Digital Nomads

There are two things that have consumed my email inbox this week (asides from of course the work we do for clients), one of those was the roll out of New Zealand’s version of the Digital Nomad Visa and the other was bacon.

The bacon issue is an entirely different story, which you can ask me about one day, however this article is obviously not about smallgoods, but of course the rise of the digital nomads and what our recent Government announcement means for those that might be keen to try being nomadically digital.

We also take a look at how this small change might benefit those looking at a longer term plan (as a skilled migrant) and also what this move represents for the future of some of our other visa policies.

What Is A Digital Nomad?

The term, ‘digital nomad’ has been around for a while and a number of countries have coined it as part of their tourism strategy. It generally refers to people working in a role that they can perform anywhere - so they might be from the US, employed by a US company but can do that job with a laptop and good internet connection from the Bahamas.

Many countries have realised that this sort of traveler is a good source of tourism - particularly for those countries with weaker currencies. If you have travelers able to holiday whilst working remotely, earning USD, GBP or EUR, then they have more cash to spend than the local populace. These digital nomads bring in valuable foreign currency and spend up large (comparatively). They also tend to stay longer as they aren’t taking leave from a desk bound job and can often spend time in multiple countries over the period of several years (usually hopping from one place to another to avoid tax issues).

Digital nomads have become a bit of a popular target for tourism exporting countries, because they are seen as a good source of income, over longer periods and in our case, also a potential source of good skilled migrants (once they are here, they might want to stay). So all in all, the term itself just means someone who travels whilst working - pretty simple.

New Zealand’s Approach

Digital Nomads

We already had plenty of digital nomads enjoying the lifestyle here - they just didn’t realise they weren’t supposed to be doing it.

We have actually had digital nomads drifting around for many years, the only issue is they didn’t realise that they were in breach of their visas. This was largely because our visa rules had never really addressed this scenario or kept pace with the modern working world.

Immigration New Zealand (INZ) would tell you that any work in NZ, even for an overseas company, whilst you were here on holiday, was a breach of your visa conditions…but what if you arrive here and quickly check your work email or call your employer to answer a question? Literally everyone does this, so is every visitor in breach? The reality is, that it was more about your overall purpose for being here. If you were here on holiday and answered the occasional email - no problem. However if you came here and sat on the beach, working eight hours a day remotely, then odds are, you were in breach.

So to remedy all of this and also to help push the Governments agenda to increase tourism, we made a very simple change. Instead of creating a new visa category (which requires substantial effort), we simply changed the way visitor visas work.

In a very swift move (announced Sunday afternoon, policy rolled out the same day), the conditions on visitor visas were adjusted to allow visitors to work remotely. This specifically means to work for an overseas company, and does not include work where goods or services are provided in NZ or for a role that requires you to be here.

No new visa, no complex additional rules, just plain, simple common sense. A swift, and very clever move. However like all these things, there are positives and negatives, although admittedly the positives far outweigh the negatives in this scenario.

Positive Benefits

When the current Government set about a push to grow the economy (and we really do need to work on that right now), increasing tourism was the first cab off the rank. It’s relatively easy to pull these levers, and really its just about making the prospect of spending your time and money here, more appealing than somewhere else. This change to visitor visa rules, opens up the door (legitimately) to a very unique set of travelers who are likely to spend longer here than a two or three week trip. They will also return relatively soon after their first trip (leaving usually to avoid taxation complications) and can often lead to longer term imports.

Good News?

This shift in policy brings significant benefits for tourism, our ability to attract talent and the economy at large.

So for a quick, easy, painless way to bring in more tourists, this was an effective strategy. There are of course plenty of folks arguing that we might sink in to the sea under the weight of all these additional bodies, but the reality is, the numbers won’t be that big (and we won’t sink).

We are still down on tourism, compared to our pre-covid potential and so we have room to spare. Tourism operators are also lining up to welcome these folks in, as are the accommodation providers and those in the hospitality industry. However these travelers also stay longer, and spend more on ordinary consumer goods, over a much longer period. So yes we will have more people wandering around and we will need to accommodate them, but the value they bring, outweighs any issues that we might have to deal with.

The bigger thing for me, is that this move (and its speed) signals what can be done in the visa space, where the will exists. We can make sensible, pragmatic changes quickly. It also signals to the world, that we are keen for people to come here. I hope that flows over to other visitors, and INZ taking a less risk averse and a more common sense approach, aligned with the Governments push to bring more people across the border.

There is also another potential spin-off benefit for those looking to move permanently. If you are in a position to work remotely, you can do so here, whilst having a holiday and also exploring local job opportunities that might lead to a Work Visa and Residence. This situation is a question I get asked quite a bit and up until now we have always had to steer people away from that plan, for fear of them being in breach of their visitor visa - this change, makes that very set of circumstances possible and makes the job search in NZ a whole lot easier.

Pitfalls?

There are always other things to consider and the biggest one will be the potential tax consequences for travelers from certain locations. Spending more than a specified number of days here is going to create a potential tax issue and so that could see some applicants ending up with double tax woes. I suspect most applicants will either be smart enough to manage their time here, or use any number of overseas, remote working platforms that offer tax management services.

Death & Taxes

Of course, there are always consequences and our tax system might catch a few people out, along the way.

It does however raise a valid question, as to why the Government didn’t consider some sort of tax exemption for these types of visitors, to encourage them to stay the full duration of the nine months they can secure on a visitor visa.

We may very well see that come in time and it would be in line with other countries who have adopted a specific digital nomad visa, but bolted on a tax exemption to make it as attractive as possible to as many people as possible. Stay tuned.

However apart from taxes, there is very little to not like about this move. Sure we will have to monitor numbers, consider impacts on infrastructure and ensure our tourism operators are up to the challenge, but given it won’t result in a mass arrival, I think these are all very manageable concerns.

Packing Your Bags Already?

It could be very tempting to see this change, pack your bags and prepare for some long summer days, writing code on any one of our superb beaches, however before you do, you might want to think it through carefully. If you were of a mind to do this, with a view to perhaps staying here longer term, the first thing you need to ensure is that you qualify for that longer term plan. We can obviously assess the viability of that for you.

You should also consider how long you can be here, before taxes become an issue and you would want to have a plan for that if you do intend to stay longer term. Also make sure that the work you do here, is in fact considered “nomadic” - whilst the rules are very simple, people’s situations are not. Lastly, we are in a very different time-zone and working here overnight, and sleeping during the day, might not make for such a great getaway.

However if you can navigate these issues, most of which can be worked around, then the digital nomad option, might just be the way to enjoy a holiday here, continue earning money and also explore the potential for a longer term future in New Zealand.

Interested?…then get in touch with us today.

Until next week.