American Workers Abroad: The Financial and Cultural Impacts of the Remote Work Revolution
Visit any hip European, Latin American or Asian capital city nowadays, and you’re bound to find an increasing number of American Millennial (born 1981-1986) expats working for their US employers, with no plan to return home in the near future. According to the Deloitte Global 2022 Gen Z and Millennial Survey, 47% of Millennials are living paycheck to paycheck and worry that they will not be able to cover their expenses. The proliferation of work from anywhere policies as the result of the pandemic, culminating with a skyrocketing cost of living in the US, has spawned a new generation of American remote workers who have redesigned their lives and finances to stretch their US dollars further and quench their thirst for adventure.
North Carolina-born Chase Warrington, 37, started his career working remotely, but still felt the urge to experience living abroad and being immersed in a foreign culture. Frustrated that his employer required him to work from within the Southeastern US, he and his wife sold their home, returned their company cars and stock options, and began traveling the world. “I had to leave a very good career behind, but it was the only way to get a life abroad,” he says. After a gap year, Warrington began working full-time for Doist, a Palo Alto-based productivity software company that has a work from anywhere policy.
“This lifestyle is for anyone who feels called to escape the confines of what they feel are the regular expectations of life and to explore other places.”
“This lifestyle is for anyone who feels called to escape the confines of what they feel are the regular expectations of life and to explore other places. There is no better time than now to grant yourself that opportunity.” Today Warrington and his wife are based in Valencia, Spain. He is also the host of the podcast About Abroad, where he interviews digital nomads and expatriates living and working across the globe.
1 of 10 Digital Nomads in Baghdad
Alex Bales, 30, originally from Keizer, Oregon, traveled to Iran in early 2019 while working at a non-profit think tank in Washington DC. “I learned how much I didn’t know about the world on that trip, and moving abroad didn’t have to be this leap into the unknown or a massive financial insecurity. I realized that I wasn’t happy in a typical 9-to-5 job. I kind of settled for a period of my life just thinking, ‘This is as good as it gets. I should be happy’, but I wasn’t, and I didn’t quite know why, until I met a few other people living the digital nomad lifestyle.”
A good friend who was already working as a digital nomad abroad encouraged him to take the leap, and Bales spent the next nine months saving money, getting rid of his possessions and ultimately resigning from his job and finding a new US employer that allowed him to work from anywhere. Since August 2022, he has been based in Beirut, Lebanon, where he is a fundraiser for a US-based non-profit. As he does not have residency status in any foreign country, he makes visa runs every three months in order to continue working from Lebanon. Prior to relocating to Beirut, Bales worked for his American employer from both emerging and atypical digital nomad destinations, ranging from Rwanda to Iraq, where he says he was likely one of the first ten Western digital nomads to work from Baghdad.
Never Going Back to the Office
Venezuelan-American Carla Villoria, 35, started working remotely in the tech sector several years prior to the pandemic. “At that point, I was convinced that I never wanted to go back to the office”, she recalls. Together with her Mexican-American husband, “we decided that we wanted to have a more nomadic life”. They maintained US jobs and rented out their home in Park City, Utah while working from other countries for several months every year. “Our base is the US. Our home is there and our jobs have always been there.” She and her husband are US tax residents and maintain private US health insurance through their employers. “The US is a much more expensive life”, she says. “If you’re trying to make your dollars go further, it makes sense to spend them somewhere else.”
“If you’re trying to make your dollars go further, it makes sense to spend them somewhere else.”
When his apartment lease was going to expire in 2021, Los Angeles software engineer Ryan Resella, 43, decided to try being a digital nomad, as he too felt unsatisfied limiting his remote work to North America. He had known about Remote Year since 2016, a company that facilitates group travel experiences for digital nomads. It was an online sale for a one-month trip to Medellín, Colombia, in opposed to the typical 12-month trip, that pushed him to finally sign-up. What was meant to be one month in Colombia turned into sixteen months working remotely from countless destinations around the world. He estimates that he spends roughly the same amount of money doing Remote Year programs as he would paying rent in Los Angeles.
Diverse Groups Embracing Digital Nomad Lifestyle
Remote Year’s CEO, Tue Le, notices a remarkable demographic change in those choosing to work remotely from abroad. “Before the pandemic, there was the image of an American guy with a laptop, who was probably a software engineer or developer. Since COVID, we are heavily weighted with female participants and 57% are People of Color, and represent over 50 nationalities from all around the world. We have a range of professionals we rarely saw before, like lawyers, real estate, finance and marketing professionals. These are roles that were considered traditional office roles, and they are finding that they are able to work from anywhere.” Prior to the pandemic, Remote Year had a team dedicated to speaking to employers about allowing their employees to work from anywhere. That team has since been disbanded, as the company found that employers are increasingly adopting fully remote or hybrid policies.
Finances
After crisscrossing the globe for several years and living out of Airbnb’s, Warrington and his wife decided that they needed a home base abroad. They secured a visa that allowed them to stay in Spain for up to five years, where they spend 6-8 months per year and travel for the remaining 4-6 months. “Overall, it is cheaper, as the US is a pretty expensive place to live,” says Warrington. He estimates that being based in Spain saves him $2,000 a month compared to what he would be spending working for the same employer and based in Charlotte, and that he would need to earn up to $3,000 more per month in order to live comparably to his life in Valencia in a mid-tier US city. “Because of the visa I’m on, I have to buy private health insurance in Spain. My wife and I pay around $120 per month, with no deductibles or limits. Six years ago in the US, we paid $600 per month for horrible health insurance that hardly covered anything and had a $5,000 deductible.” Shortly after being interviewed for this article, he and his wife received permanent residency in Spain.
Bales estimates that he saves 50% per month more than he did when he lived in Washington DC, which amounts to tens of thousands of dollars in his bank account that he otherwise would not have. As he has been physically present abroad for at least 330 full days for at least 12 consecutive months, he qualifies for the Foreign Earned Income Exclusion, meaning he is not taxed for the first $112,000 (as of 2022) earned abroad. As he also does not have residency in Lebanon or any other country, he does not pay any additional taxes on his US income.
He estimates that being based in Spain saves him $2,000 a month compared to what he would be spending working for the same employer and based in Charlotte, and that he would need to earn up to $3,000 more per month in order to live comparably to his life in Valencia in a mid-tier US city.
Major HR & Tax Implications
“Work is not a place anymore after COVID, but taxes still are”, says remote work tax advisor John Lee, co-founder of Work from Anywhere, and himself an Irish digital nomad based in Portugal. “It used to be billionaires who moved around to pay lower taxes, but now it’s people with a laptop.” He cautions employers to be very careful when allowing their employees to work from abroad. “The biggest risk to companies is Permanent Establishment, meaning the risk of corporation tax being triggered by an employee working from abroad.” He gives the example of a manager in a senior role at a US company working most of the year remotely from another country. Eventually, the host country may say, “Hold on, you’re actually generating business on our sovereign territory. We deserve some of the corporation tax from your profits.”
He also cautions that if an employee spends enough time working remotely from a foreign country, that country could determine that a terminated employee is entitled to the host country’s very generous severance package. However, he warns that “companies that are too strict or conservative are going to find that their talent will be poached by other companies that have a slightly higher risk appetite.” He advises that companies establish a mechanism to approve working from abroad on a case-by-case basis, and notes that well-designed Digital Nomad visas in certain countries can give a degree of protection to the employer, as the host country is fully aware that the employee is working remotely for a foreign employer.
“I identify less and less with my home culture. I feel like I am an aggregate of all the places I’ve been”, says Bales. He remains undecided about settling permanently back in the US, or in any one country for that matter, but can see himself eventually spending half the year in the US and the other half abroad. Warrington is unsure of where he and his wife will ultimately settle and raise a family, but does not have a strong desire to move back to the US anytime soon. “I just happen to feel that I can have the best of both worlds by living as a nomad sometimes, and going back to the US and getting my 4-6 weeks back there. Maybe family dynamics will change that, but it would be sad to give up this lifestyle.” Resella plans on traveling for the rest of 2023 and then deciding where to settle long-term.
Villoria and her husband plan for the future, which they have decided will be child-free. She concludes, “I see few benefits of living in one place the entire year. When we’re thinking about where we want to live, we would live anywhere, but not anywhere forever.”