[closewith]

No, it's a transitionary step before Governments introduce more comprehensive taxation regimes. You already can't work even a single day in many developed countries with becoming liable to the local taxation regime and as desirable locations developer, they inevitably have to restrict access due to overcrowding and taxation (along with visa availability) is the key lever available.

What AI is doing very effectively is allowing tax authorities to identify digital nomads illegally working in jurisdictions without registering for tax.

[oytis]

I think the purpose of digital nomad visa is exactly to get their taxes. As opposed to say Germany where it's close to impossible to work for a overseas company even as a citizen, not to say get a visa for that

[closewith]

No, that's not the case for the most part. For example, the Croatian digital nomad residence permit that this article is about provides an exemption to income tax for earned income while working for a foreign company and living in Croatia. This means that most digital nomads can work tax-free in Croatia.

This contrasts with, for example, Ireland, where not only does a digital nomad's income become subject to local tax on day 1, so does their company (if they are the beneficial owner).

Croatia's approach is excellent if you want many wealthy (compared to local standards) people to bring an influx of hard currency into your economy, at the cost of inflation. Eventually the benefits outweigh the costs and the government begins to subject digital nomads to local taxation and stricter visa rules.

[oytis]

What's the benefit to have rich people in your country if they don't pay taxes and don't create any meaningful amount of jobs?

[closewith]

The benefit is similar to remittances - you get a huge influx of hard currency as digital nomads freely spend their high salaries. That does create jobs and raises tax revenue through consumption taxes and downstream employment. It's very similar to tourism - digital nomads are effectively semi-permanent tourists.

However, like tourism, it causes inflation, prices out locals, and can detract from more sustainable, natural economic growth (the so-called tourism curse). So like tourism, developed economies inevitably place limits on digital nomads.

That can take the form of stricter visas, capped numbers, or by implementing tax reforms.

[FirmwareBurner]

Since digital nomads use the same public infrastructure and amenities as the people who live and work there, why shouldn't they also pay the same taxes?

[techcode]

Nomads and even more permanent expats use less of the infrastructure and amenities.

Not just for periods before and after they are living there - also during their stay.

For example. If they (nomads) lose their (remote) job - they won't get social benefits payments like the "locals".

They (nomads) also don't accrue retirement/pension which is usually part of income taxes.

And of course they pay all the other "taxes".

If they rent/buy anything - there's VAT. If they drive around in their car - they pay registration, insurance, road tax, highway tolls.

Pretty sure they also need to purchase some sort of health insurance.

[closewith]

I think it's up to each country. Some jurisdictions have done very well from allowing digital nomads.

Personally, though, I think they should be subject to local taxes and I'm glad they are in my country.

[mschuster91]

> As opposed to say Germany where it's close to impossible to work for a overseas company even as a citizen

That's by design of our employment laws. We are the ones whose social security system will have to pay up when the employer closes down shop or fires their remote employees over night, and we are the ones whose health system has to take care when people burn out from being overworked, so we demand that employers create a local subsidiary with people and bank accounts we can hold accountable when laws are being violated.

Oh, and we also want to make sure that people and companies pay their taxes.

[oytis]

I wouldn't say it is necessary by design, as it is not forbidden and definitely possible. It's just Germany can't handle the complexity of its bureaucracy. Every new government promises to alleviate the bureaucratic burden, but in the end only adds exceptions on top of exceptions making the burden even heavier. So for remote work setup either the worker or the employer should carry it, and it's rarely worth it.

[pjmlp]

As someone working mostly remote across DACH, it is possible, but naturally the official residence and taxes have to be here.

[mschuster91]

Well, that's what the problem is. When all you as an US startup want is to hire a single or maybe a dozen Europeans, you can either go and pay them in cash or as sole-proprietors and leave the employees to deal with the rest (as long as the US gov't gets its taxes, you're in the clear from the IRS point of view), you hire some intermediate body-shop, or you do it the proper way and pay a loooooot of money for a subsidiary.

[StopDisinfo910]

I think it makes a lot of sense personally.

You can contract with companies wherever you want as a company but you can only have an employment contract with a company based where the employment laws of your country applies.

[oytis]

It does make sense, but it also is pretty hard to work as a contractor being located in Germany. The main issue is that contractors don't by default pay pension contributions, so the pension fund hunts down those it considers "fake contractors" under a complicated and ambiguous set of rules.