Cross-border work may invite immigration, employment law, tax risks even in the short term
The lack of a universal definition of “digital nomad” is complicating regulatory approaches and hampering global coordination on tax and social security issues, according to the introductory “Digital Nomad Report” published by the International Bar Association’s Global Employment Institute.
The report indicated that as digital nomadism has become increasingly prevalent due to technological shifts and changing workforce expectations, multinational employers are facing complex compliance risks – especially in short-term, cross-border remote work. The report focuses on the immigration aspect of these issues, addressing the legal uncertainty with immigration frameworks.
The report also tackled employment law, employer responsibilities, taxation, and social security challenges.
“For multinational employers, the rise of digital nomads is less a lifestyle trend than a structural compliance challenge. Even short-term remote work across borders can trigger immigration, employment law, tax and social security risks if not properly assessed,” IBA GEI officers said in a statement. “Companies need to move from ad hoc decisions to coordinated, cross-functional frameworks that balance flexibility for employees with legal certainty for employers, protecting their business and ensuring compliance across all aspects.”
Digital nomads work remotely using the internet usually beyond their employers’ jurisdictions and do not enter a host country’s labour market. The report noted that digital nomads typically apply for tourist visas while conducting work activities; thus, governments have implemented specific digital nomad visa schemes as a partial solution. These schemes permit work only for companies based overseas and are largely based on employment contracts.
Countries in warm climates have introduced digital nomad visa schemes, as have Eastern European countries like Estonia. Nonetheless, jurisdictions differ in how they define and regulate digital nomads, complicating efforts to harmonize tax and social security obligations.
The “Digital Nomad Report” is the first phase of research in this area. The findings were pulled from a survey of immigration lawyers in 34 jurisdictions and a review of academic and industry literature.
Insights from surveys focusing on employment law implications and taxes and social security considerations are set to be released so multinational employers can access a comprehensive, cross-disciplinary framework for digital nomad arrangement management.
