This article is written by Meghan Benton and Kate Hooper, from the Migration Policy Institute, a nonpartisan, nonprofit think tank dedicated to the study of immigration and immigrant integration policy worldwide. Founded in 2001, MPI is located in Washington, DC with a sister organisation, MPI Europe, in Brussels.

  • The problem: Remote work is on the rise, but immigration systems are ill-equipped to handle the opportunities and challenges of working across borders.
  • Why it matters: Hybrid and full-time remote work practices are now the norm in a post-pandemic world but complex rules around immigration, tax, social security and employment laws mean that governments, employers and workers can’t fully capitalise on this trend.
  • The solution: Digital nomad visas can help international remote workers combine periods of work and travel, but to fully realise the benefits of remote work, ministries will need to work together with employers to create a more favourable environment for remote work.

The Covid-19 pandemic transformed the remote work landscape. Previously the reserve of tech-focused jobs (such as software engineers), a huge range of sectors and occupations adopted remote work practices during the pandemic. At the height of remote working in the US, more than half of paid work was carried out remotely, a tenfold increase compared to 2019. While the lifting of the state of emergency has largely meant a return to business as usual, working practices have been irrevocably changed.

One of the lingering questions facing companies, individuals and governments is how to facilitate working across borders.

Hybrid or full-time remote working arrangements are much more common, even as some employers try to incentivise a full return to the office, leading some companies to downsize or even close their office space, transforming some business districts as a result. While workers and employers alike are eager to capitalise on the remote work trend, in practice, they can end up navigating confusing rules on taxes, social security, employment law and immigration.

One of the lingering questions facing companies, individuals and governments is how to facilitate working across borders. The switch to remote work during the pandemic opened up new possibilities for workers to relocate to other countries and combine periods of work and travel. Some countries introduced tailored ‘digital nomad visas’ for these international remote workers, which offer special residence permits that allow people to work remotely for an employer based in another country or as a freelancer. For example, tourist destinations in the Caribbean, Europe and other warm climates offered the opportunity for workers to work from the beach, while other countries saw this as a route to market themselves as a hub for innovation or to attract high-net-worth individuals and their families for extended stays.

But digital nomad visas only scratch the surface of the opportunities and challenges of remote work. For one thing, most digital nomads just work on tourist visas for the comparative speed, ease and affordability. While tourist visas prohibit work for a local employer, they usually don’t specify the rules around remote work — which means that in practice, digital nomads end up operating in a legal grey area. Limited oversight of this digital nomad population prevents governments from tracking this trend, and potentially managing any unintended consequences (such as the impacts on rent reported in Mexico City, for example). Meanwhile, governments have barely begun to think about the economic and demographic opportunities remote work may offer for bringing young families back into ageing Italian “ghost towns”, filling labour shortages in America’s heartland, or stimulating consumption spending in the north of England.

Digital nomad visas – glitter or gamechanger?

As of March 2023, 38 countries and territories have introduced digital nomad visas, according to data collected by Fragomen law firm (provided to the authors for use for an MPI research project). Initially, digital nomad visas offered a chance to revitalise hard-hit tourism industries by allowing digital nomads and their families to temporarily relocate for a period of months or even years, and in doing so, boost the local economy. The Bermuda Business Development Agency, for example, marketed its natural beauty, good weather, relative proximity to New York City (via a short flight) and high standard of living as part of the appeal of working remotely from Bermuda. These early programmes, however, drew a bright line barring local work, whether working for a local employer or even conducting business meetings with local firms.

Three years on, more and more countries are introducing their own digital nomad programmes to compete for international remote workers. The favourable terms that are now on offer include reductions or even exemptions in paying local taxes, allowing digital nomads to stay for longer periods of time and even moving away from the “temporary” nature of older programmes by providing routes to qualify for other visas or even permanent residence. For example, Colombia’s digital nomad visa, introduced in October 2022, allows people to stay for up to two years and is also open to people looking to set up a business in digital technology in Colombia; while Spain’s digital nomad visa which opened in February 2023 offers a 12-month visa that can be renewed for up to five years (which would qualify holders for permanent residence), provides reduced tax obligations and allows freelancers to earn up to 20% of their income from Spanish firms.

Untapped opportunities

Digital nomad visas are just the starting point. Also promising are wraparound services for remote workers, ranging from relocation support to co-working spaces, to social programming helping new arrivals connect with other digital nomads and locals to reduce social isolation. Portugal’s Madeira Islands, for example, launched a digital nomads pilot project in 2020 to compile information and resources for digital nomads, provide special offers for accommodation and local restaurants, and set up free co-working spaces, prompting 11,500 registrations in the first five months from interested remote workers.

More needs to be done to bring immigration systems into the era of remote work. Government will also need to address challenges that go beyond the realm of immigration, such as tax, payroll, employment and labour laws, benefits (including pensions), licensing and permit issues. These thorny issues mean that, for now, there is a significant gap between the flexibility that employers would like to offer on remote work and what they feel practically able to offer, as our research has found. As a result, there is a risk that employers may end up being conservative in their hiring or relocating jobs, representing lost tax revenue.

As more people can perform their duties partly or fully from home, there may be less need — in some sectors at least — to move people to the jobs, rather than moving jobs to the people. Many immigration policymakers have been myopically focused on human capital and labour shortages, without paying attention to how firms make decisions on where to locate jobs. In a world of remote work, the “race for talent” will have to include strategies for encouraging workers and jobs into a particular territory — including by creating a favourable environment to remote workers (who may be working for firms overseas), and ensuring visa processing is swift enough so that companies do not send workers elsewhere.

To bring their remote work strategies into the post-pandemic era, governments need to support joined-up thinking across different ministries, to protect remote workers (like other people with non-traditional working arrangements, such as freelancers and gig economy workers), and deliver on opportunities for economic revitalisation and innovation.

👋 You can write an article like this one! Share your thoughts with a community of public servants. Learn more

(Image Credit: Unsplash)