Nivaani Moodley | Associate Director | Webber Wentzel | mail me |

An increasing number of jurisdictions are embracing digital nomads as a potential source of economic good, lightly taxed but who contribute to the fiscus through their daily and considerable spending habits. South Africa is no exception, following some recent exciting developments within the immigration policy space.

On 20 May 2024, the amended immigration regulations were published for comment. The regulations include the long-awaited publication of the “Digital Nomad Visa”.

Recent studies have shown that the demand for remote work outstrips supply and offers employees increased flexibility concerning their time, being nearer to loved ones, and other “life” concerns.

A stay of six months or less makes SARS registration moot

Currently, foreign nationals entering South Africa to work for a local company are required to have the correct work authorisation to do so. Getting it means applying for the appropriate work visa as set out in the Immigration Act. The existing requirements and lengthy waiting periods associated with these permits can quickly quell a foreign employee’s appetite to work in South Africa for a short period.

The digital nomad visa seeks to offer foreign workers more opportunities to work in South Africa while avoiding the travails of permanent employment. The visa would apply if the foreign national intends to work remotely in South Africa for a foreign employer or derives a foreign source of income remotely.

To qualify for a digital nomad visa, a foreign national must prove that they earn no less than the equivalent of ZAR 1 million annually.

If this visa is issued for a period not exceeding 6 months within 36 months, the foreign national may apply for exemption from the South African Revenue Service (SARS). However, if the visa is issued for a period longer than 6 months within 36 months, the foreign national will be required to register with the SARS. If applicable, the foreign national must also comply with legislation governing the employment of workers in South Africa.

What employers need to consider about leveraging the digital nomad visa

Employers have to think carefully about leveraging the digital nomad visa and whether South African employment law applies to remote workers working in the country. This is particularly important as all foreign employees, including those who do not have valid working visas, are afforded legal protection under the Labour Relations Act. This raises the importance of having global mobility policies in place and including specific terms and conditions of employment in a foreign worker’s contract that address these issues.

For example, foreign employers with employees who hold such visas and who live and work in South Africa would need to consider various tax issues arising from these remote working arrangements.

The work done by the individual may create a permanent establishment of the foreign employer in South Africa, in which case the foreign employer would need to register as an employer with SARS and account for payroll taxes here. An individual who is an independent consultant and working remotely in their capacity would not have these issues.

An alternative route that has emerged is the use of “Employer of Record” (EoR) service providers to engage workers in jurisdictions outside of the jurisdiction in which an employer is based.

An EoR effectively employs a person on behalf of a foreign client company for a fee, minimising the costs and administrative burden associated with direct employment in South Africa, especially around tax and compliance management. However, there are risks.

An EoR and the client/foreign company may be found to be the sole/shared employer of a worker in South Africa if the worker triggers the deeming provisions that apply to temporary employment services, which sit at ZAR 254,371.67 per annum. If this happens, the worker will be treated as an employee of the foreign company and deemed to be party to an employment contract in South Africa, mandating registration with the Companies and Intellectual Property Commission (CIPC).

Considerations for SA companies looking abroad

On the other end of the spectrum, South African companies wanting to engage employers of record overseas should be aware of the laws applicable in the relevant jurisdiction. In certain jurisdictions, the use of employers of record is highly regulated.

Specialist legal advice on intellectual property, tax, and employment law should be sought in those foreign jurisdictions, and careful consideration should be made as to the possibility of creating a permanent establishment.

The world of work and talent is changing dramatically. For employers and employees wishing to explore the world of work offered by digital nomad visas and similar programmes, it is wise to have a thorough understanding of the limits of such programs, and their potential implications.

Related FAQs: Digital nomads

Q: What is the digital nomad lifestyle?

A: The digital nomad lifestyle refers to a way of living where individuals leverage technology to work remotely while traveling around the world. This lifestyle allows them to combine work and travel, often leading to a unique blend of experiences in diverse cultures.

Q: How can I become a digital nomad?

A: To become a digital nomad, you typically need a remote job that allows you to work from anywhere in the world. This could involve finding digital nomad jobs in fields like tech, writing or design. Additionally, it’s important to understand visa requirements for the countries you plan to visit.

Q: What are the visa requirements for digital nomads in South Africa?

A: Visa requirements for South Africa vary based on nationality. However, many digital nomads looking to stay in South Africa must apply for a visitor’s visa, which allows for a short stay but may not permit work. It’s essential to check the latest regulations and consider options like the new digital nomad visa, if available.

Q: What is the cost of living like in South Africa for digital nomads?

A: The cost of living in South Africa can vary widely depending on lifestyle choices. Generally, it is considered relatively affordable compared to other major cities. Rental prices can range based on location, but many digital nomads find suitable accommodation that fits within their budget.

Q: How can digital nomads stay connected while traveling around the world?

A: Staying connected is crucial for digital nomads. Most rely on Wi-Fi in cafes, co-working spaces and accommodations. Additionally, having a portable Wi-Fi device or local SIM cards can help ensure reliable internet access while traveling around different countries.

Q: What challenges might digital nomads face when living and working remotely?

A: Digital nomads can encounter several challenges, including visa requirements that limit their stay, difficulties in finding reliable internet and managing work-life balance. Additionally, navigating different time zones and cultural differences can impact their work and social interactions.

Q: How has the rise of remote work impacted the digital nomad community?

A: The rise of remote work has significantly boosted the digital nomad community, allowing more individuals to work from anywhere. This shift has led to increased interest in destinations with favourable visa requirements and cost of living, enabling more people to embrace the digital nomadism lifestyle.