We call digital nomads those persons, who – even from a continent away – can do their work via digital means. Although it is not a recent phenomenon, as a result of modernization – and no doubt COVID-19 pandemic -, we meet more and more with this expression. We are surrounded by many people who, unlikely to the traditional employment relation, perform their work without a specific place of work from anywhere in the world, practically only with the help of a laptop. Even though this new trend is becoming more widespread, many people are not aware of its legal consequences. This is not surprising since there is no comprehensive legal framework. However, our digital nomadism has important employment, tax, social security and in some cases immigration law consequences.
There are questions about which country’s employment and labour laws apply to digital nomads, what kind of tax obligation they have – especially after wage income -, and whether they need to make a declaration or obtain a permit to legally stay in a country after a certain period of time. Of course, these questions can properly be answered case by case, as different rules apply based on their nationality, the country in which they wish to work, the length of time they would be working and the type of job they perform.
In our experience the new form of employment is always extremely unique, and it is only further varied by the needs of the parties. Recently a client of ours approached our firm with the following enquiry: the German employer had been employing a national of another EU member country in Germany for several years, however the employee had recently indicated that he would like to return to his home country for a longer period of time and continue working from there. Since this had no obstacle, considering the employee’s type of job, the parties managed to agree upon the conditions, however they asked for our help in connection with the legal consequences and the reporting obligations of the change. The employer wanted to know whether it had any reporting obligation in the employee’s country, whereas the employee wished to keep his German social security, which he had acquired over the many years of employment in Germany.
The case was satisfactory settled for all parties concerned, however it is necessary to understand that the parties’ high degree of cooperation is essential in order to establish an adequate construction as the legal aspect of a case can significantly differ depending on the circumstances.
As we mentioned before, the presence of digital nomads on the labour market is becoming more and more significant, but the legal regulation is still in its infancy, which often results in uncertainty. However, it is promising, that a transparent and comprehensible regulation is expected to emerge soon regarding the residence in Hungary.