What is a Digital Nomad Visa?
Digital nomad visas are immigration tools designed for foreign nationals who work remotely for clients or employers based outside the host country. These visas are available in places like Portugal, Spain, Barbados, Estonia, Costa Rica, and more. They typically require applicants to show proof of stable remote income, health insurance, and a clean criminal record. Validity can range from a few months to several years, and they often come with restrictions that prevent local employment.
While digital nomad visas give individuals the legal right to reside and work remotely, they do not inherently confer tax status. That’s where the line gets blurry — and risky.
What is Tax Residency?
Tax residency is a legal status determined by domestic laws and international treaties. It defines where an individual is considered a resident for tax purposes — and therefore, where they may be liable to pay taxes on their worldwide income.
The most common determinant is the 183-day rule, meaning that if you spend more than 183 days in a calendar year in a country, you're generally considered a tax resident there. However, many countries use additional criteria, such as:
- Maintaining a permanent home or habitual residence
- Having close personal or economic ties (center of vital interests)
- Being a national or having long-term immigration status
Some countries may treat someone as a tax resident with even less than 183 days if other conditions are met. Others might classify you as a non-resident even if you stay for extended periods, depending on your ties and intentions.
The key point is this: you can hold a digital nomad visa and still not be a tax resident — or vice versa.
The Common Misunderstandings
Many digital nomads fall into traps due to widespread misconceptions. One of the most frequent is believing that working remotely for a non-local employer means you don’t owe taxes locally. Unfortunately, if you meet a country’s tax residency criteria, you may owe tax on your worldwide income — regardless of where your employer or clients are based.
Another assumption is that being on a digital nomad visa automatically grants you tax benefits or exemptions. Unless a country’s tax law explicitly provides for this, the visa is just a permit to stay — not a tax shield.
Some nomads also continue to pay taxes in their home country under the belief that this covers them globally. But if they’ve spent enough time abroad or established personal or economic ties elsewhere, they may have inadvertently triggered dual residency, which can complicate filing and create double taxation risks unless properly managed with tax treaties.
Why It Matters
Understanding the difference between visa status and tax residency is more than a technicality — it’s the foundation of staying compliant and financially efficient as a global worker.
If you spend significant time in a single country, rent a home, open local bank accounts, or even simply develop a routine, local tax authorities may view you as a resident — even if you're on a temporary visa. On the other hand, failing to sever ties with your home country can keep you on the tax hook there, too.
For digital nomads, entrepreneurs, and remote employees, this opens up several strategic questions:
- Where should I establish primary tax residency?
- Do I qualify for a tax treaty benefit to avoid double taxation?
- What are my reporting obligations in each country?
- Should I restructure how I earn or report income internationally?
These are not one-size-fits-all questions — and mistakes can be expensive.
Aligning Your Visa and Tax Strategies
At Forward Point Solutions, we encourage globally mobile individuals to treat immigration and taxation as interconnected parts of a global strategy. This means assessing both where you want to live and where it makes sense to be taxed.
Ideally, you should evaluate:
- Physical presence thresholds and travel patterns
- Local tax laws in visa host countries
- Double taxation agreements between countries
- Exit tax risks from your home country
- Optimal structures for receiving and reporting remote income
With the right planning, it’s possible to minimize tax liabilities legally, ensure compliance, and take full advantage of tax treaties or special regimes (like Portugal’s NHR or Georgia’s low-tax program).
Visa ≠ Tax Residency
A digital nomad visa may unlock a new country — but it doesn’t settle your tax status. Tax residency is a separate legal determination, one that carries real consequences for your global income, compliance risk, and long-term financial planning.
At Forward Point Solutions, we specialize in navigating this complexity. Whether you’re exploring nomad visas, residency programs, or just seeking clarity on your tax exposure across borders, our advisors can help you craft a strategy that protects your lifestyle and your bottom line.
Ready to explore your tax residency options? Let’s talk.
