Digital nomads, welcome to Croatia – new regulation of foreign nationals’ residence introduced

One of the things the Covid-19 pandemic has taught us is that most work can be performed remotely. But even before worldwide lockdowns, some individuals have been using technology to replace their offices with exotic locations around the world. They are ‘digital nomads’ and their numbers have been increasing rapidly in the last couple of years.

As the movement is continuing to gain more and more momentum, Croatia saw this as an opportunity to position itself as a perfect destination for digital nomads. The country plans on becoming one of the few in the world offering digital nomads a regulated status –the possibility of a temporary but extended stay while working for a foreign employer. The legal framework is to be secured by the newly proposed Act on Foreign Nationals, currently in parliament.

History of digital nomadism

The term digital nomad has been in use since 1997, when a book under the same title was published, even though the concept, based on theoretical predictions, dates back to 1960s. Digital nomads in today’s form first appeared as a phenomenon in the booming IT sector of the early 2000s, when companies started accepting remote working arrangements for software developers. The movement gained more traction with the emergence of online freelancing platforms such as Elance (now Upwork), founded in 1999. In the last five to six years, dedicated online communities (eg Nomad List) and the availability of co-working spaces has contributed to the popularity of the digital nomad lifestyle and brought it into mainstream culture.

Digital nomads today

Most simply put, a digital nomad is a person who is not bound to a single location in their work and uses digital technology to work remotely. Digital nomads can be:

  • Freelancers, working for various employers
  • Employed with a company registered abroad
  • Self-employed

Technological advances opened the possibility of not being location-bound in one’s career. Many (mostly, but not exclusively younger people) choose to evade commuting to work and standard office hours and decide to create their own work-life balance in a unique location. The MBO Partners 2019 State of Independence in America research finds 7.3 million American workers describe themselves as digital nomads, and this was before the pandemic. As for the number of digital nomads currently scattered around the world, there is no official statistical information, but it is counted in millions and continually on the rise.

The legal perspective

Normally, a person performing any kind of economic activity in a certain territory is subject to taxation so digital nomads often find themselves in a legal grey area. To acquire a work permit, one normally needs an employment contract with a local company or an invitation letter.

In recent years some countries have introduced digital nomad visas or types of temporary residence permits appropriate for digital nomads. These are still rare so many digital nomads travel on tourist visas, which have a relatively short duration (in Croatia, the period is three months) and in theory do not provide for the possibility of work.

Croatia –new digital nomads’ residence regulation

Croatia’s mild climate, low crime rate, rapidly developing IT sector and good internet coverage already attract numerous digital nomads, especially EU citizens who do not need a visa to enter. The local government decided to regulate their status, allowing them a longer stay and the possibility to work.

After an intensive series of meetings between the Prime Minister’s Office, the Ministry of the Interior and representatives from the IT sector, the government passed a bill on foreign nationals which is now in parliament. Among other, the bill introduces the category of digital nomads. They are defined as:

‘third-country residents who perform work by means of telecommunication technology for a company or their own company not registered in the Republic of Croatia and who do not perform work or provide services to employers on the territory of the Republic of Croatia.’

The provided length of stay for digital nomads is up to one year. A person can re-apply for temporary residence as a digital nomad six months after the expiry of the previous residence permit, issued for that or other purpose.

The proposed bill does not specify the minimum funds required to be eligible for a digital nomad residence permit. However, according to unofficial media sources, the limit will be higher than for example, for family reunification or other reasons. Other parameters to be defined such as tax payment and insurance should be provided for separately, by a government regulation.

Digital nomad visas in the EU and rest of the world

The first nation in Europe to create a visa for freelancers was Germany. There are two types of freelance visas available in the country, for artists and other professionals. The Czech Republic has a special business visa which can be used by digital nomads, while Portugal designed a temporary resident visa which can be used by freelancers and entrepreneurs and allows them to stay in the country for longer than one year. A unique type of permanent visa is available in Norway, a member of the Schengen Area. Digital nomads who wish to relocate to the Svalbard archipelago may apply and the visa remains valid for the entirety of the traveller’s life. Estonia recently announced that it is preparing a proper digital nomad visa, in line with the country’s image as an ‘e-state’. Outside of Europe, Costa Rica, Mexico, Australia and Thailand have visas in place to be used by international remote workers.