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Estonian E-Residency – Do You Need It?

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Estonian E-Residency – Do You Need It?


This article was posted on Wednesday, 13:27, UTC.

There has recently been a lot of buzz online about the new E-residency program in Estonia, especially among internet entrepreneurs and so-called digital nomads – people who make their money from location-independent online businesses. In this article we will go over what Estonian E-residency actually is, why anyone would want to get it, and who can benefit from it.

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For those not familiar with Estonia, it is a small Baltic state in Northern Europe. Since its independence from the Soviet Union in 1991, Estonia has achieved dramatic results in terms of modernization and digitalization of their country. They were the first country to hold elections over the Internet in 2005, and introduced their ground-breaking E-residency program in 2014.

Estonia today boasts one of the fastest growing economies in the EU, with a highly developed IT sector as one of the main drivers. The country also scores highly in terms economic freedom and freedom of speech, and through this they have created a perfect environment for online entrepreneurs.

What is E-Residency?

Estonian E-Residency card

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You may be wondering what exactly the term E-residency means. First of all, E-residency is not a physical residence permit or a path to EU citizenship for those seeking that. Further, it cannot be used as a travel document for visa-free travel or photo ID.

What you do get, however, is a digital ID card issued by the Government of Estonia. With it, you are authorized to set up a company in Estonia, digitally sign documents, make secure banking transactions, and access government services online.

Today, more than 3,500 companies have been registered by Estonian E-residents, and the number keeps growing. In fact, the Estonian government has stated that they aim to attract more than 10 million E-residents by 2025.

Although Estonian E-residency may seem to offer limited opportunities for some people now, it is worth noting that the ease of use and benefit of the program is expected to increase as the program grows. For example, the E-resident card is said to be recognized as an online ID by all EU countries by 2018.

Why Do I Need It?

So, what’s the benefit of this for me you may be asking.

E-residency is the perfect solution for people who want to conduct business within the EU without actually living there. For instance, as an Estonian E-resident, an American entrepreneur would be able to set up an Estonian company that he runs from anywhere in the world, in order to serve clients that are based in the EU. The entrepreneur would also be able to sign contracts with clients throughout the EU, and easily and cost-effectively receive and transfer money to anyone in the EU. Everything is done online, securely and hassle-free.

It is particularly useful if you want to hold a bank account in Estonia. Unlike lots of other banks around the world, an Estonian e-Residency does not require you to be physically present to sign important documents. Hence, you can conduct all business and banking activities remotely and entirely online.

Because of these features, Estonian E-residency is a great vehicle for digital nomads and international entrepreneurs. Although running a location-independent business still poses some challenges, Estonian E-residency definitely brings you one step closer to having a location-independent company.

Furthermore, you are able to take advantage of other benefits for your company, such as low maintenance costs, a simple tax system with low corporate taxes, an efficient bureaucracy, and international banking.

An added benefit to international entrepreneurs basing their company out of Estonia is the solid image it reflects. Unlike Seychelles or British Virgin Island companies, basing your company in Estonia will not raise any red flags among customers, banks, or tax authorities abroad. It displays credibility and shows that you are paying taxes, even though they will often be substantially lower than what is possible if you base the company out of your home country.

How Do I Apply for Estonian E-Residency?

All you need to do in order to apply for Estonian E-residency is complete an application form online, and anyone in the world is eligible to apply. On the application form, you will be required to upload a photo, state your reason for applying, and pay a 100 Euro fee. Once the application is submitted, you will have to wait about 1 week for the Estonian Police and Border Guard to complete the background check.

If your application is approved, you can choose the pickup location for your ID card; either an Estonian embassy or consulate abroad, or visit a Police and Border Guard station in Estonia. The entire process from start to finish usually take about three to four weeks.

We would love to hear from you in the comments below if this is something you are considering doing or if you have already been through the process. We are also always happy to point you in the right direction if you have any questions about the process.

Featured image from Flickr.

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Fredrik Vold

Fredrik Vold

Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He mainly follows the stock and forex markets, and is always looking for the next great alternative investment opportunity.

  • user

    AUTHOR birmas

    Posted on 1:47 pm August 16, 2017.

    Starting to wonder why I’m signed up to when I read articles like this

  • user

    AUTHOR zgorizzo

    Posted on 2:08 pm August 16, 2017.

    It might be more interesting to tackle the taxes optimisation oopportunity of that program. Indeed in term of taxes how do we benefit from that eResidency ? I mean if you physically work in a UE country more than 140 working day you have to pay taxes in that country. Is it just something for people you gain benefits from a website ? If you are an IT Freelancer working at your customer office 2 days a week and the other three days remotly how can you benefit from that ?

    • user

      AUTHOR Dag Fredrik Vold

      Posted on 3:17 pm August 16, 2017.

      Hi zgorizzo,

      As I explained in the post, Estonian E-residency will be most useful for people from outside the EU who wishes to do business inside the EU and therefor need a EU-based company. If you are already a tax resident of a EU country, you may or may not save any taxes by getting an e-residency.

  • user

    AUTHOR porcupine1967

    Posted on 2:28 pm August 16, 2017.

    Useful for our US company needing Eu payments. Chase screw us on charges for Eu payments

    • user

      AUTHOR Dag Fredrik Vold

      Posted on 3:19 pm August 16, 2017.

      Great! Yes, your case sounds like one where the e-residency could be very useful 🙂

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