5 Tax-Free Countries For Freelance Digital Nomads In 2024

Approximately 70 million Americans express a desire to become digital nomads, with 24 million saying it’s a definite positive, and the remainder indicating it is a likely consideration for 2024, according to an MBO Partners report.

Digital nomadism is appealing for so many reasons: you’re able to work from the comfort of a deck chair, armchair, plane seat, or cafe chair, it’s entirely up to you; you can explore new cultures and food, fully embrace the flexibility that freelancing brings, and take time out for yourself to experience a change every now and then and take care of your wellbeing—all while getting the job done.

What freelancer wouldn’t want to be a digital nomad?

One of the top considerations one must factor in when deciding to become a digital nomad and obtain a digital nomad visa, is where they will fall in the tax bracket for foreign freelancing income in their host country.

What some people may not realize is that there are at least five digital nomad destinations that are tax-free for digital nomads, and are also budget-friendly, meaning you can gain more value out of your money, even though the cost of living is generally high in the U.S.

Let’s take a look at these top five countries who have thrown open their doors to digital nomads, and why they make for appealing attractions. Kasra Dash, entrepreneur and founder of accountancy firm TaxBite, weighs in and shares his evaluation of each country—and its freelancer-friendliness—below. (Some parts have been edited for clarity and length.)

1. Panama

Best for cost-effective Caribbean living, and known for its Friendly Nations Visa, Panama offers a straightforward pathway to residency for citizens from many countries.

While not completely tax-free, Panama does not tax foreign-sourced income, which can benefit digital nomads. The country has one of the cheapest standards of living in the Caribbean, meaning you can live the island life at a fraction of the price.

2. U.A.E (United Arab Emirates)

The UAE offers a 0% income tax rate for individuals, making it a highly attractive option for remote workers, and the best for financial professionals in particular. The country also has specific visas for digital nomads, allowing them to live and work there while enjoying the tax benefits.

Applicants will need to prove employment with a company outside the UAE and have a minimum monthly salary of $5,000. This can be shown through a contract valid for at least one year, recent salary slips, or bank statements from the last three months​.

3. Costa Rica

Costa Ricans, or “Ticos”, are known for their friendly and welcoming nature. The culture emphasises “pura vida” (pure life), promoting a relaxed and positive lifestyle that many remote workers find appealing for their wellbeing.

The country provides various residency options that are friendly to digital nomads, and like Panama, does not impose levies on foreign-sourced income.

4. Malaysia

Through its MM2H program (Malaysia My Second Home), Malaysia offers long-term residency options and does not tax foreign-sourced income, making it a favourable option for many nomads.

Malaysia is the best option for travel opportunities as it serves as a strategic base for travelling to other parts of Asia. Its central location offers convenient travel opportunities to neighbouring countries like Thailand, Singapore, Indonesia, and Vietnam.

5. Bahrain

Like the UAE, Bahrain imposes no personal income tax and is considered one of the more liberal countries in the Gulf region, providing a good base for digital nomads.

Bahrain provides a high quality of life with its vibrant cultural scene, historic sites, as well as a wide variety of dining and entertainment options. It also offers excellent healthcare facilities, which is an important consideration for anyone planning to live and work remotely.

It’s essential to note that due to its proximity within the Middle East, travel advisories state that you should exercise a high degree of caution and plan your travel carefully to Bahrain, keeping a close eye on tensions and war in the nearby regions. Be flexible with your travel arrangements.

What will be your next destination of choice this year?