Contractors' Questions: Is Portugal’s Digital Nomad visa for me?
Contractor’s Question: I read somewhere that Portugal has joined the apparently growing list of countries to offer digital nomad visas. Is that right, and are the visas open to UK contractors?
Expert’s Answer: Portugal has had what’s called its ‘D7 visa’ since 2007, so on top of the digital nomad visa you refer to, there is a considerable history of Portugal attracting foreign workers, like Britons.
D7: the foundation
Thanks to the D7, Portugal was open to non-EU and EEA nationals who were free to live, study and work in Portugal to enjoy the benefits of a pleasant clime and a relaxed lifestyle. Almost the only requirement was that the applicant had an income of more than the country's national minimum wage, which is currently around €822.50 (approx. £715) a month.
But yes, the Portuguese government has now announced a Digit Nomad visa, and this scheme which is more applicable to temporary workers like contractors who wish to relocate but earn at the same time from non-permanent employment, opens on October 30th 2022.
Not enough detail
Unfortunately the details are a bit sketchy, to the extent that the Digital Nomad visa is yet to appear on the Portuguese government’s visa portal! But for reference, the government of Portugal’s statement on its Digital Nomad visa (and yes, other states are indeed offering their own), is as follows:
'Portugal is a country for immigration. Every year, we receive thousands of immigrants, seeking opportunities in our country. A country that wishes to welcome immigrants as it wishes its emigrants to be welcomed, too.'
So from this coming Sunday, location-independent professionals can apply for the new visa, officially named as a “Residence visa for the exercise of professional activity provided remotely outside the national territory.”
What countries in Europe offer Digital Nomad visas?
Other European countries currently offering similar digital nomad schemes include the following 13:
- Czech Republic
At present, we don't know how the Portugal’s Digital Nomad visa fits in with the other schemes. But it may well be more than only a short-term plan to allow workers to stay in Portugal for just one to two years, and seems more likely to be a temporary visa while people think about permanent residence in Portugal.
Portugal Digital Nomad Visa: two key conditions, and limited company or umbrella company?
The two conditions we know about are that you need to derive your income from a foreign company or source, to be either employed or self-employed. So, as employment and self-employment seem to meet the requirements, there would be no bar to using a limited company to work in Portugal.
But do remember that you always pay social security in the work country, so unless you can obtain an 'A1' from back home, you will need to pay into the Portuguese social security system.
The Digital Nomad visa extends beyond six months of course -- so that means you would become a tax resident there, and the tax authorities will look to you for your contribution! The upshot? You would need to localise your company and yourself for Portuguese practice. But for these reasons, it would not work for you to operate through a UK umbrella company using the scheme, unless the umbrella can get you an A1 and handle your taxes in Portugal. Most can't.
The second key condition of the Digital Nomad visa is that your income must be four times that required for the D7 Visa, which is currently €2,820 (approx. £2,400) a month. Of course, these conditions and the visa are relevant only to those who are not EU or EEA nationals.
European Digital Nomad Visas: what’s the thinking?
But why are more and more countries offering Digital Nomad visas?
The most obvious reasons, we believe, are:
- More and more of us are now working from home, so what difference if you work abroad? Provided you have the necessary connectivity to fulfil your tasks, there’s potentially very little.
- Nomad visas are a way to offset the fall in tourism from the covid pandemic. Surely it's better – reason the governments of digital nomad-offering nations -- to have tourists staying for one to two years, than just a two-week summer break?
- School disruption due to the pandemic caused many parents to home-school or use distance learning. The flexibility this brings makes transferring abroad not the same restriction it once was, when having to attend a physical school was a consideration if not requirement.
- All states are desperate for revenue, and many ‘digital nomads’ like UK contractors have incomes way beyond the minimum criterion, which means that when they spend money and pay taxes, they bring funds into state coffers.
- War and instability, including Russia’s mobilisation, have had many people scrambling for the exit and yearning for a life elsewhere.
N.B. As Portugal's Digital Nomad visa is for those deriving an income from foreign sources, the business opportunities and labour market conditions in Portugal should not affect you.
That said, the D7 visa has facilitated IT and hi-tech businesses relocating to (or expanding in) Portugal. And since 2019, the Tech Visa has been a quick route for companies to attract highly skilled labour into the Portuguese labour market to stimulate technology businesses. The October 30th Digital Nomad visa focuses on attracting high tech to the country and reflecting that tech makes remote working possible.
My personal take? Portugal has a delightful climate, varied landscape, cosmopolitan cities in Lisbon and Porto, the balmy Algarve, and the offshore paradises of Madeira and the Azores.
So to you and other contractors I say this; what are you waiting for?!
The expert was Kevin Austin, managing director of overseas work advisory Access Financial.