CLAUDIA PIZZOCRI: Digital nomad visa — how wide is its appeal and reach?

The much anticipated implementation of a provision for remote work visas in SA has finally taken shape with the publication of the third amendment of the immigration regulations earlier in October. 

Foreigners employed overseas on a remote work agreement who can demonstrate receiving a minimum gross annual remuneration of no less than the equivalent of R650,796 (about $37,500.00 or €34,000) may now apply for a long-term multiple entry visitor visa for up to three years at a time.   

While for SA this minimum remuneration threshold is extremely high, the same does not apply globally to the growing population of digital nomads. Research has shown that the average digital nomad earns between $50,000 and $123,000 a year. On this basis, the minimum salary threshold set in terms of SA immigration requirements renders it of wide application and reach.   

It is evident that to better understand which foreigners the remote work visa has been implemented to attract to SA one must look closely at the global digital nomad population, and at the same time compare SA's appeal as a smart destination based on digital nomads’ destination selection strategies. 

Looking at the demographics, it is estimated that by 2023 about 35-million people had become digital nomads and these numbers are rapidly increasing annually. The phenomenon of remote work in the context of global mobility was accelerated with the pandemic, which forced individuals and employers to implement sustainable solutions to allow for remote work. It is therefore not surprising that in the US alone between 2019 and 2023, the number of digital nomads grew from 7.3-million to 17.3-million. 

Of the global digital nomad population 50% originate from the US. About 54% of digital nomads have a bachelor’s degree, are well-educated and well-travelled, and usually understand key elements of business internationalisation. The majority of digital remote work nomads work in the technology sector, 47% are aged 30-39 years, 54% are married or living with a partner and 24% are travelling with their children. All of these parameters are important indicators of the patterns of preference that drive their destination strategies. 

While the majority (49%) of digital nomads are remote full-time workers, this employment type and model is not necessarily true of all digital nomads. Remote workers are employees whose contractual obligations do not entail performance from a traditional office environment or predetermined place of work. However, the digital nomad population also includes business entrepreneurs, financial day traders, consultants and freelancers.

This composition will necessarily mutate over time as more adapt to the pull of global internationalisation and resource mobility. Digital nomadism has been defined as a hybrid form of mobility, practised by location-independent remote workers who combine travel, leisure and work activities.   

SA’s “remote work visa”, as implemented by home affairs minister Leon Schreiber, strictly refers and applies to a demonstration of a “gross salary” and a foreign “contract of [remote] employment”. Many business entrepreneurs who enjoy dividend related incomes, and day traders who enjoy high net performances on their trades, for instance, would fail to meet the regulatory requirements of this visa.  

A high income alone is not sufficient to qualify for the remote work visa as designed. In its initial format, the remote work visa has been mapped out only to encompass remote workers with a salary income that meets the minimum income threshold.   

The target population the SA remote work visa may attract today is therefore equivalent to about 50% of the digital nomad visa population (17.5-million). This is a substantial number, which has led to a competitive bid between different destination countries that have sought to boost local economies through the spending and investment digital nomads bring with them beyond seasonal tourism, having recognised the added effect these communities have on innovation. 

According to University of Barcelona academic Fabiola Mancinelli, “mature digital nomad destinations offer high-performing technological infrastructure, digital nomad communities, co-working spaces to maintain work routines, and extensive leisure infrastructure... Other pull factors include mild climates, reduced cost of living, easy to obtain long-term visas, a variety of sport and wellness options, vibrant cultural life and nightlife, and proximity to nature”. 

The top ranking digital nomad destinations besides Mexico and Canada are mostly in Europe, and include Spain, the Netherlands, Norway, Malta , Portugal, France and Germany. Factors that appear to increase a destination’s attractiveness have been identified to be streamlined visa processes, with the majority of countries offering processing time frames ranging from seven to 30 days, and tax exemption and/or reduction policies as digital nomads are aware of taxation and may be more inclined to avoid destinations that impose higher tax obligations. 

In certain countries, including SA, a stay over 183 days will result in the individual being taxed as a resident. Some countries with digital nomad visas allow visa holders to be non-tax residents for up to a year of stay, where incomes are derived from other countries, while other countries offer tax reductions.   

SA has always been an attractive destination for tourism beyond its natural beauties and resources. Considerations that have influenced its placement as a desirable destination over the years have included the favourable currency exchange rates, its English-speaking capacity, the moderate climate, the diverse lifestyle offering, and its medical, wellness and leisure infrastructure. 

SA’s potential to attract the digital nomad population as a destination of choice has always been there. Over the years, many high income families with younger children have opted to relocate to SA even in the absence of a remote work visa option. These families seek a stable long-term destination with a strong (from an international standard view point) educational offering from primary to tertiary education — their children’s stability being the main driver rather than merely destination leisure travel. 

The recent remote work visa implementation adds significantly to SA's immigration offering and has the potential to attract substantial numbers of digital nomads from developed countries with high income and welfare, placing SA at the continental forefront in the implementation of these policies, which have the potential to benefit the local economy and incentivise innovation. 

However, its practical limitation to remote workers only, and the exclusion of high location-independent income earners, independent contractors and freelancers, may result in narrowing SA’s competitive attractiveness, particularly when taking into consideration digital nomads seeking viable long-term destinations as a family.

Moreover, the standard application of tax policies as envisioned in the third amendment of the immigration regulations may also detract from the strategic desirability positioning of SA in the global race to attract digital nomads. 

• Pizzocri is CEO at Eisenberg & Associates.