Working remotely is becoming more common everyday, and thanks to improvements in technology and connectivity, many young professionals are taking advantage of the ability work from anywhere as they earn a living traveling the globe.
At NCCA we assist many clients in the IT industry as well as specialize in cross-boarder taxation. If you already are, or are considering working abroad, and have questions, don’t hesitate to contact us!
Below are just a few of the things you should consider when working outside of the country.
Where Do Digital Nomads Pay Their Taxes?
Tax when you spend
Let’s start with the easy one. If you are buying goods as a consumer, you will probably be paying sales tax or VAT at the point of consumption.
Tax when you earn
This is far more complex, and very, very specific to the individual. Two people of the same nationality, same travel history, same work etc., could have two completely tax situations due to one performing work as self-employed and the other being a one-man company.
Identifying Tax Residence
This is not always an easy thing to determine, but is a critical feature of knowing where you are liable for your earned income tax (earned means salary, self-employed profits etc., as opposed to unearned which means dividends, royalties, interests etc.), because by default it will revert back to your tax residence.
Double Tax Treaties
Many jurisdictions have signed bilateral tax treaties between the source of your income and tax residence in order to prevent you paying tax on the same thing twice.
Click here to read the full article: https://www.forbes.com/sites/timlai/2020/07/30/where-do-digital-nomads-pay-their-taxes/?sh=74fc40962578
Managing Tax Deductions, Expenses, and Income
Most digital nomads are entrepreneurs or freelancers. Even if you have a telecommuting job, if your employer has hired you as a “contract” employee, then you’ll be filing taxes as if you’re self-employed.
Although this might seem daunting if you’re new to the self-employment game, the good news is that operating as a self-employed/freelancer means you are able to take advantage of way more tax deductions than you can as a salaried employee.
For most digital nomads, this will include things like:
- Laptop, and all computer-related equipment, including laptop bags and accessories
- “Office Expenses”, like notebooks, pens, and other supplies used in your work
- Internet service
- Phone expenses, including your cell phone, as well as SIM cards and service
- Co-working space membership
- PayPal fees and other banking fees incurred in the process of getting paid
- Legal and accounting expenses
- Professional fees, including licenses or insurance you need to operate in your line of work
- Memberships and subscriptions, including association fees
- Courses or education expenses related to your field
Click here to read the full article: https://www.theprofessionalhobo.com/filing-taxes-as-a-digital-nomad-everything-you-need-to-know/