What “Going Offshore” Means for Digital Nomads
The digital nomad lifestyle is all about getting out of your comfort zone. You’re not supposed to be comfortable with your small town in the United States. You’re supposed to feel like something’s missing, and that there’s a bigger world out there for you to enjoyx.
Going offshore gives you that sense of power and freedom. But what does it really mean to go offshore for digital nomads? What’s involved? How feasible is it?
Going offshore means working remotely, but in a different country.
Going offshore is working remotely, but in a different country. That’s the core of it. You don’t have to work from your home country—you can choose to live in virtually any country and still work for your US, UK, or EU-based company as long as you have internet access.
Don’t confuse that with establishing an offshore company. That process is different and involves incorporating (in one way or another) in a foreign country.
The concept is similar to “remote work,” which is already pretty common in digital nomad circles: people who work for companies based outside of their home countries will often choose to set up base somewhere else so they can travel more easily or be closer to family.
Most people go offshore to take advantage of lower costs of living and a higher quality of life.
If you’re considering becoming a digital nomad, it’s important to think about what living in an off-shore location would mean for your lifestyle. In general, most people go offshore in order to take advantage of lower costs of living and a higher quality of life.
- If you currently live in the United States (or another country with high costs like the UK), going offshore might mean lowering your expenses by moving somewhere cheaper. You could save money by paying less for housing while earning the same amount you currently do.
- Going offshore could allow you to enjoy more comfortable temperatures than what’s available near your current home. Imagine working on the beach, or in the tropics, or in a bustling big-city hub. You can take your business anywhere and move as you please (kind of) when your new spot starts feeling a bit stale.
Digital nomads going offshore need to establish residence in a tax-free jurisdiction.
Tax-free offshore jurisdictions are a popular choice for digital nomads who want to live and work in a country with a low tax rate.
While it’s true that you can take advantage of the many benefits of living abroad without establishing residence in a tax-free jurisdiction, it may be worth your while to do so. After all, doing so offers you the opportunity to pay lower income taxes—and since taxes are often much higher than average in developed countries like the US and UK, this can save you thousands of dollars over the course of a year.
There are several ways to set up residence in an offshore country:
- You can buy real estate or an apartment there (e.g., buying property in Monaco). This will cost some money upfront but may end up saving you more than just renting would have cost.
- Some countries or regions offer digital nomad visas that allow you to gain temporary residency. This is beneficial when you want to take advantage of certain tax breaks. Stay long enough and you can even turn that temporary residency into a full-on second passport.
- Get your name on the lease. You don’t have to buy property, you just need your name on the lease of wherever it is you’re staying. It’s easier to actually sign a lease and stay in this new place for X amount of time, but there are other ways. For example, some landlords and property owners will charge you a small fee to edit the lease that already exists.
- If you invest a hefty sum into a foreign country’s deficit, you can get what’s called citizenship by investment. This is definitely an option for the wealthiest among us, but an option nonetheless!
You will, of course, still need to pay taxes in your home country. but luckily there are several offshore tax breaks available from the IRS or HM Revenue like the FEIE (Foreign Earned Income Exclusion). To ensure you’re gaining the most, it’s best to contact an an expat-supportive domestic or foreign bank for consultancy and tax advice.
The 8 best countries for digital nomads are Thailand, Portugal, Vietnam, Mexico, Germany, Bali, Colombia, and Costa Rica.
Some popular countries for digital nomads include Thailand, Portugal, Vietnam, Mexico, Germany, Bali (Indonesia), Colombia and Costa Rica.
These countries are attractive because they offer tax-free status to non-residents who work remotely—a big perk for those who want to reduce their tax burden.
These are just a small sample of the locations available to digital nomads, and as you can see the differ greatly in location, culture, weather, benefits, and so much more.
While many people are under the impression that going offshore means taking advantage of the system and pumping up your bottom line by putting all of your offshore investments in a tax haven, it simply isn’t the (only) case. Many of these countries are great for digital nomads because of their incredible tax laws, waivers, and asset protection, but there’s nothing sneaky about it. There are still tax obligations to attend to.
Other top picks include the Caribbean, Panama, Singapore, and the Cayman Islands. Your life, your choice!
Many people move offshore with the intention of making financial gains by taking advantage of favorable exchange rates.
You can easily get lost in the details of exchange rates and currency fluctuations, but it’s important to understand how they work.
There are two main factors that influence exchange rates: economic conditions in each country and strength of its currency relative to others.
For example, if a country has high inflation and low growth prospects, then its currency will likely depreciate against other currencies over time due to reduced demand for imports (e.g., food). Conversely if its economy booms while everyone else’s suffers then its money will strengthen against theirs as investors flock towards new opportunities abroad rather than risk staying at home with stagnant markets all around them.”
The biggest cultural adjustment that most digital nomads face is having to travel long distances for medical care if it’s needed.
It’s important to note that you may need to travel long distances for medical care if it’s needed. In some cases, you may be able to find a doctor who speaks your language and knows your medical history. However, there will likely be occasions where this isn’t the case—in which case you’ll need to travel through different medical systems and countries.
As a result of this, it’s important that any digital nomad planning on being away from home for extended periods of time have access to international health insurance coverage as well as an emergency fund in order to cover potential expenses related to traveling in case of an emergency situation requiring immediate attention abroad.
The digital nomad lifestyle isn’t easy, but it is rewarding for many people who are willing to make the change.
It’s not for everyone. The digital nomad lifestyle is definitely rewarding and exciting, but it’s not easy. It takes a lot of work to get started, and even after you’ve made the transition, there will be challenges ahead. If you are willing to put in the time and effort required to make this change, though, then it can be very rewarding.
Moving offshore may seem like an unattainable dream, but it’s actually happening all the time. If you have a stable enough income and a good grasp of your finances, it could be something that you should consider seriously.
The digital nomad lifestyle isn’t right for everyone, but if you’ve ever had the desire to travel and see the world while working from anywhere in it then this is probably your best opportunity to make that happen.
For your offshore life to succeed, you’ll need to set up an offshore bank account and an offshore merchant account get your payment ecosystem ready for the road ahead. Get in touch with us for more info.