Working from Paradise
The relationship between companies and employees has transformed dramatically in the last few years, working remotely is becoming more common every day, and this trend has also led to a growing number of ‘Digital Nomads – workers who conduct their activity in a totally remote way.
This new way of being, allows individuals to work from anywhere in the world.
MATLAW talked to Abode2 and explained why Portugal is the new hub for digital nomads.
After the seismic shift in favour of a work from home regime, Antony Davenport talks to Joana Neto Mestre of MATLAW, about why Portugal is the new hub for digital nomads.
The relationship between companies and employees has transformed dramatically in the last few years, with significant numbers of staff now working remotely, conducting business with the click of a mouse. This new digital age has numerous clear-cut benefits, including; reducing employer overheads, not to mention employee cost savings in relation to commuting, with greater autonomy of work, higher productivity levels and an improved quality of life.
This trend has also led to a growing number of ‘Digital Nomads; workers who conduct their activity, either as employees or as freelancers, in a totally remote way. This new way of being, allows individuals to work from anywhere in the world. All that’s needed, is a computer and good internet connectivity.
It’s fair to say, that this trend is here to stay, with recent legislation seeking to regulate this new work place dynamic.
In Portugal, a new legal visa framework applicable to Digital Nomads came into being in October 2022. Joana Mestre explains: “We fully expect to see the remote working trend continue, even intensify in the coming years.
This will consequently lead to an increase in Digital Nomads relocating around the world. As Portugal is pulling ahead as the ideal destination for remote working, a special visa is now available. ”
Before the law was amended in October 2022, individuals who wanted to live in Portugal had no other option than to apply for the D7 visa. Joana continues: “The D7 visa is applicable to individuals with passive income who intend to live in Portugal. Passive income comes from rentals, dividends, accrued interest, pensions and income derived from various savings, so it would be difficult for income arising from professional activity to fall within the limits of this visa. “
Although many Digital Nomads aren’t ‘passive incomeearners’, before the new visas were available, the D7 was their only option. Those who didn’t have alternative passive income or sufficient savings, struggled to apply for the visa.
To keep up with social changes, Portugal has now introduced two new visas exclusively for Digital Nomads: a residence visa and a temporary stay visa. These permits are granted to employees and independent workers who conduct their professional activity remotely from Portugal. Joana adds: “There are three special requirements for the new Digital Nomad’s visas. The first, is the existence of an employment relationship or provision of services, evidenced by the presentation of an employment contract or a service agreement and additional declarations.”
“The second, is for a fiscal residence or headquarters outside of Portugal, requiring the applicant to submit a document proving their fiscal residence and finally, having an average monthly salary higher than 4 times the national minimum wage, which is equivalent to at least €3,040 per month (in 2023). Digital Nomads who apply for these visas are also allowed to simultaneously apply for family reunification, so that their direct family members and dependents can relocate with them to Portugal.”
These visas are specially designed for Digital Nomads to enable them to live in Portugal, whilst working for foreign entities. It means, they can now work remotely in a hospitable country with good food and pleasant weather, which is proving an attractive option to many. Joana adds: “The advantages that arise from these visas are unquestionable, representing a huge progress and adaptation to the new reality and current needs of the new forms of work.”
Digital Nomads who move to Portugal may, in some cases, also benefit from the non-habitual resident tax status(NHR), which is an incentive designed to attract new residents to Portugal, namely pensioners and high-qualified professionals. Under this scheme, which is applicable during 10 consecutive years, foreign passive income may be exempt from taxation in Portugal and work income from high-added value activities may be taxed at a 20% flat rate. Joana concludes: “These visas are designed for those who have ever thought of working in Portugal, whilst getting to know this wonderful country’s attractions from the waterfalls of Peneda do Gerês and the Luís I Bridge in Porto, to the canals of Aveiro and Serra da Estrela. Those who wish to spend their leisure time visiting the Sanctuary of Fátima or the Batalha Monastery and enjoy the beauty and uniqueness of the Berlengas Islands are especially welcome. Portugal has so much to offer individuals looking for a superior quality of life in the sunshine.”
This article is generic, and does not constitute, nor should it be interpreted as constituting legal advice to any concrete case, who will always depend on a careful and thoughtful legal analysis of all the circumstances involved.
Joana Neto Mestre | MATLAW