Portugal: the new homeland of digital natives

The residential building at number 1 Calle de Pedras Negras, in the heart of Lisbon, is one of many that over time have been emptied of neighbors to become offices. On the first floor, a drawing on the wall welcomes the Impact Hub, one of the many coworking spaces that have proliferated in the city in recent years due to the unstoppable arrival of digital nomads, young remote workers who travel the world. with his laptop in tow.

One of them is kate shifman, a young American specialized in digital marketing who decided to settle in Portugal after spending a vacation in the country with a friend. “I fell in love with the light of Lisbon, the blue of the sky & mldr; colors that you don’t see on the east coast of the United States,” she explains, between sips of tea. “Then I saw the beaches and the cliffs and I thought: ‘I have to live here.’ A year later I left my job in New York and settled in Portugal.”

“The foreign population has almost doubled in five years”

Lisbon and Porto

A quick visit to the nomadlist.com portal is enough to verify that Portugal is one of the favorite destinations worldwide for digital nomads. The two main cities of the country, Lisbon and Porto, are among the five best places in the world to settle, according to this specialized page, due to the affordable cost of living, a wide range of leisure activities, security and a good level of population’s English, among other reasons.

Digital natives hooked on surfing make a pilgrimage to Ericeira, 35 kilometers from Lisbon

Another notable city is Ericeira, a small coastal town 35 kilometers from the capital, which has become the ideal place for remote workers and surf lovers. The increase in the number of foreign residents in this municipality has led Shifman to start ArtHouse, his own ‘coliving’ project, while in other destinations, such as Madeira, collaborations between public administrations and private companies are growing to attract more potential residents.

Bet on Madeira

Gonçalo Hall, co-founder of the company NomadX, is the main promoter of what has been considered the first village for digital nomads in Europe, located in Ponta do Sol, on the main island of the archipelago. Thanks to an agreement with the autonomous government of Madeira, more than 5,000 remote workers from all over the world have passed through this town and other subsequent projects in various municipalities of the islands in the last year. The local authorities have enabled free spaces to work and a leisure offer. Something that, according to Hall, has contributed to the success of the project.

5,000 teleworkers have passed through Madeira in the last year

“From the beginning of the project we thought about creating a community, to attract more people. We don’t spend money on marketing, word of mouth is more effective,” says Hall, who adds that the organization of sports activities and talks about business and entrepreneurship are an incentive that adds to the peculiarities of Madeira as a tourist destination. The promoter of the project maintains that these initiatives are positive for the local economy and highlights the collaboration of the regional government to make it possible. “Local and national powers have played a facilitating role that has helped create this community faster.”

Public politics

At the national level, Portugal has been working for a decade to become the European Silicon Valley. The arrival in 2015 of the Web Summit, one of the most important technology and innovation fairs in the world, has given the country – and especially Lisbon – a boost in attracting investment and in the creation of emerging companies. In the Portuguese capital, the Startup Lisboa incubator has made it possible to develop 400 new companies and generate nearly 4,500 jobs since his birth 10 years ago, according to the organization.

tax incentives

Added to this commitment are the tax incentives approved shortly after the 2008 crisis, which stipulate a fixed withholding of 20% in personal income tax for 10 years for foreign workers who settle in Portugal to work in certain sectors, such as computer science or that of design. A measure highly criticized by the left-wing parties, but which the current socialist government intends to further expand to accommodate digital nomads with professions that, for now, cannot benefit from this regime.

The Administration offers a fixed retention of 20% in personal income tax for 10 years to ‘techies’ and designers

These policies have contributed to the exponential increase in foreign residents in recent years. According to data from the Foreigners and Borders Service (SEF), the foreign population in the country has doubled between 2015 and 2020, with an increasing role for European citizens, especially British, French and Italians. A phenomenon that the sociologist and housing policy specialist Sandra Marquês Pereira attributes to the concept of geoarbitrage, which consists of obtaining income from countries with medium or high incomes and spending it in other places where the cost of living is lower.

“The goal of digital nomads is to maximize their income in places with a good quality of life,” explains Marquês Pereira, a professor at the Lisbon University Institute. “The fact that housing prices are still not prohibitive for many of To them, the benefits in the lifestyle are added, related to the climate, the leisure offer or the geographical location”. According to the sociologist, travel restrictions during the pandemic caused some people to give up settling in regions far away from their countries of origin, such as Southeast Asia, and opt for destinations such as Portugal.

the price to pay

Pereira admits that there is still not enough data to assess the impact that this situation may have on rental prices, already high in the Portuguese capital due to the strong growth in tourism in the years prior to the pandemic, but acknowledges that digital nomads tend to concentrate in areas of the city with a high offer of tourist accommodation and especially affected by gentrification.

Czech portal Flatio advertises 4,000 rental flats for digital nomads since 2020

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Added to these accommodations is the proliferation of medium-term home rental portals, including that of the Czech company Flatio, which settled in Portugal in 2020 and has more than 4,000 ads published by nearly 2,000 owners. “We have made a good investment; in 2021 we had thousands of digital nomad reservations through our portal and broke the records we had registered in the Czech Republic,” says the company’s president, Radim Rezec.

Rezec argues that medium-term stays have a much smaller impact on the rental market than tourist apartments, and says that they can simultaneously help improve owners’ incomes and have a positive impact on the local economy. Pereira agrees that the impact is not comparable, but warns that the lack of fiscal justice and low wages place the local population in a situation of inequality that is difficult to correct.

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