Greetings Nomads,

Welcome back to Nomad Cloud, where we share with you the latest news, thoughts, and innovations in the digital nomad world. We prioritize your needs and bring you topics that matter.

Without further ado, let's get right into it.

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• Financial Organizations Challenged by the Growing Community of Digital Nomads 📈

• Japan: Immigration Changes Favorable to Digital Nomads Forthcoming 🇯🇵 

• American nomads let’s talk taxes (oh say can you see your tax bracket) 🇺🇸

Hot Off The Press 🔥

• Want to move to South America? Uruguay has just introduced a digital nomad visa (Euronews)

• Digital Nomads Are the New Gentrifiers (Vice)

• Digital nomads leading to glut of foreign document admin—researchers (BiomerticUpdate)

• Global Survey: Financial Organizations Challenged by the Growing Community of Digital Nomads (BusinessWire)

• Toronto was named one of the best cities for remote work (StreetsOfToronto)

• Croatia Digital Nomad Visa: The Ultimate Guide (NomadCapitalist)

• 5 Must-Have Apps For Digital Nomads On The Go (TravelingLifestyle)

• Coliving Project Cabin Wants to Put Digital Nomads in Nature (CoinDesk)

• Why These 4 Underrated Central American Destinations Are Perfect For Digital Nomads (TravelOffPath)

• Costa Rica Digital Nomad Visa Guide 2023 (NomadCaptialist)

• The 10 Worst U.S. Cities For Digital Nomads Revealed In New Report (TravelOffPath)

• Japan: Immigration Changes Favorable to Digital Nomads Forthcoming (Fragomen)

• This Latin American Country Has No Set Income Requirement For Its Digital Nomad Visa (TravelOffPath)

Here is what else we dug for you

Global Survey: Financial Organizations Challenged by the Growing Community of Digital Nomads

Digital nomadism is a growing sector that has seen many fulfilling their dreams of traveling while working remotely.

However, it's not all rainbows and sunshine, as the growing digital nomad community has trouble accessing financial services while living abroad.

Have you ever tried to open a bank in Bali on a tourist visa, we didn’t think so. How about getting a new credit card when you haven’t “owned” anything in a while. Nice try, buddy.

We’re being dramatic here but you get the point. Financial institutions are still living in 1924. Let’s see what all the fuss is about below.

Here is what we know about the story:

• The global COVID-19 pandemic has led to a rise in remote work and increased interest in travel while working, creating a need for financial institutions to cater to the digital nomad community.

• A survey by Regula reveals that financial services companies are struggling to handle the growing volume of foreign document verification cases, with significant increases reported in countries like France, Turkey, and the USA.

• Manual verification of foreign documents is prevalent among these businesses, indicating a potential problem with accuracy and efficiency.

• To adjust to this new industry, financial institutions should prioritize identity verification solutions that offer a comprehensive database of document templates, incorporate liveness checks and biometric verification, and enable face comparison to enhance fraud prevention and customer onboarding processes.

P.S We’re exploring a partnership with a company called Xpat that will solve all this, a full service solution. We’ll keep you updated on how things progress.

Japan: Immigration Changes Favorable to Digital Nomads Forthcoming

Digital nomadism is obviously a growing sector that is watering the mouths of many organizations and stakeholders around the globe.

So it’s no surprise that the Japanese government has highlighted its intentions to revamp it's immigration frameworks to attract remote workers to the region.

Here is what we know about the story:

• The Japanese Government plans to reshape its immigration framework with respect to promoting digital nomadism.

• The region's major strategy is to become the largest port in Asia for digital nomads (look out Bali!)

• Primarily, the aim is to promote a dynamic startup ecosystem that enhances cultural exchange while still promoting economic growth. (Well that’s a different angle 🤔)

Whoa…Japaaan is throwing it’s horse into the race? This is about to get real interesting.

Digital Nomad Visa Tax Rules for Working Remotely

Just because digital nomadism entails working remotely from anywhere in the world, it doesn't mean you can pack up and start living in a different region without thinking about taxes.

Especially if you’re American.

So American community members this one is for you!

Yes you may enjoy freedom that others have chosen not to embrace yet but it’s still important to be aware of various rules and regulations regarding your taxes.

You see, the US tax structure is at odds with remote living as it requires all citizens, irrespective of their current living location, whether it's abroad or local, to file taxes with the IRS.

Adam Nubern, an accounting firm expert specializing in nomadic tax law, was quoted explaining, "No matter where you work from, or how you work — freelancer or salaried employee — if you're an American citizen, you always have to file and report your taxes,"

We are not here to offer financial or legal advice, we’ll leave that to our partners but what we can share is that you should look into the Foreign Earned Income Exclusion (FEIE)

What is the Foreign Income Tax Exclusion (FEIE)

The FEIE lets expats and digital nomads exclude a certain amount of their foreign-earned income from US taxation. The exact number changes each year: For 2022, the exclusion was $112,000 and for 2023, the exclusion increased to $120,000.

The FEIE applies only to earned income, such as:

• Salary

• Wages

• Bonuses

• Commissions

• Self-employment income

• Professional fees

…and not unearned income like:

• Interest

• Dividends

• Pensions

• Social Security payments

• Capital gains

The FEIE isn’t an automatically in play for everyone living outside of the US. To qualify for the FEIE, you must pass at least one of two tests:

• The physical presence test

• The bona fide residence test

What Is the Physical Presence Test?

To qualify for the FEIE—and by extension, the Foreign Housing Exclusion—digital nomads must pass either the physical presence test or the bona fide residence test. What the heck is that?

First let’s look at the physical presence test, since it’s the easiest one for digital nomads to pass.

All that the physical presence test requires is that you spend more than 330 full days outside of the US during any 12-month period. You can spend those 330 days in one country or many—but remember, you must be in the country legally.

What Is the Bona Fide Residence Test?

The bona fide residence test is a liiitle more complicated than the physical presence test and not as easy to nomads to do. The bona fide residence test requires that you:

• Are a US citizen (or resident alien living in a country that has a tax treaty with the US)

• Maintain a residence in a foreign country

• Live within that country for a period of time that includes an entire calendar year (January 1–December 31)

• Have no plans of returning to the US in the foreseeable future

The bona fide residence test requires that you live in one or more foreign countries for at least an entire year (dude that’s not nomading is it?). So you can see this doesn’t really apply to us.

Anyways, we hope this helped.

And remember if you want help with anything digital nomad immigration, check out our new legal partners Orience.

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