Digital Nomad Visa: Tax implications for remote workers living in Estonia
The Digital Nomad Visa allows remote workers to live and work legally in Estonia while enjoying its digital infrastructure's benefits. However, there are significant tax implications to consider:
Residency Status: Digital nomads who stay longer than 183 days in a year may be classified as tax residents in Estonia, which subjects them to local income tax on worldwide earnings.
Double Taxation Treaties: Estonia has treaties with various countries to prevent double taxation. Remote workers should check if their home country has such an agreement to avoid being taxed in both jurisdictions.
Self-Employment Tax: Understanding the Estonian tax system is crucial for freelancers or self-employed individuals. They may need to register as businesses and comply with local tax regulations.
Social Security Contributions: Depending on their home country's agreements with Estonia, remote workers might be liable for social security contributions in either country.
Tax Deductions: Digital nomads can benefit from certain tax deductions related to business expenses, which can alleviate their overall tax burden.
In summary, while the Digital Nomad Visa offers an exciting opportunity for remote workers in Estonia, it is essential to navigate the tax landscape carefully to ensure compliance and optimize tax obligations.