Digital nomads: labor-related issues of this work format

Precautions for companies hiring digital nomads and a few points of attention for those intending to embrace this work style

By Luciana Lupinucci

A computer, an internet connection, and the possibility of working from anywhere in the world. The digital nomad is the face of these new technological and borderless times.

This work arrangement is already a reality for 35 million people around the world, according to the 2022 Worldwide Immigration Trends Report by Fragomen, a global company specialized in immigration.

Ever since the pandemic, the movement toward work location flexibility has grown on a global scale for many employees. This shift suggests that digital nomadism is likely to get more followers in the coming years.

But what precautions should be taken by professionals who wish to work without settling long-term in a fixed address or even in a fixed country? How can companies avoid labor risks? How does our law address this issue? Learn more about these and other aspects below.

What is a digital nomad?

In very broad terms, a digital nomad is a professional who works online and is able to work from anywhere – a concept sometimes known as “anywhere office”. When such worker is formally employed by a company, both parties should keep several aspects in mind.

This article provides general insights on the topic. Ideally, each situation should be dealt with in a case-by-case analysis, as a single detail can be crucial when determining the labor and tax outcomes.

Digital nomads based in Brazil who work abroad

When employees are hired by a Brazilian company, they remain entitled to their labor and social security rights in Brazil, even if their work is performed from elsewhere.

The recently published Law No 14,442/2022, which addresses remote working, introduces provisions that can be applied to a nomadic work style.

One must be mindful of the legal requirements for performing a job remotely, thus both parties must sign a contract providing for all conditions and details. This is essential for ensuring legal certainty.

The aforementioned statute established that contracts are governed by the law of the hiring place, even though employees may work from elsewhere. In other words, the law of the hiring place applies, as opposed to the law of the place chosen by the worker in which to perform the services.

Said law allows employers to demand that workers attend to the company for on-site activities whenever necessary. But what should be done if an employee is on the other side of the world and cannot attend right away? To resolve such situations, additional rules should be provided for under the agreement.

Depending on the difference in time zones, working hours can also pose a challenge. For this reason, individual agreements should stipulate the period during which an employee should be available to respond to work demands.

One good piece of advice for companies implementing remote work is to perform a workforce planning that anticipates digital nomadism, accommodating this possibility in the employment contracts as a way to mitigate risks.

It is worth pointing out that the concept of digital nomadism does not apply to Brazilian workers relocated by companies to work abroad, in which case they must comply with specific rules.

As for employees, they should weigh up the pros and cons of their relocation in order to check how labor and tax issues are handled in the country where they intend to live temporarily.

Among other aspects, digital nomads should also keep in mind the time they plan to stay abroad to assess the need for submitting a Definitive Country Exit Statement so as to avoid double taxation while working overseas.

Foreign digital nomads coming to work in Brazil

Foreigners working in Brazil are considered digital nomads when they can perform jobs for their foreign employers remotely, by using information and communication technologies. Those individuals coming on a temporary basis are not entitled to labor rights in Brazil. These topics are addressed under the CNIG/MJSP Resolution No. 45/2021.

With the enactment of the above regulation, the National Immigration Council (CNIG) has granted temporary visas and residence permits specifically for digital nomadic immigrants not formally employed in Brazil. The initial period of residence for immigrants holding this temporary visa is up to one year, which can be extended for an equal period.

In case a foreign company that employs digital nomads is headquartered in Brazil, precautions should be taken to prevent those employees’ recurring presence in the company’s facilities, so as to avoid an employment relationship tied to those locations.

Foreign digital nomads must be aware of the tax implications. If they stay in Brazil for more than 183 days, in succession or not, for up to 12 months, they will become tax resident in the country and will be liable to comply with Brazilian tax obligations.

Global mobility free of labor risks

Domingues e Pinho Contadores has a team of specialists who are always up to date with the latest labor and social security regulations to meet the demands of an ever-changing world.

Our assistance ensures that the best practices and strategies are implemented to minimize risks related to nomadic work for both companies and workers. You can rely on our support: dpc@dpc.com.br.