Taxation of digital nomads: rates, benefits and features in different countries

Nowadays, remote work has become more mainstream than something exotic. Thanks to this, a new category of workers has emerged — digital nomads. These are people who work online, without being tied to a specific place or country. Living in this mode, it is important not to forget that each state has its own nuances in the field of taxation. Tax rates, available benefits, conditions for obtaining tax resident status — will be discussed further in this material.

Who are digital nomads?

Digital nomads are people who work remotely online and live without being tied to a specific country. They usually receive a residence permit based on income outside the country of residence. This category often includes freelancers, sole proprietors, and company employees working remotely.

Among the most common professions whose representatives become nomads are programmers, designers, editors, marketers, and SMM specialists.

Taxation of digital nomads

Taxation of digital nomads is a complex topic as it depends on many factors. The main aspects to consider are:

1. Tax residency. It determines in which country taxes must be paid. Usually, tax residents are those who live in the country for more than 183 days a year.
2. International agreements. Many countries enter into double taxation agreements to prevent citizens from paying taxes twice on the same income.
3. Types of taxes. Digital nomads may face various types of taxes, including income tax, value added tax (VAT), company tax (if they own a business), and social contributions.
4. Tax incentives. Many countries offer special tax regimes or incentives for digital nomads to attract them to their country.
5. Digital Nomad Visas. Some countries have introduced special visas for digital nomads, which are often associated with certain tax conditions.

Tax conditions in popular destinations among nomads

Now let's look at the taxation features in various countries popular among digital nomads.

Portugal

You can become a tax resident of Portugal by staying in the country for more than 183 days during the year, or by purchasing or renting real estate in the country.

The tax system is progressive, with rates ranging from 13.25% (for annual incomes up to €7,703) to 48% (for annual incomes over €81,199). Incomes over €80,000 are subject to an additional surcharge of 2.5%, and incomes over €250,000 are subject to a surcharge of 5%.

The income requirement for a nomad visa is €3,280 per month. This visa is valid for 2 years with the possibility of extension. There is an opportunity to obtain citizenship after 5 years. You can also include your family in the application.

As for social contributions, the employee pays 11% to the social fund and health fund, and the employer pays 23.75% for each employee.

In the summer of 2024, there was talk in Portugal about a return of the preferential NHR regime, which was cancelled in 2023. At that time, this regime implied a fixed rate of 20%.

Italy

Italy has also become a popular destination among nomads in recent times.

The remote work visa is a new way to attract digital nomads to Italy. To obtain this visa, you must have a stable income from abroad of at least €2,700 per month or €32,400 per year. You must also have at least €28,000 in savings in your bank account.

For residents who are just starting to work in Italy, there is a progressive tax scale: from 23% (for earnings up to €28,000 per year) to 43% (over €50,000 per year).

Since 2024, a special regime has been introduced for new residents that allows them to pay a flat tax on their foreign income. Digital nomads are entitled to a 50% tax break on their income during the first five years of residence in Italy. The break applies to incomes up to €600,000.

To benefit from the special regime, you must become a tax resident of Italy. This happens automatically when you register with the local authorities or if you have significant economic ties with Italy, for example, by staying more than 183 days in the country.

Example: The editor of an online resource moved to Rome on a new visa for remote work. Her income is €50,000 per year. Under the standard system, she would pay about 35% in tax, but thanks to a special regime for new residents, she can choose to pay a flat tax on her foreign income, significantly reducing her tax burden.

Greece

Despite high tax rates, Greece offers attractive conditions for digital nomads. The country has a progressive tax scale that ranges from 9% to 44%. The maximum rate applies to income exceeding €40,000.

To benefit from the maximum tax rate, you must have an income of €42,000 per year. This automatically falls within the maximum rate.

Greece has a well-developed infrastructure and a high standard of living.

Hungary

Hungary stands out for its attractive tax conditions. It has a flat income tax rate of 15%. This is one of the lowest rates in Europe.

There is a special visa called “White Card” for digital nomads.

Hungary also offers tax breaks for those who live in the country less than 183 days a year.

Example: A non-Hungarian programmer has received a "white card". His annual income is €70,000. Living in Hungary for 150 days a year, he does not pay income tax in this country, but must take into account his tax obligations in the country of his primary residence.

Spain

Spain attracts digital nomads with its climate, culture and many attractions. It has a progressive tax scale, which varies from 19% to 47% depending on income.

Spain has the “Beckham Law” – a special tax regime for new residents with a fixed rate of 24% for 6 years.

Another advantage is the ability to include family members in the visa.

Example: The SMM specialist moved to Madrid on a digital nomad visa. Her annual income is €60,000. Thanks to the “Beckham Law,” she pays a flat 24%, rather than the 37% she would pay under the standard progressive scale, saving her about €9,100 a year.

Read about personal experience of getting a Spanish digital nomad visa.

Malta

Malta offers the following conditions:

• A progressive tax scale that ranges from 0% to 35%.
• New 10% rate for digital nomads (from December 2023).
• The special resident status allows you to pay tax only on income remitted to Malta.

Example: A marketer has obtained a residence permit in Malta. His annual income is €75,000. By choosing a special resident status, he pays tax only on the €30,000 that he transfers to Malta for residence. With the new 10% rate for digital nomads, his tax will be €3,000 per year.

Cyprus

In Cyprus, a foreigner becomes a tax resident if he has spent more than 183 days a year on the island. You can also obtain resident status if you live in Cyprus for 60 days and fulfill certain conditions:

• Buy or rent property in Cyprus.
• Have close economic ties with Cyprus.
• Live in other countries less than 183 days a year.

In Cyprus, you can count on attractive conditions for new residents:

• A progressive tax scale that ranges from 0% (for annual income up to €19,500) to 35% (for annual income over €60,000).
• New tax residents who have not been taxpayers in Cyprus for the previous 10 years can reduce the amount of tax by 50%. This benefit is valid for 10 years.
• Simplified residency requirements (60 days).

Example: An SEO specialist moved to Cyprus. His annual income is €100,000. Thanks to the new resident exemption, he only pays tax on €50,000, which at the maximum rate of 35% is €17,500 instead of €35,000.

UAE

The UAE offers the following conditions:

• Zero income tax for individuals.
• Modern infrastructure.
• One-year digital nomad visa with the possibility of extension.
• Possibility of obtaining a resident tax certificate.

Example: The blogger moved to Dubai on a digital nomad visa. Her annual income is €150,000. She does not pay income tax in the UAE, but uses a tax certificate to optimize her international tax obligations.

Türkiye

Türkiye is becoming an increasingly popular destination for digital nomads. Some of its features include:

• A progressive tax scale that ranges from 15% (for annual income up to TRY 70,000) to 40% (for annual income over TRY 880,000, which is approximately €24,400).
• Long-term visa for remote employees.

Example: A copywriter moved to Istanbul. His annual income is €45,000. With proper planning and the use of tax deductions, he can reduce his effective tax rate to 25%. This makes Turkey an attractive option compared to many European countries.

Summary table of tax conditions by country

It is important to remember that when choosing a country to live and work in, it is necessary to take into account not only tax aspects, but also many other factors. Among them: quality of life, opportunities for professional development, cultural environment and personal preferences.