9 interesting questions (and answers) about digital nomads

Who are digital nomads, what do they do, where do they live and how much do they earn? Here are the answers to these questions and more.

The term “digital nomad” is becoming more and more present in out day to day lives. And for good reason, because more and more people are choosing the life of digital nomadism. The global community of digital nomads is expected to reach one billion people by 2035. Experts estimate that the number of digital nomads currently fluctuates from 500.000 to tens of millions.

There is no need to move far away: a large part of the Denationalize.me team is living the digital nomad life. Among other things, we finance our travels and our way of life with the consultations and other services that we offer at Denationalize.me.

Just like us, many of Denationalize.me’s clients are independent business owners in a specific location, although only some of them consider themselves as digital nomads. Others consider themselves more as perpetual tourists and a large group do not really define themselves, they see themselves more as entrepreneurs or investors applying different parts of the Flag Theory.

In this article, we want to get rid of the theoretical distinctions and focus on the essence of digital nomadism in order to finally get a detailed image of perpetual travellers.

Digital nomadism and science

The answer to the question why so many people live as digital nomads is obvious: freedom, flexibility, and the opportunity to travel all over the world (although, the good press and the marketing have also helped).

From our point of view, there are many reasons why, especially in physical, legal and bureaucratic aspects. However, many people still have some unanswered questions regarding digital nomadism. Therefore, in this article we want to answer 9 of them.

We have gathered all the answers from a study entirely dedicated to the topic of digital nomads (Master Thesis: Lifestyle-LCA of Digital Nomads CO2 Efficiency by Living in a Global Sharing Economy; by Hilpert, Fabian).

Following each question, you will find Christoph’s commentary giving his opinion on the survey answers and comparing the results to the average perceived by the clients we advise.

1) Who are digital nomads and what do they do?

As there are more and more opportunities to work and earn money through the internet and social media, many people can travel around the world and work online at the same time. Therefore, digital nomads are free to choose which climate they live in, what their daily expenses are (food, accommodation…) and even where they want to pay their taxes. They often do not have a fixed place of residence or work, given that all they need to continue their work is a stable internet connection.

There are many different jobs which can be carried out from anywhere in the world, but which jobs are particularly compatible with the digital nomad style of life? We have created a brief list of 5 of the best jobs for digital nomads according to the Fabian Thesis:

1. Software developer
2. Copywriter
3. Marketing specialist
4. Data analyst
5. Director of Sales

However, many do not have an employment relationship as such, i.e. they are not employed by a company. Most digital nomads are self-employed as freelancers or entrepreneurs: they offer their services to companies, which become their clients.  In addition, most of them have a higher level of education: 37.7% have a bachelor’s degree or equivalent and 35.1% have a master’s degree or equivalent. Of course, it is not necessary to have a high level of education to become a digital nomad: anyone who finds a way to earn money online can become a digital nomad.

Christoph’s note: Digital nomads have jobs, perpetual travellers create jobs. Although some Denationalize.me clients earn good money as freelancers in the IT sector and similar areas, most of our clients have companies with several employees or have been living off rents since their departure. Naturally, this cannot be classified as a job.

A rough count of location-independent entrepreneurs among our consultancy clients shows that 35% are in the service sector, 25% in e-commerce (especially Amazon EU and dropshipping), 20% in software, music and other digital assets, 10% in the physical production of goods and the remaining 10 % in other business models. It never fails to surprise me that with really simple ideas some people can make huge sums of money, and do it completely remotely.

Among the self-employed who come to our consultancy we find a very high proportion of psychotherapists, non-specialist doctors and registered doctors. They often seem to question the system in a particularly critical way. Many virtual assistants and freelancers of all kinds also use our open service of the American LLC, among other services. We are happy to support anyone on their path to greater freedom and prosperity, regardless of what they do; even if you do not work anymore: retirees, traders and bondholders make up approximately 25% of our consultancy clients.

2) Where do digital nomads prefer to spend their time?

Another fascinating question is where digital nomads prefer to live. Sunny and warm Spain is on the top of the list. This should not come as a surprise, as Spain is the sunniest country in Europe with more than 3,000 hours of sun each year. As long as you do not become a tax resident, Spain can be a great option to spend your time. Mexico and Thailand are joint in second place. Third place is also shared by two countries: Italy and Portugal.

Christoph’s note: If we take a look at the most relevant groups of digital nomads on social media, this survey is validated. Koh Phangan, Bali, Playa del Carmen, Las Palmas or Lisbon are clear nomad hotspots with a large community.

Many stateless people also like to stay in these countries or even set up their permanent base there. However, you should not assume from this that other countries are less attractive. You have internet access in nearly every country in the world, and I confirm this from my own experience. For example, the wifi connection in many developing countries in Africa and Asia is better than in Germany.

Few Denationalize.me clients travel as much as I do. Around 40% have a two base approach – normally a European country in summer and a tropical country such as Mexico or Thailand in winter -. Around 20% permanently settle in just one country are therefore expats rather than perpetual travellers. Another 15% live in a camper, a motorhome or even on a boat. 10% move between 3 and 4 counties and another 10% combine this with a mobile life on a boat or motorhome for several months of the year. Only 5% actually travel perpetually for more than a year without having a permanent residence.

3) What are the most important criteria when choosing a country for digital nomads?

The majority of us choose hot and sunny countries for our holidays, so it is not surprising that, when you ask nomads what criteria are the most important when choosing a country, the climate is the most mentioned. In second place it is the cost of life. Moreover, the culture and social life play an important role. Visa restrictions, a country’s amenities, gastronomy and the country’s main attractions are also taken into account when choosing upcoming destinations.

Many countries have recently benefited from digital nomads, as they can adapt to different working environments and conditions and are often highly skilled workers. For this reason, some countries have developed a number of policies and incentives to attract and encourage digital nomads to stay longer. Estonia, for example, offers special conditions for business, a flexible tax system, special visas, work permits and e-Residency for digital nomads. The possibility of paying a tax-free salary favours, for example, remote start-ups, and you will not find this in any other EU country, where salaries are usually subject to social security and taxes.

Besides Estonia, other countries have jumped on the bandwagon and introduced a special visa for digital nomads. More and more countries are offering special visas for digital nomads.

Christoph’s note: Typical digital nomads tend to be more concerned with community, cost of living and infrastructure. The question of taxation is often not a decisive issue for them, for the simple reason that their income is rather low. Therefore, countries with difficult entry or immigration conditions are not particularly popular amongst digital nomads.

After having worked in my own business “illegally” with tourist visas in every country in the world without having any problems, I do not really see the need for special visas for digital nomads. Of course, it is likely that governments will increasingly regulate this still recent lifestyle.

The reality is that currently this visa category only offers advantages that most people do not need. You can continue working in your own company as a digital nomad in nearly every country with tourist visas. However, it is true that with digital nomad visas you can stay longer without having to go through the normal immigration process. In some cases, this type of visa even has tax advantages, such as allowing you to overstay 183 days in the country for tax purposes, for example.

4) What is the financial situation of digital nomads?

Many people dream of the life of a digital nomad, but they think they will not be able to afford it. I assure you: you do not need to earn millions a year to afford this lifestyle. On the contrary: 27.3% earn less than €10,000 a year – that is less than €835 a month! Another 21.3% have a yearly salary of between €10,000 and €15,000 – with a maximum of €1,250 per month -. As you can see, you do not need a big income to become a digital nomad. Naturally, this depends on your standard of living and the country you intend to live in.

Another question is how much of digital nomads’ income they really need to live on. Almost 12% spend all of their income and do not save anything, so they cannot invest it. Around 40% need between 70% and 90% of their income to finance their lifestyle.

Christoph’s note: According to the survey’s results, one can even speak of a digital proletariat. However, we should classify it correctly. Those who speak German, for example, tend to have an advantage of not having cheap competition in low-wage countries. This implies an acceptable wage level even for the most basic jobs. If you do not have to pay taxes for it, you can make a good living as a freelancer or assistant without much effort.

Our team’s salaries in Denationalize.me, for example, are already above this average. Only a few clients who use our consulting services earn less than €50,000 a year. In these cases, they tend to have recently started their businesses and have financial reserves, whether it is from inheritance, sale of real estate or other businesses.

Since 2015, Denationalize.me has been dedicated to the creation of strategies of large companies, large tax law firms and family offices possible for the average self-employed and small entrepreneur. The majority of our clients (50%) remain in the same income range as before: between €50,000 and €200,000. Around 20% have an annual income of between €200,000 and €500,000, while 10% have an annual income of up to one million euros. Around 10% of the entrepreneurs that we give advice to at Denationalize.me are truly millionaires in terms of income, or, at least theoretically after taking on our suggestions. At the end of the day, taxation in countries with a high tax rate means that every millionaire in terms of gross income is only “half a millionaire” because of their tax residence.

We always talk about gross profit after costs, but before income tax, because a high turnover loses a lot of attractiveness after income tax (e-commerce with low margins, for example). 10% of our advised clients earn less than €50,000 a year, but the majority of them do it passively as private individuals on the stock market. Even on €2,000 or €3,000 a month, you can have a great life living internationally with little effort.

5) How many hours does a digital nomad work?

The majority of digital nomads work less than 9 hours a day – a huge part within this group work an average of between 6 and 7 hours a day -. However, there are also those who dedicate less than an hour working on their income. On the other hand, you can also find people who spend more than 12 hours a day in front of their laptop.

Throughout the week, the majority of people work between 19 and 44 hours in total. The range of statements from the participants in this study starts at 4 hours per week and ends at 120, which makes it clear how much it varies from person to person.

Christoph’s note: It is not easy to truly calculate how much our clients work but, from our own experience, we assume that work hours remain constant up to a certain level of income (freelancers who are content with what they earn), then increase in proportion their income during a long run (the tough early years as an entrepreneur) and then slowly decrease again in the long run as profits increase (optimising time rather than money after success). Although it is true that workaholics exist, the majority of stateless entrepreneurs have diverse interests and passions that they pursue around the world.

6) Do all digital nomads work from the beach?

In fact, more than 75% work in the place where they reside – their hotel, hostel or Airbnb -. The second most frequently mentioned places are cafés or public places. Many also say that they change their work space frequently and that they work in co-working spaces or offices. A co-working space is a large shared office space where many people can work simultaneously.

Co-working spaces are becoming more and more popular with digital nomads. The co-working community has grown exponentially in the last decade: From 21,000 people in 2010 to more than 2,000,000 in 2019. Therefore, many of the popular cities amongst nomads have also joined the trend and created their own co-working spaces, including Bali, Mexico City, Barcelona and Lisbon.

Christoph’s note: I have never worked a single hour in a co-working space in my 8 years of self-employment, and I know very few entrepreneurs with businesses that do not tie them to a physical location. Co-working spaces can be a great option for freelancers who do not have to deal with their clients directly. However, I only see disadvantages in comparison to working from the comfort of your hotel: a huge loss of time commuting there, the inevitable distractions from other people, the lack of silence for phone calls and the unnecessary extra costs.

I do not believe that anyone truly works from the beach. However, if most of your work is carried out over the phone, like in our case, you could occasionally work from the beach. Anyway, lying on the beach is not a big deal for most stateless people – why lie on the beach sunbathing in destinations like Bali, Kho Phangan or Thailand when you could be expanding your business with the advantages they offer?

7) Do all digital nomads travel alone?

In reality, many nomads do not travel alone, although the ratio is quite close: 46.4% travel alone around the world, around 40% travel with their partner, 2% do it with a group of people and 11% travel with their entire family – there are even families who travel all around the world with three kids -. This shows that life as a digital nomad is not just for young single people.

Christoph’s note: In fact, we see a very interesting division between our clients, especially among families with children. Approximately half of them have never been interested by free learning and rely on the traditional education system. On the other hand, we see many families that opt for free learning for their children or they are trying mixed models of free learning – often online – and self-education. This group has increased a lot, mainly due to the pandemic (mandatory antigen testing and the imposition of the mask at all times) and the consolidation of “woke” indoctrination in schools.

8) Are all digital nomads genuine backpackers?

The majority of us probably have in mind the image of a backpacker when we talk about digital nomads, but… is this really the case? According to this study, a substantial quarter of digital nomads travel the world with only one backpack, while another 43.4% have a second small backpack in addition to their large one. There are also those who travel traditionally with one or more suitcases. Naturally, the amount of luggage you travel with depends on the time you are staying in a country and how frequently you will change location. For example, 25% travel to 2 countries, 14.2% travel to 3 countries, and 14.9% travel to 4 countries on average per year. Therefore, a digital nomad does not necessarily change country every month.

Christoph’s note: as already made clear in other articles, cases of nomads travelling to more than 4 countries a year are quite exceptional. Compared to my average of 40 countries a year, the truth is that it sounds quite relaxed. The majority of these digital nomads deal with the digital part very well, but not the nomadic part. Perpetual Travelling would be a much better fit for them. With 2 locations, you might not be a nomad yet, but as a perpetual tourist you would live permanently outside the system. The majority of stateless entrepreneurs are more interested in getting their business off the ground and enjoying a relaxed day-to-day life – preferably, of course, tax-free and in a warm climate.

9) What is the daily life of a digital nomad like?

As well as adventures and work, the nomad’s life also involves – as for everyone else – daily chores and activities, such as washing clothes and preparing food every day. As most people only travel with one backpack and therefore do not carry a lot of clothes with them, they typically wash their clothes more often: just under a third wash their clothes once a week, while 13.2% wash their clothes every 1.5 to 3 weeks.

The majority of digital nomads (45.8%) go to eat in restaurants once a day or order food to takeaway. This does not tend to be a big expense, given that the restaurant prices are extremely affordable in many countries (particularly in South America and Asia). On the other hand, many people exclusively cook for themselves every day. People prefer to sleep in flats rented through Airbnb, although hostels are also very popular. To travel around the country, most nomads use public transport, such as the bus (60%) or train (53%).

Christoph’s note: The daily life of stateless people is as varied as their sources of income. The fact that self-optimisation is high on the agenda for many of us has numerous effects on consumer behaviour, health, nutrition, sport, etc. Optimising flights and accommodation is also exciting for many when there is nothing left to optimise in terms of taxes. Travel hacking can often extend the benefits of being a perpetual traveller even further.

The conclusion here is that everyone is different. And this is exactly where our work begins: on the individual. We try to understand your situation, your wishes, and your aims. We take them into account and compare all jurisdictions around the world because we do not want to sell you a single standard solution – even though some standard solutions, such as the American LLC are so good and versatile that everyone wants them.