Benedict, the digital Nomad

Many only see Benedict as the surfer boy. He lives in South Africa in Summer, spends Autumn in Portugal and Winter in Austria – snowboarding goes well with surfing. He plans to spend the Spring in Croatia, but has not yet planned any further. Benedict is a digital nomad. However, he is not a programmer or web designer. He simply works in the back office for the sales department of a German company.

Digital nomads are becoming more and more of a trend, because “Work from Home” increasingly is the new standard for employees. And if you’re not in the company anyway, why not on the beach in Bali? As long as you have a fast internet connection, you can work from anywhere.

Tax Opportunities for digital nomads

However, many digital nomads are still freelance or self-employed – and that offers fascinating opportunities for tax optimization. Most countries base their assessment of tax liability on the length of time one has been in the country. More than 183 days a year in a certain country usually lead to unlimited tax liability.

What if Benedict goes “all-in” as a digital nomad? Gives up his (tax) home in Austria and lives all over the world? What if only his passport reminds you where he originally came from?

Well, all states agree that even a pure digital nomad has to pay taxes somewhere. In case of doubt, if otherwise no more criteria apply and no other country can really make claims, then the right to taxation falls back to the country of origin. This is how most double taxation agreements regulate it. Americans have no chance anyway, they are always taxed in the USA.

Of course there are options for optimization. Our digital nomad can set up a company, for example in Cyprus. These only pay a tax of 12.5% on their profits. Combined with a residence in Cyprus (non-dom rule), the corporate tax can remain the only tax that has to be paid.

If this could be of interest to you, please contact us. The optimal way of implementation depends on various criteria, which can best be discussed in a video call.

Do not expect tax advice, we are not a consulting firm. We only share personal experiences with you.