Taxes for Digital Nomads

Most countries tax their residents on their worldwide income and non-residents only on income earned in that country. So the question that matters is not where you were when you did the work, but which country (or countries) count you as resident.

You are almost certainly still a tax resident of your home country when you start travelling. Leaving for a few months, or even a year, rarely changes that. Most countries look at more than days: where your home is, where your family lives, where your bank accounts and job are, and where you intend to return. Breaking tax residency usually means deliberately cutting those ties, and in some countries proving you have become resident somewhere else.

You can also become a tax resident of the country you are staying in. Many countries use 183 days in a calendar year (or in any 12 months) as the line. Some use other tests: Thailand uses 180 days, and a residence permit, a home you can use, or family living with you can count too.

You can be a resident of two countries at once. Tax treaties between the two countries then decide which one gets first right to tax you, usually by looking at where you have a permanent home, then where your “centre of vital interests” is, then where you usually live, then your nationality. Treaties also stop the same income being taxed twice in full, typically by giving a credit for tax paid in the other country.

The idea that a nomad who moves every few months owes tax nowhere is mostly a myth. If you never stay 183 days anywhere but haven’t broken residency at home, your home country still taxes you. If you have broken it but have no residency anywhere, some countries (the UK and Canada among them) may decide you never left. And US citizens owe US returns whatever they do.

A legitimate low-tax life usually means moving your residency, properly, to a country with low tax on your kind of income, and living there enough to back it up.

The US taxes its citizens and green card holders on worldwide income wherever they live. You file a federal return every year. The good news is that most nomads end up paying little or no federal income tax on earned income if they plan well:

• Foreign Earned Income Exclusion (Form 2555). Excludes a large slice of foreign earned income (about $130,000 for 2025, indexed each year) if you pass the Physical Presence Test (330 full days outside the US in any 12-month period) or the Bona Fide Residence Test. Days in transit over international waters don’t count, so count carefully.
• Foreign Tax Credit (Form 1116). Credits income tax paid to another country. Often better than the exclusion if you live somewhere with higher tax than the US.
• Self-employment tax still applies. Freelancers owe 15.3% Social Security and Medicare tax on net earnings even if the income is excluded from income tax, unless a totalization agreement with the country you live in says otherwise.
• FBAR (FinCEN 114). Required if your foreign bank and financial accounts together exceed $10,000 at any point in the year. Wise and Revolut balances held outside the US can count.
• FATCA (Form 8938). Required above higher thresholds for foreign financial assets ($200,000 at year-end for a single filer living abroad).
• State tax. Some states, including California, New York, Virginia and South Carolina, make it hard to stop being a resident. Many nomads establish residency in a state with no income tax, such as Florida, Texas, Nevada, Washington, Wyoming, South Dakota or Tennessee, before they leave, with a real address, driver’s licence and voter registration there.

The UK’s Statutory Residence Test decides whether you are resident in a tax year (6 April to 5 April), using day counts and ties: a home, work, family, accommodation, and days spent in the UK in previous years. Spending fewer than 16 days in the UK usually makes you non-resident; between 16 and 182 depends on your ties; 183 or more makes you resident. Leaving part-way through a year can qualify for split-year treatment.

From April 2025, the old non-dom remittance basis was replaced by a four-year regime for new arrivals, which matters more if you come back after years away. If you leave, check how to protect your state pension with voluntary National Insurance contributions, as the rules for people abroad changed in 2026.

• Canada looks at residential ties: a home, a spouse or dependants, and secondary ties such as a car, bank accounts and provincial health cover. Becoming non-resident triggers a “departure tax” on the deemed sale of most assets.
• Australia uses several tests, including whether you “reside” in Australia and where your domicile is. Many Australians remain residents while travelling because their domicile stays in Australia.
• EU citizens are generally taxed by the country where they are resident, following the same 183-day and centre-of-interests ideas, with treaties sorting out overlaps.

Before choosing a base for six months or more, find out how that country treats a foreigner with foreign income:

• Taxes foreign income only if you bring it in: Thailand (since 2024, foreign income remitted by a resident is taxable), Malaysia (exempt for individuals to 2036), Mauritius.
• Exempts nomad visa holders’ foreign income: Croatia, Costa Rica, Montenegro, Cape Verde, Panama, Barbados.
• Special regimes for newcomers: Spain’s Beckham regime (24% flat on Spanish income, foreign income largely exempt), Greece (50% off income tax for 7 years), Italy (impatriate regime), Malta’s nomad permit (0% in year one if your presence is casual, then 10%), Portugal’s IFICI (20% flat on qualifying Portuguese income, mainly for tech and research roles).
• Low or no tax: the UAE has no personal income tax. Georgia’s small-business status charges 1% on turnover up to GEL 500,000 a year, if you register as an individual entrepreneur.

The visa directory notes the tax treatment of each nomad visa.

If you are an employee, working from another country can create obligations for your employer: payroll tax and social security where you are, and, in some cases, a “permanent establishment” that makes the company liable for corporate tax there. This is why many employers limit how long staff can work abroad. Be open with your employer; some use employer-of-record services to employ you legally in another country.

Start on day one. Reconstructing a year later is miserable and expensive.

• A day count for every country, with entry and exit dates. Keep boarding passes and passport stamps. Several apps track this automatically from your phone’s location.
• Every invoice and payslip, and which country the client or employer is in.
• Tax paid anywhere, with receipts.
• Bank and card statements for all accounts, including multi-currency accounts.
• Proof of where you lived: leases, utility bills and residence permits.

• IRS: Foreign Earned Income Exclusion: the official rules, current limits and the two qualifying tests.
• IRS: Report of Foreign Bank and Financial Accounts (FBAR): who has to file and how.
• HMRC: Statutory Residence Test (RDR3): the full UK residence rules, with worked examples.
• CRA: Determining your residency status: the Canadian residential-ties tests.
• ATO: Your tax residency: the Australian residency tests and how to apply them.