The ways digital nomads earn money and handle taxes have become increasingly popular topics of interest. With advancements in technology and the widespread use of the internet, more and more people are choosing to work and live as digital nomads. Digital nomads can generate income through various means. They engage in different types of work, such as writing, design, programming, translation, and even establish their own online businesses, selling products or services. They may also earn income through advertisements and sponsorships on platforms like blogs, social media, or YouTube.
Discover Unnoticed Aspects of Real Life
The lifestyle of digital nomads is often ambiguous, and there are different interpretations of what it entails. Some believe that digital nomads frequently change countries and cities, while others may consider it as simply not living in their home country. Let’s explore how different YouTubers describe the digital nomad lifestyle.
Challenges in Finding a Place to Reside
In a video titled “5 Scary Truths about The Digital Nomad Life” by YouTuber Wolters World, he mentions the following:
“And then, another tough thing is just finding a good place to live can be tough. Like Portugal is super popular for digital nomads because it’s affordable, the people are super nice, they’ve got great internet. I mean, it’s just a fun place. I mean, you got a great place here, great weather. You have those, but you notice if you want to be a digital nomad, you kind of feel like you have to go to different places. If you’re a digital nomad and you just stay in one place for two years, three years, is that really a digital nomad? Is that just somebody that’s working in another city, you know, and that’s just it? So you got to think about things like the safety of the city you’re going to go to, the internet connections that are there, what else is there to do there, what else can I work with there? Okay, so there are things you got to think about because though you get 16 shots at the beach when you’re going out there, if you don’t have internet to upload, it doesn’t help you really grow your Instagram or your Vlog or your blog. So that’s one thing you kind of have to think about, is where am I actually going to live?”
The Need for Thorough Research
While we often see the one-sided benefits of being a digital nomad, what are the actual downsides they face?
In the same video by YouTuber Wolters World titled “5 Scary Truths about The Digital Nomad Life,” he touches upon the importance of this aspect:
“Another thing I think is really important to mention is if you’re going to do the digital nomad lifestyle, you don’t have a safety net. There’s no parent you can go see, no friend you can go stay with if something happened. Because you know what? Sometimes bad things happen. I’m not going to lie to you. Sometimes bad things happen to you as a digital nomad, and you’ve got no one to turn to. You don’t know how the system works in the country. Who do I call, the police, the ambulance, lawyer? What do I do? These things, you just don’t have. That’s why it’s really important when you are going to be a digital nomad in a country, try to meet locals that can help you, even if they’re just like people that are helping give you basic information. That’s why it’s really important to do your research before you go to any place to be a digital nomad.”
Learning Costs
So, what should you pay attention to when it comes to making money? In fact, many friends who want to become digital nomads receive a lot of impressions from advertisements and videos, but in reality, do they really work? YouTuber Wolters World mentioned in his video “5 Scary Truths about The Digital Nomad Life“:
“Another thing I think is very important is people don’t always talk about how their passive income streams really can help them out, but it takes a long time for those passive income streams to work. That’s why I’m sure if you’re watching this video, probably an ad before this or you’re on TikTok or Instagram, an ad popped up like, “Do you want to have the digital nomad lifestyle? Sign up for my 80-course that I can teach you how to be a digital nomad.” The thing is, they’re going to teach you and tell you, “Hey, you should do a class about telling people how to be digital nomads and sell that class, and that’s going to help you pay for your living abroad.”
Look, I do pretty well on YouTube. I’m not gonna lie to you, like it pays more than my bills, alright. But the thing is, it took me four years to start making any money online. It took me eight years, so I had an income that I didn’t have to have any other job. This is something you have to think about. “
Feeling of Loneliness
As digital nomads, many aspiring individuals find it exciting to meet different groups of people, but is it really like that in reality? YouTuber Wolters World mentioned in his video “5 Scary Truths about The Digital Nomad Life“:
“But the thing is, there’s a lot of not fun parts of it, and I’ve done that lifestyle. I have lived that lifestyle before, and I’m going to tell you there are things that people don’t bring up. And the biggest one out there is just, you’re gonna be lonely. It is a lonely life being a digital nomad, because you are by yourself going around, right? And yes, you can make some friends when you travel, but a lot of times it’s just other digital nomads, and they’re nomads as well.
So they only stay a little bit of time and they leave. So you have more meetups, and you’ll see this online. “Oh, I had a great meetup with people.” A meetup isn’t a date, a meetup isn’t hanging out with friends, a meetup isn’t like going to a game and bonding. It’s a meetup, it’s more like a business transaction, and therefore you get very lonely. And the reason why I’m filming this here in Lisbon at the Expo, my first year here, I actually lived right over there, like right past these buildings over there, and I would come and have dinner by myself night after night after night at the Expo, sitting there having my toast with goat cheese and honey, the Irish Pub alone. And I’m telling you, I mean, it’s one thing if you’re eating lunch alone every so often, or dinner alone so often, sometimes you’d like, they’re like, “Oh, get away with my friends and family,” just like me and my meal. I don’t have to worry about anything. That can be fun. But once again, and again, and again, that loneliness really hits you. That’s why depression and sadness really can be overwhelming for some people that do the digital nomad lifestyle, and that’s why they stop. It’s just the loneliness is out there because it’s hard to make friends.
I mean, I’m gonna tell you right now, celebrating your birthday and no one’s around, celebrating an important holiday to you and nobody’s around, that hits you right here. Yeah, I remember I was living in Lithuania, and it was Christmas Eve. I didn’t have friends to do anything with. I couldn’t get home to see my family. I was literally sitting in my apartment, watching DVDs of Christmas movies. Thank God one of my co-workers gave me a call. She’s like, “Hey, would you want to come over to our house?” She felt pity for me, so I had something because it was like the most depressing Christmas ever. I think that’s just the biggest thing, is that loneliness you get when you do these things.”
Taxation Issues
However, for digital nomads, taxation is an important consideration factor. Due to the cross-border nature of their work and lifestyle, which involves different laws and tax systems, they need to understand and comply with relevant tax regulations.
In terms of taxation, digital nomads need to consider the following aspects:
– Tax residency: Depending on the tax regulations of different countries, digital nomads may need to determine their tax residency. This depends on the time and conditions of their residence in a particular country. Tax residency will determine to which country they need to pay taxes.
– Global income tax: Some countries impose taxes on residents’ global income, which means that digital nomads need to declare and pay taxes on the income they earn worldwide to their country of residence. Other countries may only tax income earned within their borders.
– Tax treaties and double taxation: Digital nomads may need to understand tax treaties between different countries to avoid double taxation. These treaties can ensure the fair allocation of tax responsibilities between two countries and prevent the same income from being taxed twice.
– Deductions and exemptions: Digital nomads can take advantage of various tax deductions and exemptions to reduce the amount of tax they owe. This may involve legitimate business expenses, social insurance, pension plans, and more.
– Financial planning and consulting: Given the complex tax situations digital nomads face, they may need to seek professional financial planning and consulting services. This will help them understand tax regulations applicable to their specific circumstances and devise strategies to minimize their tax burden.
Now let’s take a look at how YouTuber Travel with Rafa addresses tax issues in their video titled “Asking DIGITAL NOMADS how they MAKE MONEY and pay TAXES“:
“You said your business is based in Hungary.Yeah, uh, so you pay taxes there? Yes, I’m still the traditional paying taxes for Hungary also because I have property in Hungary and kind of, you know, like it’s on my name. I’m not using it. For example, in Hungary if I’m not wrong, if I check out for, so if you have an LLC, you still need to tax in your home country depending on the contract that you have from with the US, like your country needs to have an anti-tax anti-double taxation law. I’m just as far as I know, and we don’t have it with, so that’s that would not be an option for me because I would need to Ste to take it out from Hungary exactly.
So, another option that people do is that they check out from Hungary, like check out from the country where they play taxes and then find residents somewhere else, which would make sense. And I think I would like to pay taxes continuously. Like, I think taxes are essential. I think we should not cheat on that one. The main problem if you are not actually in the country, it doesn’t make sense. It’s just like, where should we pay taxes? I think the infrastructure for Nomads and location dependence are still not there for us to be like, it would be a healthy system. “
Regarding taxation, it’s difficult to define whom we should pay taxes to. The video “Asking DIGITAL NOMADS how they MAKE MONEY and pay TAXES” by YouTuber Travel with Rafa mentions:
“But yeah, so first of all, you have to consider when you are a nomad, you’re always operating in some kind of gray zone because the world is not ready for a nomad at the moment. So in normal life, you are a citizen, you get a job somewhere in a corporation, in the company in your home country, and you work there all your life, and then you retire. So for the system, it’s very easy to let’s say gauge you, right? Who you are. So basically, you’re earning money, you’re paying taxes there.
And that’s also like where you eventually retire. So being a nomad comes with its own challenges, right? Because the tax systems of this world, they are not ready for Nomads. So first of all, I want to say that being a nomad means you need normally a home base. That’s option one. Option two is you have no home base anymore, and the setup is usually very different in those cases. Because if you have a home base, your country allows you to travel a certain amount of time before you become a tax resident of some other country. Most of the time, it’s 183 days. You have to be in the country. Also, why I am a part-time, so I spend most of my time in my home country, and taxes are there. But if you decide, for whatever reason, to give up your home base and become, let’s say, a real nomad without a home, stateless, yeah, um, then very different rules are applying, actually. And this is actually where the gray zone is really starting because when you don’t pay taxes to anyone in the world, let’s say you don’t have a home base, it means also that you might not pay taxes anywhere in the world. So, for instance, what Nomads do a lot is they de-register from their home country, and then they start, for instance, a US LLC. What exactly is the American LLC? Technically, it’s a limited liability Corporation, and this company is being taxed where you are based. But if you don’t have a base, you’re not being taxed on this. Exactly. That’s in theory. So please, please confirm this with the experts.
I wonder where this is going to go with because now I think remote work is getting is becoming more and more famous, and people are starting to get into the nomadic lifestyle. And I think the government of the countries will have to come up with a solution. ”
In general, how digital nomads earn money and pay taxes is a matter that requires careful consideration and planning. It is essential to understand the tax regulations of one’s own country and consult with professionals to develop a suitable financial plan based on individual circumstances. If you have any specific inquiries, you can consult our website for more information. We also hope that you can fulfill your tax obligations in a legal manner while enjoying the freedom and flexibility of the digital nomad lifestyle.
This article references the following video sources:
https://www.youtube.com/watch?v=J1D-ld1PJWM
https://www.youtube.com/watch?v=97hwUDG0VEU
If you have more questions or need assistance with tax-related matters, feel free to leave a message or add our official WeChat account to access a range of professional services, including tax planning, consulting, immigration, and digital nomad assistance.
