JAN DE JONG, a Dutchman living in Split, has a brilliant idea that would earn Croatia € 66 million a month. He would like Croatia to start issuing visas for digital nomads, which would enable everyone who earns over 3,500 euros a month, and who is able to work remotely, to stay in Croatia for a period of time. However, their salaries would not be taxed in Croatia, but in the countries where the company they work for is located.
Jan de Jong has already written about this on his LinkedIn profile, where he has thousands of followers who loved his idea of Croatia becoming a new "paradise for digital nomads", and he recently sent a letter to Prime Minister Andrej Plenkovic. In the letter, he presents his project to the Prime Minister, stating why it would be good for Croatia to do the same thing as Estonia, the first EU country to launch such a project.
This month, Estonia announced that they would start issuing visas for digital nomads – employees of companies that allow remote work. They will be able to work from Estonia for up to a year. These visas are devised primarily for non-EU workers, and the Government of Estonia has launched a website where everything is explained in detail.
The applicant must provide proof to Estonia that their income met the minimum threshold for six months prior to the application. Currently, the monthly income threshold is 3,504 euros (gross).
Applicants must prove that they can do their job remotely, that they have an active contract of employment with a company registered outside Estonia, that they do business through their own company registered abroad or that they work as a freelancer for clients outside Estonia. The applicant should not have citizenship or residence in Estonia or the EU.
Estonia was the first EU country to launch such a project
After seeing that Estonia launched this project, De Jong thought Croatia could do the same.
We have already written about this Dutch entrepreneur. He has been living in Croatia for the last 14 years. He started several companies and is now working on a project aimed at attracting digital nomads to Croatia, which would be extremely beneficial for the Croatian economy that was hit by the coronavirus crisis. Since there are far fewer tourists than usual, and the Croatian economy is heavily dependent on tourism, De Jong believes that digital nomads might help the situation. In case Croatia attracts 50,000 of them, assuming that they would spend about € 1330 a month in Croatia on accommodation, food, transport, going out, and hygiene items, they could provide Croatia with about € 66 million a month.
"In the midst of the coronavirus pandemic, more and more companies are realizing that their employees can work remotely just as efficiently, and more companies are allowing their employees to do so. Why wouldn't these people come to work and live in Croatia and spend their money here?" de Jong wonders.
We asked him about the details of his plan, specifically about his plan regarding the high tax rate in Croatia, and he immediately responded that digital nomads should not be taxed in Croatia at all.
"Their salaries should not be taxed in Croatia, they would pay taxes by paying VAT anyway"
"I think that digital nomads should not have to pay income taxes in Croatia. They should pay them in the country where their company is located. Nobody wants to pay Croatian taxes because the rates are too high, especially when we consider the high tax rates on large incomes. My inbox is full, people keep asking me how to come to Croatia as a digital nomad and how much they would have to pay in taxes. A man from Switzerland told me that given the tax rates, it would be better for him to stay in Switzerland than to come here," De Jong states.
He adds that digital nomads would pay taxes by paying VAT on food, fuel, and numerous other services.
"In my opinion, their income should not be taxed in Croatia, but in the country where the company they work for is located. There should be an income threshold of € 3,500 in order for one to be eligible for a digital nomad visa." It would be great for Croatia if people with high incomes came to spend a year here, and not just on vacation," De Jong says.
He sees digital nomads as a potentially large source of income for the government. He points out that the government should react as promptly as possible, hoping he will receive a response.
"Time is of the essence here, if you want global publicity and a fantastic promotion of the country, there is nothing better than allowing digital nomads from all over the world to work from Croatia and spend their salary here. I think Croatia could copy a large part of the Estonian law. More and more companies are allowing people to work remotely, and this trend will grow rapidly, we will have billion digital nomads by 2035. If Croatia could establish itself as a country that accepts digital nomads, it could become one of the most popular destinations," De Jong states for Index.
Why would anyone decide to live in Croatia?
He says that about 50,000 digital nomads live on Bali, an island with about 4 million people, similar to Croatia.
"Imagine if that many nomads came to Croatia, with each of them spending about € 1, 330 a month in Croatia. That's about € 66 million a month. Of course, a requirement should be that they earn a good salary by working for foreign companies and not Croatian ones. Digital nomads could account for a large part of marketing activities by tweeting, posting on social media, writing blogs, and filming vlogs. It would be a great digital promotion for the country," De Jong claims.
When we asked him why anyone would decide to live in Croatia, he named many benefits that he noticed as a Dutchman who has lived here for 14 years.
"First of all, Croatia is in the EU, a lot of people speak English, it offers a great lifestyle, the Internet is good, the climate is great, it has a good traffic connection to the rest of Europe, and it is possible to live here by European standards. And the most important thing is that it is a safe country," De Jong says.
He also states that Croatia has affordable and quality private health care.
He hopes to receive a response from Plenkovic
"If Croatia is open to tourists, I don't see why it would not be open to high-earning digital nomads who want to live here for up to a year. International media wrote about Estonia when it launched the project a few weeks ago," he said.
He expects an answer from the Croatian government, and he hopes that the ruling party will understand that this is one of the greatest opportunities there are for Croatia.
"If we launch this project by the end of the year, we could have the first digital nomads here at the beginning of 2021. It would take a couple of months to write such a law. It is also an opportunity for Croatia to be among the first innovators in this sector and become one of the most popular destinations for digital nomads in Europe," De Jong says.
He also explained why this law would be devised for people from countries outside the EU.
"Since Croatia is now an EU member and people from other EU members do not need a work permit, they can easily come to Croatia. However, someone from the US, for example, who would like to work from Croatia for a year, wouldn't be able to work on a tourist visa, nor would American companies allow them to stay somewhere on a tourist visa and work," he states.
In the end, he says he hopes that the government will respond to his proposal.