Sluggish Start To Malta’s Attempt To Attract Digital Nomads As A New Economic Niche
Malta was among two dozen pioneering countries worldwide when it began to offer a residence visa specifically for digital nomads last June. Junior Minister Alex Muscat said at the time that digital nomads or remote workers lured to Malta would be a new economic niche.
But six months later the number of resident visas issued to nomads has remained in the two-digit territory according to sources. Sarah Aquilino, manager of Residency Malta Agency, declined to give exact figures when contacted by Lovin Malta.
Asked for the number of applications received and visas granted, or nationality of applicants, she said: “This programme has just been launched and is relatively new, and you will appreciate that numbers, although very positive, are not yet representative of the programme’s attractiveness. We will be in a position to share hard numbers and a profile of the typical applicant in due time.”
Malta’s nomad residence visa is intended to tap into the growing number of people who work remotely as freelancers or away from the office. A report published earlier this year estimated that number worldwide at 35 million – 31% of them American – generating an economic worth of €787 billion.
And a report by MBO Partners, a company that specializes in management strategies of the location-independent workforce for many international companies, found that the number of Americans who work remotely jumped by 49% in 2020 over 2019 levels.
COVID-19 has given an additional boost to ‘location independence’, which is evolving into a new way of life.
Matthias Zeitler, who has put the small Bulgarian mountain town of Bansko on the digital nomads’ circuit, told Lovin Malta: “I believe location independence is a fast-growing trend at the moment, and in the future people will spend much less time in the office than in the past. COVID has taught us is that we can work distributed, remotely, and worldwide if you set up the right processes. This will become mainstream.”
Zeitler set up Coworking Bansko five years ago, and now organizes a yearly Bankso Nomad Fest – a weeklong event of talks, presentations, and activities – which attracts hundreds of nomads to small-town every summer.
Malta is one of several EU countries that this year launched digital nomad residence visas, which are geared for non-EU nationals (EU nationals can reside and work throughout the EU without a residence visa).
These countries all offer a yearlong visa for applicants who earn a minimum threshold of monthly income that varies between €2,250 in the case of Croatia and €3,500 in the case of Greece and Estonia. Malta’s threshold is €2,700 monthly.
Other countries, including Germany and Italy, offer a variety of freelance residence permits, while Portugal has its longstanding D7 visa, which has a monthly income threshold of €665.
Portugal has emerged as one of the favourite destinations on the worldwide circuit of digital nomads, frequently appearing in the top ten lists.
Taxes and free movement in the EU
Andreas Wil Gerdes, an entrepreneur with decades of experience in mobile solutions and technology, believes that Malta’s income threshold is rather high considering that the average income of digital nomads according to surveys is in the region of €1,650.
“Why is the threshold so high?” Gerdes asked rhetorically in comments to Lovin Malta. “Is it because Malta is much better and attractive? I doubt it. Look at what expat groups have to say about Malta – it’s not very flattering. Malta has an image problem – cranes everywhere, nightmarish landlords, and other issues.”
Gerdes has lived partially in Malta for more than two decades. In recent years he has gained a reputation as a thought leader and key speaker in conferences on location independence.
He is also critical of Malta’s tax arrangements for digital nomads, requiring them to pay taxes in their country of residence even though, perhaps oxymoronically, they get a residence permit in Malta.
“You need to offer them a headache-free scalable solution, and that means offering them the option of tax residence,” he said. “We also need to market what we are good at: English is widely spoken, good airport connections, and on top of that there is a need to train landlords.”
Asked what he makes of Malta’s nomad visa, Matthias Zeitler of Bansko mentions the ability to travel within the EU’s Schengen zone as a plus. Under Schengen rules, anyone who has residency in a Schengen country can travel to any other Schengen country for a maximum period of 90 days.
Yet such competitiveness, as a gateway to Schengen countries, is fading as the number of EU countries within the Schengen zone that offer a nomad visa has increased in recent months. Estonia and Greece, which launched nomad visas in August and September respectively, are both Schengen countries.
Spain is also reportedly in the process of designing a nomad residence visa.
Community and lifestyle more important than free movement
Yet the popularity of somewhere like Bansko in Bulgaria, which is in the EU but not in Schengen, shows that considerations such as quality of life and community are more important for remote workers than the ability to hop around the EU.
Bansko, a small mountain town and ski resort, was put on the digital nomad circuit by Matthias Zeitler and Uwe Allgauer, the founders of Coworking Bansko, a coworking space they set up in 2016.
The digital nomad community is now thriving. The town of around 8,000 permanent inhabitants now boasts several coworking places, several coliving places, and a self-sustaining community of digital nomads that are estimated at hundreds strong at any one time.
Bulgaria does not offer a digital nomad visa specifically, but non-EU nationals, including Americans, can spend up to 90 days in Bulgaria without a visa or else procure a yearlong freelance visa.
The attractiveness of Bansko is tripartite: the community, the outdoors (the town is at the foot of a spectacular mountain range), and geoarbitrage – a place that offers good quality of life at a lower cost.
“Ultimately, it’s not about the visa, it’s about community,” said Kate Shifman, an American who has been marketing packages for American digital nomad families. “I am talking about having a community of nomads, either a community that grows organically or is created, as in Madeira.”
At the height of the COVID lockdown in 2020 Madeira organized a cluster of existent tourist villas into a community bubble where people could work remotely in a sunny, outdoorsy island location and escape the misery of lockdown.
“The idea of being location independent was new to a lot of people, and it blew their mind,” Shifman told Lovin Malta. “I was told that 600-800 remote workers moved to Madeira. The island made good money from this.”
An idea for a digital nomad village in Gozo for 200 nomads featured in an action plan of the Malta Digital Nomad Association set up last January. It is not known whether the idea is still under consideration – the official mentioned in relation to the nomad village, the director of the Tourism and Economic Development Directorate at the Ministry of Gozo, did not reply to an email seeking further information.
Yet industry sources say that a popup village is unlikely to succeed and that Madeira’s success happened in the context of the lockdown.
Andreas Gerdes, who has become something of a guru on location independence, said that such an idea is reminiscent of smart cities, which tend to fail if created in a vacuum. He said: “Communities have to be built organically, a digital nomad presence in Malta has to come about organically.”
Such communities of digital nomads tend to form around coworking places – office-type hubs that cater to remote workers who prefer to work out of shared or communal office rather than home – as well as coliving places, which offer private living quarters alongside shared common spaces such as kitchens, lounges, and courtyards.
“The coworking space becomes the centre of our members’ social life,” said Zeitler of Coworking Bansko.
The coworking places in Bansko are boutique and comfortable, and organize near-daily activities such as barbecues, hiking, skiing, volunteering, travelling, and even lectures or presentations on a variety of subjects.
In contrast, the coworking office spaces in Malta are a hybrid that caters for companies as well as individual remote workers, and their décor and setup does not go far enough to engender community.
The only activities organized in Malta so far have been monthly events organized by the nomad association at the rooftop café-like of one of the coworking spaces. These events, for which an entry fee is charged, attract a mixture of expats who work for companies in Malta and freelancers.
“You have to go to a place like Malta for a reason, not simply because a visa makes it possible,” said Kate Shifman. “There has to be a scene, and a community, that attracts nomads. You can create a visa and a structure – but how do you create the magic of scene and community?”
What do you think of Malta’s digital nomad policy?