Do I need to pay taxes in my home country, my country of residence, or both? This is one of the questions I see popping up a lot within digital nomad communities.
The rise of digital nomadism has revolutionized the way people work and travel. With the raise of remote work, you can now live and work from anywhere in the world. You only need a laptop and a stable internet connection.
While this lifestyle offers unparalleled freedom and flexibility, it also raises questions about taxation.
As a digital nomad, do you need to pay taxes in your home country, your country of residence, or both?
In this article, I’ll explore the nuances of digital nomad taxation. I’ll also provide some guidance on how to navigate this complex issue.
Taxation is not a Generic Thing
Firstly, you should understand that taxation is a complex issue.
It varies significantly depending on your personal circumstances and the country you’re in. The tax laws in each country are different.
Moreover, you need to consider multiple factors when determining your tax liability. That being said, I’ll give you some general principles that apply to most digital nomads.
Where do you Pay Taxes?
In most cases, digital nomads will have to pay taxes in their country of (tax) residence.
This can be the country where you registered yourself as having your address. However, even without registering yourself somewhere, you can become liable to taxes.
This is the case if you’re living in a country for more than six months in a year. This means that you’ll need to file a tax return in that country and pay any taxes owed.
However, this doesn’t necessarily mean that you’re off the hook for taxes in your home country.
Your home country can still consider you as a tax resident if you still have some ties to the country (e.g. real estate, bank accounts, etc.) This means that even if you’re living and working abroad, you may still need to pay taxes in your home country. This is a complex issue.
Therefore, you should always consult with a tax professional to ensure that you’re complying with all relevant tax laws.
In addition to paying taxes in your country of residence and/or your home country, you may also need to pay taxes in the countries where you’re earning income.
If you’re working as an employee, for example, you may have to pay taxes in the country of your employer. This becomes particularly complex if different countries get involved.
Tax Incentives for Digital Nomads
One thing to keep in mind is that some countries offer tax incentives for digital nomads.
For example, Portugal introduced a “non-habitual resident” tax regime, which offers a 10-year tax break for foreign nationals who move to the country. Unfortunately, this regime was severely limited since 2024.
Other countries, such as Albania or the Czech Republic, have also introduced special tax regimes for freelancers. These programs are an attractive option for digital nomads looking to minimize their tax liability.
In any case, you should always thoroughly research the requirements and restrictions of each program before applying.
Practical Tips
Navigating the complex world of digital nomad taxation is challenging.
Nevertheless, you can take a few key steps to ensure that you’re complying with all relevant tax laws.
Firstly, keep detailed records of your income and expenses.
Furthermore, make sure to file your tax returns on time.
If you’re unsure about your tax liability in any particular country, consult with a tax professional who specializes in international tax issues.
Finally, you need to stay up-to-date with any changes to tax laws in the countries where you’re living and working, as these can have a significant impact on your tax liability.
Conclusion: do I need to pay taxes in my home country, my country of residence, or both?
In conclusion, as a digital nomad, you may be required to pay taxes in your country of (tax) residence, your home country, and the countries where you’re earning income.
In order to have a good understanding of your personal tax liability, you should definitely consult with a professional.
