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Is it Legal? Digital Nomads and Immigration (Part 2)
April 30, 2019
As technology continues to transform the way we work – laws and company policies struggle to keep up. One such case is that of the “digital nomad”.
What happens when the reality of immigration laws meets the hype?
(Part 2 of a 2 part series)
By Kent O’Neil
One of the more interesting developments to come out of the ongoing paradigm shift in the world of work brought by technology has been the rise of the “digital nomad”. The idea is often depicted in mainstream media as the long sought-after “holy grail” of work-life balance – the elusive marriage of the two seemingly incompatible partners of productive work and ultimate freedom. But what happens when the reality of immigration laws meets the hype?
Last week… we began our look at digital nomads – the changing nature of work and the struggle of immigration laws to keep pace with technology. We determined that digital nomads are indeed “working” under the current immigration laws of most countries – and thus, require work permits to legally pursue their livelihood. (If you missed it – Part 1 here.)
This week… the question on the minds of many aspiring digital nomads and their employers… If you are sitting on a beach in Thailand sipping a Singha or a Cha Yen and being paid…
Does It Really Matter?
Truthfully, no immigration officials are going to know if I switched on my laptop while on vacation in Thailand and finished this blog, emailed it to my editors in the UK, and then uploaded the final draft to a server who knows where.
Similarly, in most cases – no immigration officials are watching over the tanned shoulders of digital nomads on their laptops at the beach. In fact, with these foreigners spending money in the local economy, there is much reason for local authorities to just look the other way.
However, do not mistake a low probability of enforcement as an endorsement of the practice. There is still the possibility of problems. As the prevalence of digital nomads increases, the chances of it running into conflict with outdated immigration laws increases.
Interesting Case in Chiang Mai
Such was the case several years ago in Chiang Mai, Thailand. Depending on the time of year, and how you define “digital nomad” (there’s some dispute when a “digital nomad” is more accurately defined as an “expat”) – there are as many as 3,000 digital nomads living and working in Chiang Mai. This city in northern Thailand is often mentioned as the capital of digital nomadism in Southeast Asia – primarily because of the low cost of living, the relaxed and welcoming atmosphere, and the significant community of expats and nomads.
In 2014, digital nomads in Chiang Mai received a scare when reportedly 20 armed police and immigration officials showed up at the popular digital nomad internet café and co-working space Punspace. They checked passports and IDs of the 18 foreign nationals on the premises and detained those that could not immediately produce identification, transporting them by van to the immigration office. Those detained were questioned about their work and activities in the country and released the same day with no fines levied.
Afterwards, an unnamed official was reported as saying that authorities declined to bring any charges because the digital nomads were “doing nothing wrong”. While some digital nomads claimed this as endorsement of working in Thailand on tourist visas – no official statement or policy on digital nomads was issued by Thai or Chiang Mai authorities.
Apparently, a less-publicized incident occurred in 2018 in Ubon Ratchathani when local Thai police detained 166 Chinese nationals on tourist visas who were doing online stock trading at a “mansion”. Police questioned the Chinese nationals but filed no charges – stating they had no law to govern the situation.
While the outcomes in both instances were favorable to digital nomads – both highlight the risks of operating in a “grey area” of the law. Local officials may not understand the nature of digital nomads and the current laws do not give them much guidance. What could have happened in these instances?
Illegal Working
Immigration laws in most countries include penalties for “illegal working” – that is, foreign nationals working in the country without proper work visas or permits. Penalties for “illegal working” can include lump sum or daily fines, detention and possible jail time, deportation, and temporary or permanent bans on future visas and travel to the country.
As in the above case in Chiang Mai – authorities may also simply choose to look the other way. Enforcement of immigration laws on digital nomads is not likely to be high on the list of priorities. However, the possibility still exists of significant penalties if digital nomads find themselves in a situation where the laws are enforced. That possibility only increases if, while in the country, they experience other issues involving local authorities – a car accident, an altercation with a local, a dispute with a property owner, etc.
Lying to Immigration Authorities
Which also brings up the tricky issue of how to answer the common question posed of travelers when entering a country – “What is the purpose of your visit?” The answer is complicated for digital nomads.
If you answer truthfully, the answer is – “I’ll be here as a tourist and working at my job or business remotely online while I’m here.” However, it certainly opens the door to follow-up questions regarding your employment or business. Will an immigration officer at a border crossing understand the nature of digital nomads? Will they approve or deny entry based on their understanding of the law that does not address digital nomads? Further complicating the communication and understanding, you may not even speak the same language.
If you answer less completely with – “I’m here as a tourist.” – and you are later determined to be working in the country, you may be liable for visa fraud or lying to authorities. In most countries, this is an additional offense – also carrying potential fines, detention, deportation, and bans on future travel and visas. In many cases… the penalty for lying to immigration officials is worse than the penalty for the underlying infraction the person was trying to cover. The same concerns and consequences also apply when you are completing an application for a tourist visa.
What about Employers?
While most digital nomads are freelancers, some are contractual or de facto employees of the companies for which they work. If the employee does somehow run into conflict with immigration authorities, and authorities determine that he or she was working for the company at the time – the company could be potentially liable. In most countries, employers are subject to monetary fines for immigration violations of their employees.
Potentially more problematic might be the impact on the company’s current or future operations in the country. The company might receive a temporary or permanent ban on sponsoring foreign nationals for business travel or work in the country. Future visa or work authorization applications for other company employees may receive increased scrutiny or risk of denial. If the company is a licensed visa sponsor in the country, it may have its sponsor license revoked or downgraded.
In more extreme cases, companies can have profits from the worker confiscated or face civil or criminal liability if they knew of the employee’s illegal work in the country.
More broadly, there is certainly reputational damage when a company’s employee engages in any illegal activity. This can affect the company’s ability to successfully operate in the country and interact with government authorities on various levels.
“Digital Nomad Visas”?
In some digital nomad online resources and forums – you will occasionally see articles and blogs with titles like “10 countries with digital nomad visas”. However, there are currently no countries with visas specifically for the digital nomad situation.
The existing visas that are commonly cited as suitable for digital nomads are the various self-employed visas, freelancer visas, working holiday visas, start-up visas, entrepreneur visas, visas under certain trade agreements and treaties, or other temporary residence visas. Depending on the country, some of these options may actually be suitable for some digital nomads.
However, these existing options are typically going to carry requirements that seem counter to the true digital nomad ideal – of freely moving from country to country with little to no schedule or pre-planning. Self-employed or freelancer visas may be limited to certain designated professions or require showing a demonstrated need in the local economy. Working holiday visas typically have an upper age limit of 30 or 35. Start-up visas typically require business plans and some showing of benefit to the local job market. Many temporary residence visas permit working, but there may be income or means requirements.
The bottom line is… there are options available for digital nomads to legally work in many countries. However, those options do not include visa-free or tourist visas. Therefore, some degree of assessment and planning is required.
World’s First “Digital Nomad Visa”
While immigration laws in most countries are still far from catching up to the idea of digital nomads – there are some early signs of where immigration law might be going. Last year, the government of Estonia announced plans to introduce the world’s first Digital Nomad Visa sometime in 2019. While we have yet to see the new visa officially rolled-out, digital nomads and the companies that employ them hope that it sparks a trend that other countries follow in addressing this gap in their immigration systems.
Reportedly, once introduced, Estonia’s digital nomad visa will apply to non-EU nationals whose work is primarily online and not location-specific and offer stays in Estonia of up to one-year. The program is being developed in conjunction with the Estonian company Jobbatical that hosts an international job search platform that matches job seekers with digital jobs. The express purpose of the new visa is to bring immigration law in line with the modern reality of location-independent work.
Readers may recall that the Estonian government has been at the forefront of embracing technology in its laws and infrastructure. In 2014, Estonia launched its e-Residency virtual residency – which allows foreign nationals to establish an online residency in Estonia to access Estonian company formation, banking, payment processing, and tax situs. It allows foreign nationals to conduct business as an Estonian resident without a physical presence in the country.
Where Do We Go from Here?
In this blog series, it may seem that I am uncharacteristically playing the role of the naysayer. That is not my intention. As a former expat myself, I wholeheartedly support international experience as both a lifestyle and as personal and professional development. My intention here is to draw attention to the significant issues and considerations that need examined before blindly following the latest trends.
Technology will undoubtedly continue to evolve the world of work – and the opportunities this presents for us as individuals and organizations are profound and predominantly positive. For individuals – the digital nomad experience can be an amazing lifestyle and personal growth experience, whether on a long-term or short-term basis. For companies – allowing their employees to participate in digital nomad experiences can be an innovative method of attracting and retaining top talent, as well as a valuable professional development opportunity. (Possibly more on this in a future blog. Stay tuned.)
However, we must recognize that, at present, immigration law is struggling to keep pace. Eventually, immigration laws of many countries will update to accommodate digital nomads. I believe then we will see the use of such non-traditional work models as digital nomads used by companies on a much larger scale and with a more international scope. However, until that time, thoughtful consideration of the currently available options and the weighing of risks and opportunities must fill the gap.
This is the reason Newland Chase takes a comprehensive, strategic, global approach to corporate immigration. There is almost always a strategy to achieve your goals – but it takes planning, preparation, and sometimes… an experienced partner.
Considering innovative global mobility strategies for your company? Feel free to reach out to your Newland Chase immigration strategist or contact us.
Related content: Is It Legal? Digital Nomads and Immigration (part 1)
