You want to become a digital nomad. You know, one of those people who moves around the world freely, working on their laptops as they go. But, you aren’t entirely sure where to start. Maybe you are a little nervous to just head off on your own, or you have a business idea and want to collaborate with other digital nomads.

After doing some research, you come across Remote Connections Croatia, a personal and professional growth travel program in Croatia.

You are intrigued, to say the least. And want to give yourself the opportunity to grow personally and professionally through immersive cultural experiences and professional opportunities in Croatia, to join a vibrant group of global citizens, and (of course) to travel.

So you know you want to do it, and when budgeting for it, you begin to wonder if this could possibly be tax deductible. (Or, if you are anything like me, that thought would never have even crossed your mind because #taxesareconfusing.)

The good news is that there is a very likely chance that your coworking retreat could be tax deductible! After all, you are spending your time working, learning, and growing professionally.

So, if becoming a digital nomad is one of your goals for 2018, here are some directions for determining whether or not your coworking retreat is tax deductible.

What is tax-deductible?

Something that is tax deductible is defined as “an item or expense subtracted from adjusted gross income to reduce the amount of income subject to tax.” Items such as mortgage interest, state and local taxes, unreimbursed business expenses, and charitable contributions are all considered tax deductible, but there is a wide variety of items that can also be accounted for, including, your coworking retreat.

That being said, as a freelancer/digital nomad, make sure you are working with a professional accountant who knows how to help you make the most out of these deductions.

Why is “tax-deductible” important for freelancers/digital nomads?

As workers become increasingly mobile, taxation is a complex area that governments, companies, and individuals are struggling to address. The reality is that tax codes have just not caught up to the fact that so many individuals are engaging in a globalized workforce.

As the laws are continually changing, it is imperative that freelancers and digital nomads keep up to date with what is going on — both to keep you out of trouble and to ensure you are paying as little taxes as possible!

Here are some more specific tax deductible rules by area.


EUROPE

For the most part, the countries in Europe, operate a residential taxation. This means that if you are a resident of another country, and you abide by that country’s laws, then you are exempted from paying taxes in these countries.

While it differs from country to country, for individuals, physical presence in a jurisdiction is the primary test. If you live in Europe for 183 days or more each year, then you will be taxed on your worldwide income. As many digital nomads register themselves as “self-employed”, then they have to pay in this bracket of taxes.

In Germany, most digital nomads are in the tax category of “small businesses”, meaning they have no added tax to their bills and don’t have to pay Value Added Tax (VAT). If this is your case, on all of your invoices, ensure you are mentioning your small business tax status.

Similar to home office expenses, there is a good chance that in Europe coworking membership fees or retreat rent may be tax-deductible. Continually work with your accountant to clarify the details for how much of your travel expenses are deductible as laws can change from year to year and ignorance is no defence.


UNITED KINGDOM

Just like with other European countries, the UK follows residential taxation. However, if you spend 91 days or more in the country each year, you will have to pay tax.

In the UK, remote freelancers are recognized as sole traders/entrepreneurs, and Her Majesty’s Revenue and Customs (HMRC) allows freelancers to “claim tax relief on some home or travel expenses as long as they are within reasonable measure”.

In other words, (most likely) your coworking retreat!

Furthermore, expenses acquired throughout a business excursion for sole traders can be marked as “tax deductible expenses”.


UNITED STATES OF AMERICA

Different to most countries in the world, the US employs a citizenship-based tax scheme, meaning American citizens are obligated to file federal income taxes regardless of where they make their money (or where they are living).

When American citizens travel outside of the United States for business activities (and the entire time must be spent on business activities), a taxpayer can deduct 100% of the transportation and lodging expenses.

However, if the reason for travel was primarily personal, then the transportation expenses are nondeductible. (Luckily, a coworking experience with Remote Connections Croatia is all business!)

Similar to the United Kingdom, expenses acquired throughout a trip that are directly linked to business (for example, workshop registration fees, or the Remote Connections Croatia program fee) are deductible, even if the actual trip expenses are not. What is never deductible? Out-of-pocket costs that occur on personal days.


CANADA

The Canada Revenue Agency supports those who are self-employed and traveling, by allowing them to deduct a wide array of business expenses at the end of the financial year. For example, if you choose to start a new business while on a Remote Connections Croatia experience, then you will be able to claim business operating expenses (including advertising fees, start-up costs, and delivery or shipping costs) as a deduction.

Travel expenses, meeting costs, conference fees, and hotel costs also can be deducted, as well as 50% of your meal and entertainment costs.


Once again, you should always talk with a qualified accountant about your taxes. But hopefully, this is given you more reason to book a coworking retreat like Remote Connections Croatia. After all, a world of opportunity awaits you as an international freelancer/digital nomad – now you just have to make it happen!