WSJ What’s News - Taking Your Office Anywhere in the World: Your Questions Answered

Episode Date: August 11, 2024

How realistic is the post-pandemic dream of working from anywhere? While more workers have enjoyed the digital nomad lifestyle–where they not only get to work from home but from anywhere in the world–since the pandemic, the introduction of stricter rules is now complicating the picture. KPMG director and global mobility policy expert Daida Hadzic and WSJ career columnist Callum Borchers answer your questions on the regulations governments and employers are introducing, and how to navigate them. Further Reading Work From Anywhere! (Well, Not Really)  The Disconnect Between Remote Workers and Their Companies Is Getting Bigger  Remote Workers Are Losing Out on Promotions, New Data Shows  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Benefits vary by card, other conditions apply. Hey, What's News listeners. It's Sunday, August 11th. I'm Luke Vargas for the Wall Street Journal and this is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world.

And this week, it was for some a post-pandemic dream, the possibility of not just being able to work from home, but work from anywhere. The digital nomad lifestyle promised an escape from the office, freedom from the grind of a commute, and a life of adventure and variety. But how realistic is that dream as countries formalize their rules for remote workers, and companies for all manner of reasons want them back in the office? We're about to find out. What does it take to do your job from anywhere in the world?

The answer, in 2024, is an appetite for paperwork. KPMG earlier this year found that 45 countries from Belize to Portugal to Sri Lanka are now offering various forms of digital nomad visas for workers feeling a little wanderlust. But between maintaining minimum income levels, establishing proof of housing, or having to pay into social security systems, navigating the fine print is increasingly complex. And with countries cracking down on unofficial digital nomads, employers are now taking note too, and dialing back the leniency that some so readily granted after the pandemic. With so much changing on the frontier of flexible work, we're joined from Amsterdam by Dida

Hadzige, a director at KPMG and an expert on global mobility policy. Dida, your colleagues and you maintain a very comprehensive list of what countries around the world are doing to regulate digital nomads, or foreign remote workers, as I've also heard them described. And by the sound of it, those rules are quite a tricky maze to navigate, aren't they? Tell us how we got here. The pandemic prompted some countries to introduce these digital nomad visas aimed at attracting or providing certain conditions to enter the country when they are working remotely. But the legislative framework around remote workers hasn't really gone far. So you have something called digital

nomad visa, but what about personal taxation that is not regulated within that visa? So then you have to go and look at the country combinations and so on. You mentioned social security nightmare, and it just really makes your head spin sometimes when you look at these conditions. All right, so maybe it's a bit difficult for countries to set up these programs. For those that have done it, how easy is it to get a digital nomad visa? Does it really depend on where you're applying? Well, if you take one of the hotspots in Europe for remote work, Greece. Greece has digital nomad visa, but

there is a requirement for monthly income of 3,500 euros. And then if you have family members that of course increases accordingly. Italy, another hotspot, they require at least six months of experience working as a digital nomad prior to coming to Italy. And I'm only mentioning these few details that I find could exclude significant number of people for applying for such a visa. And I can just tell you, generally the number is underwhelming.

Something that to me looks like a contrast to this trend. I've obtained some numbers for Argentina, city of Buenos Aires. They apparently had this international strategy that they initiated way back in 2015. In 2021, they had less than 10,000 applications for digital nomad visas, and the economic effect of that was about 21 million US dollars. In 2022, they issued over 72,000 digital nomad visas with economic impact of more than 154 million US dollars, and they expect the same numbers for 2023. So that can be seen as like a startling contrast to how this has gone down in Europe.

All right. So a fascinating overview you've given us there of the state of play of the various rules out there. I have to ask though, how are countries monitoring compliance with these rules? If you just want to go and work someplace for a month, what are countries doing to keep tabs on you? And what kind of trouble might workers or their employers get into if they're not playing by the book?

Technological advances, they are not exclusive only to us in corporate world. So authorities, they are using technology to establish our whereabouts for tax purposes, social security coverage and more. And I can see that firsthand. More companies are contacting me because they are confronted with questions from authorities in the host countries, even when their employees have left. All right, Dada, we've got to take a very short break. But when we come back, we'll dive deeper into how rules around remote work are changing the workplace and the relationship between employers and employees.

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His name is David Livett. He called and shared one example of a client that came to him just a few days ago. And here's what he had to say. Last week I had a California based tech company has got three employees in China since the pandemic. And they've only just found out they had an employee who actually is a site manager.

So immediately they know they have one employee there. The other two, absolutely by chance, it's almost by the fact that somebody said, oh, where are you? And they both said, oh, yeah, we're still here. No one's ever spoken to us about coming back. I of course wanted to know what kind of pressure now that company is under to clean things up. And I asked David, how much we're talking about here? What are the dollar value financial implications of a surprise like that? And here's what he told me. Tens of thousands is very much the way I would put it. The actual tax and social security for one individual employee potentially isn't that great. But the fines, the registration, the licenses, the reputational

damage, that is where you start adding noughts to the actual scenario. To probe this point a bit more, we're joined now from Massachusetts by Wall Street Journal on the clock columnist Callum Borschers. Callum, what we've just heard there sounds somewhat similar to what you reported on two years ago that in the wake of the pandemic, a number of states realized, oh, who are these new workers who have shown up within our borders but aren't filing any taxes and that that had led to some nasty surprises for workers and for their employers? As Dida said, it's the same story here domestically as it is across the world, which is that enforcement is really stepped up, right?

Early days of the pandemic, states were pretty lax. We all understand this is a special circumstance, but that grace period is over and it's been over for a while, Luke. I spoke with a CEO named Alex Atwood, who's got a company called Gravy Work in Virginia. All of a sudden, he gets hit with a $20,000, $30,000 bill from California and Texas saying, hey, you owe payroll taxes. You owe registration fees because you never set up shop here. And oh, there are some penalties too, because you had a software engineer who was working here remotely. And he's like, I had no idea.

I didn't, I didn't know that this guy was remote. And so what I'm hearing from managers and business owners on this topic is the bar is getting really high to tolerate the digital nomad. Like you've got to be really good at your job for a company to put up with that kind of headache, or they're just going to say, hey, you want to go and be an independent contractor and you take the liability. Okay, then maybe we'll bring you in. But we're not doing this with our own employees. Dida, in terms of how businesses are responding to the various regulatory regimes being set up,

you know, we got this question from Doug Lake in Ames, Iowa. He described that he used to file tax returns in four different U.S. states because of the work he was doing in various places. But he thinks that many people didn't realize this and something he now sees from the corporate perspective. Let's take a listen to that. Could some part of corporations resistance to remote work be due to the cost of filing corporate tax returns in every state where they have workers?

I can see how the Apples, Amazons and Chevrons of the corporate world probably already file 50 state tax returns. But does this hinder some small corporations? Dida, your experience more global than it is within the United States. But what about that? How are companies responding to all these new rules? And does the size of a company dictate how flexible they're often willing to be? The size of the company plays a part because it's always down to the country combination,

nationality, duration, what are you going to do there while you're there, and it's on case-by-case basis. So you can imagine that if somebody puts a request, I would like to work remotely from this destination, that means that those resources that are in HR, global mobility teams have to go into the study mode to understand is this possible? So even though it can be really useful to learn what is the market standard,

what is competition doing. You will gain more knowledge by surveying your employees, asking them would you be interested in remote work and which destinations would be interesting to you. That would give you more knowledge where you should be in terms of any type of policy than just looking at what others are doing. Got it. So some downsides of a one-size-fits-all approach there. Callum, if we think of this sort of whiplash that now seems to have occurred at many companies

in the last few years, where in the wake of the pandemic, flexibility booms. And now a lot of employers are sort of closing the door to that flexibility that people maybe got used to, something that must be jarring to some workers. It is, and we see it showing up in the numbers, Luke. Last year, the growth of self-described digital nomads in the US was 2%. So very clearly, the headache on workers and their employers is really slowing down on

the number of people who are deciding to try to live this lifestyle. There's that, Callum. There's also, as your colleagues have reported reported on this phrase, quiet vacationing, kind of something now on the radar of employers wondering what exactly some of their workers are up to if they are working a few days or weeks away from the office at a time, kind of curious how people are managing their hours.

And yet we also heard from a lot of listeners who said, when their companies were generous with them, when they allowed them to work from other places, they got a lot of work done. It was great for them and their mental health, which I think Callum brings us to something Dido was alluding to earlier, that if companies and workers can come to some sort of agreement, maybe this can be a win-win even if there are more rules and restrictions to navigate. I think really where you feel about it comes down to kind of what's your frame of reference. So if you compare, well, what's my level of freedom or work flexibility to what I had in 2019?

For many, many so-called knowledge workers, it's much, much better, right? But I will say, too, some of the digital nomads I talked to did eventually tire of the lifestyle, Luke, which I found interesting. I thought it was going to be very glamorous and liberating. And after doing it for a year or so, I talked to some who said, you know what, it got kind of lonely or it got kind of exhausting. Sure, though, for those who don't tire of being away from their home country, Dada, we've actually seen one country, Spain, right? Crafting provisions, letting nomads stay.

And it's interesting that you're mentioning Spain for remote work. They also have what I consider quite strict rules for digital nomad visa. But what is very unique about Spain is that the time that you get on your digital nomad visa, you can extend it again and again. And then when you decide, oh, I have fallen in love with the local cuisine and good wine and good company, I'm going to stay." Then you can use that time to obtain permanent residence. So when you choose a destination, it makes a huge difference, not only on your eligibility, but also what you can use it for afterwards if you decide to stay or come back. Good advice there. A fascinating kind of backdoor

into the immigration system as well. And I'll close. Callum, Dida, just do you have any other tips that you'd share with anyone considering the digital nomad lifestyle or perhaps who's already doing it but is maybe a little bit more nervous now that that undisclosed lifestyle is about to catch up with them? Dida, I'll start with you. Be transparent about it. Talk to your employer. I know this is really difficult, so I should really encourage all global mobility teams

and HR teams working with this. Just don't be afraid of it. Honesty is the best policy. Callum, what do you have? One of the things that came up consistently in my conversations with these people who've tried it is get yourself a good accountant. You can end up paying taxes in a dozen different jurisdictions if you're somebody who's been living the digital nomad lifestyle as an American.

Callum Borschers is The Wall Street Journal's on-the-clock columnist, and Dida Hadzic is the director at KPMG and an expert on global mobility policy. Callum, Dida, thank you both so much. You're welcome. Glad to be with you. And that's it for What's New Sunday for August 11th. Today's show was produced by Anthony Bansi with supervising producer Christina Rocca, and we got help from Deputy Editor Scott Saloway.

I'm Luke Vargas, and we'll be back on Monday morning with a brand new show. Until then, thanks for listening.