Over the past few years we have seen a dramatic rise in the number of so-called 'digital nomads' in Thailand. Digital nomads are essentially remote workers who do not need to work from a specific location and just require an internet connection, therefore they can work from anywhere in the world. While this is a well established phenomenon around the world, there is relatively little in the way of support from national governments and immigration authorities.

Countries around the world are now starting to see the advantages of welcoming digital nomads and have started to offer special visas which are tailored towards attracting them. Estonia, Barbados and Dubai have all introduced special visas or programs specifically designed for this purpose. The same cannot be said for Asian nations, including Thailand. This is relatively surprising considering Thailand is often touted as a top location for digital nomads, especially Chiang Mai. Koh Phangan is another popular destination which is becoming more and more attractive due to its high quality lifestyle and beautiful beaches.

Thailand Smart Visa

While a digital nomad visa would be a welcomed option for those who want to come to Thailand, there hasn’t been a single Asian nation to follow the likes of Estonia. As a result, many freelancers have resorted to using short-term tourist visas as a way to live and work in Thailand. While this may seem like an easy alternative, there is one significant drawback, tourist visas do not permit the holder to work.

While there isn’t an immediate fix available, there is light at the end of the tunnel. In December 2020, Thailand's Centre for Covid-19 Situation Administration approved a proposal from the Thailand Board of Investment (BOI) which would allow freelancers and digital nomads to work In Thailand for up to four years under the pre-existing "Smart Visa" program. The proposal is currently waiting for approval from the Thai Cabinet and not yet in force.

The Smart Visa was originally introduced in 2018 to "enhance Thailand's attractiveness in drawing science and technology experts, senior executives, investors and startups." As it stands there has only been a little over 500 applicants who have successfully applied for and received a Smart Visa. However, if the proposal from the BOI is legally introduced, there will likely be a large increase in applications.

Do digital nomads have to pay tax in Thailand?

In Thailand, you are deemed to be a “resident” if you stay in the country for more than 180 days total in any tax (calendar) year. Residents of Thailand have to pay tax on income from earnings in Thailand as well as on income that is transferred into the country from foreign sources.

However, even if you are not a resident of Thailand i.e you stay in Thailand less than 180 days per year, you still are required to pay tax, but only on income earned in Thailand. Please note that the first 150,000 Thai baht is tax-exempt.

In reality, it is very difficult for the Thai authorities to enforce the payment of taxes as most digital nomads are living here on tourist or short term visas. This is the case because they do not have to register their business or activities with anyone in the country, therefore, tracking down people who owe tax is almost impossible. However, it is essential to note that this is a very dubious and grey legal area.

The potential introduction of the Smart Visa amendments mentioned above should introduce a framework for the payment of tax and other issues, but there has been no official information relating to this released so far. 

What are the current available options for digital nomads who wish to have legal status in Thailand?

One of the easiest ways for a digital nomad to achieve legal status in Thailand would be through setting up a company. However, setting up a company is not an ideal solution for digital nomads as the requirements for establishment are high (2 million baht paid up capital) and a minimum of 4 Thai employees are required in order to  support a Work Permit. 

A Representative office can be used as an alternative as there are less initial requirements and more favourable Work Permit options i.e. you can receive a Work Permit for the first two years before releasing the full investment. There is also a reduced ratio of only 1 Thai employee per foreigner needed to support a Work Permit. Representative Offices have a few drawbacks, firstly, the scope of their activities are limited and they cannot generate income. Secondly,  a head office outside of Thailand is mandatory (Hong Kong or Singapore are popular choices for the head office which is then used for a billing entity to bill clients).

Use of an ‘Employee Contractor Management’ company is another potential option. These companies will be able to host you and provide you with a Work Permit and Visa. They will however, charge you for this convenience by taking a fee from your monthly salary. The service charges are usually around 15,000 / 20,000 Baht per month. 

The other solution which has become popular recently is to take advantage of the current Smart Visa type S. The Smart S is an initial 6-month visa (renewable for up to 2 years) which is designed for foreigners who plan to set up a startup company in Thailand or engage in promotional activities for startups or Startup Camps. This visa is a popular choice because it does not require a work permit for setting up a startup and working for that startup. Holders of this visa are also allowed to participate in an endorsed startup promotion activity. However, in order to be able to receive this visa, applicants must have a plan to set up a tech startup in Thailand, which must be endorsed by relevant agencies such as the National Innovation Agency. Alternatively, they must be engaged in an activity aimed to promote startups, or an activity similar to a Startup Camp, endorsed by government agencies such as the Board of Investment and National Innovation Agency.

It is highly recommended that digital nomads register with news sources related to the digital nomad visas in Thailand

What are the Pros and cons of the digital nomad lifestyle in Thailand?

Pros:

High quality and affordable lifestyle - Being a digital nomad gives you the ability to work from anywhere in the world. This means you can choose any location that offers you the best quality of life. Thailand is an obvious choice as there is plenty of affordable food and drink, excellent health care, infrastructure and an abundance of amazing locations to locate too. 

Finances go further - Thailand offers an attractive lifestyle that allows people to have a high quality life at a fraction of the cost of back home. Usually, digital nomads are from more developed countries such as America, Canada, Europe etc. These countries have a far higher cost of living than Thailand which means that your money goes much further. 

Options for digital nomads to stay legally - There are some options available for those who wish to settle in Thailand a little more permanently. These options include setting up a representative office, using an employee management service and getting a Smart Visa type S.

Cons:

Legally grey area - While there are some options available for digital nomads to legally live and work in Thailand, they are often expensive and/or a hassle to set up. As a result very few people take advantage of those options and work in secret or don’t say anything. The chances of being caught are slim but actions such as this are of course illegal.

Taxes - Living and working in any country requires you to pay taxes. However, as the legal status of digital nomads is questionable it’s a complex area to contend with.

Security  - As a digital nomad, you won’t contribute to the social security system and therefore won’t have access to the free Government healthcare in Thailand. As a result you will have to rely upon expensive private insurance.

Conclusion

While Thailand remains a popular destination for digital nomads, they are operating in a legally grey area. There are, as mentioned above, a few options which can be utilized to make their stay in Thailand legal. However, with the possibility of the amendments to the Smart Visa being introduced, the whole process could become a lot easier in the near future.