Costa Rica Digital Nomads Law

Carlos Alvaro, the President of Costa Rica, and Gustavo Segura, the Minister of Tourism in the country, signed a law into legislation this week, named “Digital Nomads Law”. The purpose behind signing this law is to attract remote workers or digital nomads and their family members from foreign countries to Costa Rica to accommodate them in the country and extend their term of living in the country up to 2 years. The man behind the promotion of the project at the Assembly of Legislation is Deputy Carlos Ricardo Benavides and was also present during the signing of the law. The law enabled the country to form a regulatory framework that is capable of attracting more digital nomads or remote service providers from various foreign countries, enhancing the status of the competitiveness of tourism in Costa Rica.

Digital Nomads 

Now the question that arises in the first place is that who are these digital nomads? Digital Nomads are the people that use technologies of telecommunications to earn their living and so that they can conduct their life in a nomadic manner. Lea Woodward coined a term in the year 2006, location independence soon later “Digital Nomads”. The location-independent workers were the term used to describe them before digital nomadism became popular. Steve Roberts was the first digital nomad who rode on a bicycle that was computerized in the year 1983 to travel to different locations and he became popular after featuring in the Popular Computing magazine. The digital nomads have become more used to the nomadic life with all the advancements that have come in technology. The invention of Wi-Fi connections and laptops that have the facility internets enabled in them have been path-breaking inventions for the digital nomads. 

An alternative way of working

The digital nomad workers usually work from different foreign countries, from the public libraries, coffee shops, recreational vehicles, and various co-working spaces. The work of digital nomads is commonly accomplished with the use of various devices that are capable of connecting with the internet through a wireless medium, such devices are mobile or smartphones hotspots. Any successful digital nomads need to have the financial backing or very high levels of self-discipline and self-resilience. Most of the members of the digital nomad community are usually semi-retired or retired individuals, wealthy and independent entrepreneurs, and many young workers that work remotely. The lifestyle of the digital nomads has become extremely popular since the year 2014, with the development of various websites that can rank countries based on their weather, internet speed, and most importantly the cost required for living to help digital nomads to select the place according to their convenience.

But why living as a Digital Nomad?

People choose the career of being a digital nomad for various reasons but the two primary reasons behind them choosing this career are the search for becoming financially independent and having a job that can allow them to have total independence over their location of work. Since the increase in the popularity of the work of digital nomads, remote work has become a very viable mode of working, especially for the companies that specialize in technological departments.  Even though as it is visible that there are various advantages of having such a lifestyle with work flexibility and total freedom of the individual this also has its fair share of disadvantages. Digital nomads have reportedly been informed that the biggest problem is loneliness which is followed by burnout.

The lifestyle of a digital nomad also presents various other disadvantages or challenges like the maintenance of their health insurances internationally with total global coverage, abiding by all the laws at the local level at different locations, obtaining a visa for their work, and finally paying the taxes according to the laws locally and at home. In Costa Rica, the new “Digital Nomads Law”, has made life a lot easier for the digital nomads as they can stay for a much longer time than they were able to before and this can be a great attraction for them to stay and start their work at Costa Rica. 

Turning a new leaf

In spite of this, Digital Nomads became increasingly popular over the years and more so now with all the advancements done in technology. The major factor behind the popularity of the digital nomad lifestyle is the widespread use of the internet, even now the rural areas have access to the internet, making more areas available for the digital nomads to travel. Another reason behind the popularity is that the jobs have become less dependent on the location of the work and also the significant increase in the cost of housing has all contributed to their popularity. There are negative reasons that have influenced people to become digital nomads, for example, the unrest of the politics in their own countries, and the high cost of living at the places they reside. Other factors can influence people to become digital nomads but the positive advantages outgrow the negative factors of this lifestyle. 

Owing up to the growing popularity of digital nomads, different programs helped the digital nomad’s improvement. Estonia has started an e-Residency and Thailand has started a SMART visa to attract more digital nomads. Estonia has announced its plans regarding the start of a “digital nomad visa” after a large number of applicants have applied for the e-Residency. Many other countries like Barbados, Georgia, Croatia, and Bermuda have started offering digital nomad visas in their countries to digital nomads. 

Popular Destination for Digital Nomads

Certain locations or destinations are popular among the digital nomads because of their superiority in facilities over the other locations. These locations include Lisbon, Thailand, Medellin, Mexico, and Colombia. Bali in Indonesia is by far one of the most popular destinations among digital nomads due to their extremely low cost of staying and living while providing a reasonably superior quality of life. Cyprus is another very popular choice of destination among digital nomads as it is a European state with comparatively low tax, a process to set up any company quickly, and also the beauty of the island adds up to it. 

These are the reasons behind the fast growth of the digital nomadic community in Cyprus. Other notable cities that have been that are famous for their accommodation of digital nomads are Tallinn, Bansko, Tarifa, and Tbilisi because of their comparatively low of life in the cities. The beauty of choosing digital nomads as a career is that the individual doesn’t necessarily have to stick to any city, the individual can always change their cities according to their convenience. 

With the implementation of the Digital Nomad Law in Costa Rica, Costa Rica will emerge as one of the most populated and famous sites for the accommodation of digital nomads from all around the world. The new laws or the new relaxations that will come into action will attract a lot of digital nomads to the country and help the country to become financially stable again.

Costa Rica Digital Nomads Law

The Costa Rican Digital Nomad Law appeared in September 2020 when the government passed the Digital Nomads Bill and the court agreed because of the realization of the importance of the digital nomads by the government and the key role they have in the recovery process of the tourism industry and the economy of the country as a whole. Digital Nomads have a great impact in boosting the local economy as those digital nomads who stay for a long term usually stay at hotels, rent cars for their travel, and even take up lessons on surfing during their free time, all of which contributes to the economy on a local level and in turn on the economy of the country as a whole.

Laws similar to the Digital Nomads Law have been in effect in other countries like Bermuda, Dubai, and Anguilla for the betterment of the living conditions of the digital nomads and also to attract them to their countries. However, Costa Rica has an edge over these countries as the country has a significantly lower cost of staying, has much better outdoor facilities, and most importantly has been able to cope up with the covid 19 pandemic excellently.  

How the Costa Rica digital nomads law works

The Costa Rican government announced last week the benefits of the digital nomad’s law and now the question arises, how does the law work? According to the law, any foreign individual or digital nomad that has an income greater than 3000 dollars per month will be able to reside in the country for a year with their visa and will have the facility of extending the visa for another additional year making it two years total. If the individual is traveling along with their family, then they must have an income of 4000 dollars per month. There will be an exemption tax payment to import personal basic computer equipment, information technology, or any other similar gadget for work when they can meet the criteria of proportionality directed by the National Customs Directorate of Ministry of Finance. 

Aggregated benefits 

Digital nomads who are traveling to Costa Rica are exempted by the tax of the income of the country that has been defined in Title I of Law 7092, of the Income Tax Laws. This exemption will not be applicable to the family member of the beneficiary. In addition to that, the validity of the driver’s license that is valid in the beneficiary’s home country will be valid for driving in Costa Rica as well. The government projected that the law will be able to contribute to the industry of tourism in many regions that have faced a downfall in the sector over the last few years. Digital nomads will contribute to tourism, increasing consumption of food, more vehicles on rent, increase in tours, increase in medical services, and increase in the services of education

Legal Developments of Digital Nomads

The digital nomads that immigrate from more developed countries have passports that allow them to have much more freedom of traveling from one country to another. Resulting from which, many digital nomads prefer to travel on tourist visas. Although it is illegal for any digital nomad to stay in a country for work on a visa that is meant for tourists, many digital nomads reside at locations that have a much lower cost of staying while they work on projects remotely that are outside the country, they reside in. In any country, visa runs are very normal for the community of nomads. Some nomads have made significant efforts to make their stay legal in the countries they have migrated to by taking up the job of English teacher on a part-time basis as well as taking up courses at the universities of their host countries. 

Digital Nomads Visa in Costa Rica

Costa Rica has earned recognition on the global platform for its efforts in coping up and handling the covid 19 pandemics by the World Travel and Tourism Council (WTTC). Costa Rica has done an excellent job in controlling the effects of the pandemic in the country as the country has one of the lowest rates of fatality in Latin America. During the early days of the pandemic, the government of Costa Rica made it mandatory for everyone traveling into the country to follow a 14-day strict quarantine period. As the pandemic started to reach its peak, the government declared to close the borders as the country was in a state of national emergency. Since the effects of the pandemic have eased up, the borders of the country opened for tourism.

The people traveling into the country do not need to show a negative Covid 19 test proof. However, the Tourism Institute of Costa Rica has made sure that all the hospitals, public labs, and some selected hotels have facilities of antigen-antibody and RT-PCR tests.

Digital nomads can be the key factor for the rebound of the tourism industry as Costa Rica is the ideal destination for them as the country provides very fast connectivity of the internet that is paired with the warm, pleasant weather and all the outdoor adventure activities that include hiking and surfing. The signing of the law has made the place more desirable for digital nomads and Costa Rica will attract a lot more now than they used to before the signing of the law. For digital nomads to immigrate to Costa Rica, they need to qualify for the visa of the digital nomads in Costa Rica. 

Requirements
  • The digital nomad has to provide proof of a stable salary every month. The digital nomad must have a fixed income or at least have an average income on the monthly basis in the previous year which must be equal to or greater than 3000 dollars if the individual comes to the country alone. If the individual chooses to ask for the benefits for his/her family as well then, that individual must have a combined income with any of his/her family members which should be greater than 4000 dollars. In both of the cases, the income must be something that can continue even when the individual is not present at their origin country. 
  • The applicant must obtain an insurance policy for medical purposes that can cover the applicant’s complete stay in the country. The General Directorate in charge of Migration and the Foreigners determines the minimum coverage of the policy. 
  • The applicant will have to make a payment only once, which will grant them their non-residential visa and will recognize them as workers or service providers working remotely. 
  • Other requirements from General Laws of Migration and Law number 8764 of Immigration.

Conclusion

Digital nomads are individuals that work for a company or are self-employed by traveling to different locations of their choice according to their convenience without being confined in an office. Digital nomads are individuals with a passion to explore different locations without compromising on their work. The Costa Rican government has released the Digital Nomad Law that allows various benefits for the digital nomads and will, in turn, attract a lot of digital nomads from all over the world. The main feature of the law is the extension of the staying period from 90 days to a year and later you can extend it to another year, making it two years in total, and the exemption of any charges on the import of personal goods that you will require for work. The exemption of the tax up to the time they meet the proportionality standards of the country.

Digital nomads in return help a lot in stabilizing the tourism department and making it financially more efficient after the kind of losses the country suffered mainly in tourism because of the covid 19 pandemic. Costa Rica aims to become one of the leading countries for the immigration of digital nomads after the passage of the digital nomad law.

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