The Different Kinds of Location-Independents and Why It Matters

The location-independents are a vast category of workers who can leverage the specificity of their job and personal situation to travel and seize opportunities that are not available for "location-dependent" individuals. By reading through the available literature, you may already have heard a wide variety of expressions: digital nomads, slowmads, expats, van travelers ...

Simply put, a location-independent is an individual (or business) that has a career or job that is independent of any requirements to be in a specific physical location.

This independence from a specific location is exactly what opens special opportunities to those individuals. However, those opportunities are not the same, depending on the kind of location independent.

We'll review the different categories of location-independents and the opportunities/challenges that are specific to each of them (mainly from a tax perspective, as this is what we do at Heavnn):

1- International travelers

International travelers are individuals traveling to other countries without any ties to the visited countries (administrative, financial or personal). That means, a fast accommodation method such as hotels or very short term Airbnb rentals, no bank account in the visited countries, no registration, etc ...

This category includes tourists and business travelers.

Besides the multi-ownership deals that they are often offered in some countries, being an international traveler offers no specific financial opportunities (but a great compensation most of the time!).

2- Digital nomads

Digital nomads are individuals leveraging technology to perform their work while traveling. Their main characteristic is the freedom they benefit from in terms of geo-arbitrage and legal status.

Compared to expats, digital nomads stay a short amount of time in a given location, between 3 weeks and 6 months, before moving to the next one.

They are also to be distinguished from international remote workers, as they operate their professional activity in full independence, from a legal perspective (they are business owners or freelancers).

Digital nomads are the location-independents who can benefit from the most financial opportunities, especially from a taxation perspective. The key optimization aspect for this population will be:

• The choice of their global tax setup: their status open a wide variety of setups that can lead to a minimum taxation (even zero taxation), while still being in line with their personal and travel ambitions. An optimum setup takes into consideration the type of business and the correlative taxation, the global offering for registration, the tax residency question and the many tax reduction opportunities for digital nomads, worldwide.
• the choice of the right financial strategy: a full access to the best financial scenarios often requires a high-level of location-independence to leverage the best investments opportunities available worldwide. Investing in the right opportunities and/or financial instruments, and correctly managing the correlative tax question (especially for Bitcoins and NFTs), is the key for a sustainable financial growth.

As always, it's all about having everything settled the right way. It's also about accepting to take action and stop paying taxes in a country you left a long time ago because "it's easier" (even this country didn't plan things to be this way, and you should plan differently as well).

3- Slowmads

As their name obviously state it, slowmads are digital nomads traveling at a slower pace. While still being fully location-independent (geo-arbitrage and compatible legal status), they will stay between 6 months and a year at the same location.

The financial opportunities for them will be identical to the ones that we explained for the digital nomad category.

An extra caution for the tax residency part should be taken. The slowmad has tighter ties with the host countries, which makes it easier to trigger multi-country tax residency issues (but this can also be leveraged).

4- Corporate nomads (International remote workers)

The corporate nomads are part of a distributed workforce and therefore are linked to a specific company, for which they perform their work on a location-independent fashion. The concerned specific company is located in a different country.

The corporate nomads need to be distinguished from the workers from home (WFH), who also work remotely but without an international dimension. The WFHs work in a configuration where they and their employer are located in the same country, under an HR policy restricting the possibilities of international movements.

As their occupation does not tie them to a specific location, corporate nomads can benefit from interesting financial opportunities. The first obvious one is the possibility for them to plan their country of tax residency. Correlatively, they can also benefit from various digital nomad programs that facilitate their mobility and can, in some cases, lead to particular tax advantages.

However, this category of location-independents faces particular legal challenges that very often end up locking their potential for financial optimization. The main challenge is their global legal setup, in 3 ways:

• Which professional status will better serve their financial interest in their specific situation?
• Which country offers the best legislation according to their personal situation and their business goals? (easy registration, easy management of their status, hability to operate internationally, etc ...)
• How should they get paid and where? (international flow of their money, banking options, etc ...)

Those questions are not neutral and lead to some unexpected difficulties as soon as the contract is signed: complications to get a mortgage, double taxation (especially for americans and eritreans), massive administrative load ...

For international remote workers, the real challenge is their global setup that will determine wether they will be able to leverage their location-independence to improve their finances or not. For a long-term collaboration, it is in the interest of both remote employers and international remote workers to get it right and optimized from the very start.

Actually, it's even in their common interest that international remote workers switch to a digital nomad status.

5- Expats

An expatriate is an individual who voluntarily moved from his country of origin to a new country, for work purposes. By voluntarily, we understand because of a personal travel ambition or following an interesting incentive from their employer.

The average length of an expatriation is comprised between 6 months and 3 years. The characteristic of the expat (so that we can put a full stop on this common debate) is that they are supposed to go back to their country or move to a new country after a certain period of time. "Long-term expats" should actually be named immigrants.

Expats are highly qualified workers, often experienced, that are the jewelry of the companies or groups they work for, and much appreciated by their host country. The main financial opportunity for them will be in:

• the negotiation of their salary structure, that can have a massive impact on their taxes (for a same gross salary, two salary structures can show up to 50% difference in terms of personal taxes due). By salary structure we target factors such as fixed vs variable part, additional benefits, payment modalities ...
• managing multi-country taxation: avoiding taxation in two different countries for the same revenues (especially for stock-options) and choosing the right country for taxation (hot topic for crypto holders).

We also often get the question: should I open or keep a bank account in the countries I am a guest in? The answer is yes, for future financial planning this will definitely be an asset.

In the current context of remote work rising, if the already established candidate for expatriation have no particular interest in switching to a digital nomad status, this is however an opportunity to be seized by young professionals tempted by the expatriation journey.

Final Thoughts

There are other types of workers who are globally mobile individuals but not location-independents: cross-borders, immigrants, certain expats that perform an in-person job that does not rely on technology.

They can still adopt a nomadic lifestyle, and we find surprising profiles among the location-independents (doctors, lawyers, architects ...). The financial optimization possibilities in those particular cases are still real but will need an especially high level of personalization.

For more detailed information and resources, visit our other articles in the "Your Niche as a Nomad" series for digital nomadism tips and tricks!