggested tax amount was 5 euros (as a percentage of their trip), namely as it seemed like it would not impact their trip.  

In the case of digital nomad hubs, let’s consider a tax on the province/city-level with an extra 5% tax on accommodation rented out for longer than two weeks.  Assuming monthly rent is $1,000.  That’s only $50.  This is a small amount to many digital nomads who might spend $50 on a few days at a coworking space.

$50 would provide real money to help solve many of the issues that plague many digital nomad hubs: crimes targeting foreigners, poor public infrastructure, and weak social services.   Of course, corruption is a concern, however taxes could even fund an anti-corruption task force to improve the way of business in the region.

We see a lot of cities doing the opposite: doing everything to lure digital nomads over with the process of cheap housing, good wifi, and great coffee. That’s fine if it helps boost the local economy.  However, it can’t remain like this forever as indirect spending can only make so much of an impact.

Some attempts at consumption-level taxes imposed on lodging have upset those in the tourism sector not surprisingly, however limiting the impact to those staying in homes more than a certain period without paying taxes might be a start. If the funds are used appropriately to improve infrastructure and create a better environment for business, I could see this as a boon to the local economy if it improves life for both locals and digital nomads. 

There are entire websites dedicated to comparing infrastructure and amenities in cities around the world.   Imagine the impact for a city like Lisbon if it both attracted thousands of digital nomads flush with cash and the city reaped thousands in additional money that was earmarked for improving infrastructure?  It would provide an opportunity for a transformation.

Proper visas for digital nomads

One of the things that bugs me most about “digital nomadism” that it’s often a grey space as many governments have not yet set a policy in this regard. As long as governments/immigration doesn’t ask, people don’t tell.

Another possible solution includes governments including digital nomads in their business visa–and requiring that if you earn money online, you must apply for a certain visa that isn’t free. It’s a small amount compared to the income of many digital nomads.

In 2019, the first digital nomad visa will launch in Estonia and the government is betting that digital nomadism will be big business. By default, the Estonian government will only verify that their business is established in the country of origin although access to public services/goods (e.g. healthcare) will require contributing more funds.

We have yet to see how this visa will pan out, but I see it as a step in the right direction of recognizing that people can do business without a home and that digital nomad hubs require more than just consumption on the ground to pay for the key infrastructure that will attract more business.

We don’t live in a perfect world, but we need to change the dynamics at play. Individuals who are digital nomads need to look further at the impact of their footprints and countries need to create visas that encompass a modern world where all you need is an internet connection to work.

It won’t be an overnight revolution, but I believe that this is the beginning of a world with less inequality. Already on Fivver, developers from developed countries compete with developers from developing countries who undercut their rates for the same services.  Now, all it takes is an idea and an internet connection to get a business started. It’s only a matter of time until the developing world catches up and this imbalance won’t last forever. 

It’s unclear if people will go the route as digital nomad more and more as it becomes easier to work solely from a laptop. However, there’s no doubt that there’s big money at stake for developing and developed countries who are trying to open up their economies to new business.  It’s time that we sorted out the issues that it creates and thought about the potential of digital nomadism long-term for developing economies.

Have you been a digital nomad? How do you feel that the world should deal with digital nomadism?

Do you feel that digital nomads have an obligation to pay taxes where they live for a period? Any solution you see?

I’ve asked Sandra Henriques Gajjar, a sustainable travel expert based in Lisbon about her opinion about digital nomadism:

Like tourists, I think most digital nomads who come to Lisbon are misinformed about the current situation and the strain they sometimes cause. Others, I believe a minority, simply don’t care. Of course, the tourism board and the startup incubators and accelerators rave about the city, the weather, the hospitable people (we truly are), the food, and the great working and living conditions. But their average monthly income is higher than locals’ and most of the times, tax free. 

Affordable housing is the biggest problem for locals in Lisbon right now. News of unlawful evictions in historic neighbourhoods became the norm in the last five years. And guess what neighbourhoods appeal the most to foreign investors? For their “charm” and their “character” and their “typical vibe” — that, by the way, no longer exists as people imagine. 

I know a digital nomad, whose company is based elsewhere outside of Europe, and who rents an Airbnb apartment in the Madragoa neighborhood. He told me he knew he was part of the problem but he could afford it, so why not. Does he give back to the community? Yes. He shops locally, he employs Portuguese freelancers when he needs an extra pair of hands, he eats at local restaurants (not franchises), etc. For most local freelancers, myself included, this is not a bad way to balance things out, considering they’re not using public resources and utility bills (that are taxed) are paid by the Airbnb host/landlord.  

My concern is those digital nomads who only socialize with other digital nomads, who only frequent local businesses that speak English or serve food/drinks they’re familiar with, who choose their next location because it’s “cheap” (and there are so many implications for calling a destination “cheap”).  

We need to define what a digital nomad is and if one should be allowed to travel for work under a tourist visa.