The Estonian e-residency program can certainly be considered a global success, with over 120,000 e-residents and more than 30,000 companies established by e-residents as of 2025. It’s been particularly popular among digital nomads, entrepreneurs, and freelancers. The program offers access to a range of Estonian services, such as company formation, banking, payment processing, and taxation – making it an attractive option for those looking to manage a business remotely and tap into global markets.
The ability to work from anywhere and run a business without geographic restrictions is undeniably appealing.
However, even though the program has been around for over a decade, there are still a few common misconceptions about e-residency. Before you jump in, it’s important to get a clear understanding of what it is – and what it isn’t.
E-residency is not the same as citizenship or actual residency
One of the most persistent misconceptions about e-residency is the idea that it grants you the right to live in Estonia. We get asked about this a lot, and it’s definitely a point of confusion for many people.
To set the record straight: e-residency is a digital ID, not a path to citizenship or residency. It allows you to access Estonian business services, sign documents digitally, and manage your company remotely. However, it doesn’t grant you any legal rights to live or work in Estonia.
So, if you’re hoping to move to Estonia, you’ll still need to go through the visa or residence permit process. Estonia does offer some great visa options for entrepreneurs, like the Digital Nomad Visa and the Startup Visa, which are worth exploring if you’re planning to relocate.
E-residency does not automatically mean tax-residency
Another common misunderstanding is thinking that having e-residency means you’ll automatically be taxed in Estonia. While Estonia does have a favorable tax environment for businesses (for example, a 22% corporate income tax rate, which is only applied when you take out dividends), tax residency is not determined by e-residency.
Tax residency is more complex and is based on factors like where you live, where you work, and where your income is generated. So, while e-residency makes it easier to set up a business in Estonia, it doesn’t automatically change your tax obligations. If you’re living and working in a different country, your tax residency is likely determined by that country’s rules – and you may still be subject to taxes in your home country.
Note: In 2026, Estonia plans to introduce a 2% profit tax, which is a significant change. But, even with this change, the tax environment in Estonia will still be favorable compared to many other countries.
E-residency doesn’t automatically provide banking services
Another area where people often get confused is banking. While e-residency allows you to run a business within the EU, it does not automatically grant you access to a business bank account in Estonia or anywhere else. Traditional banks are required to follow international anti-money laundering regulations, which means they typically require you to verify your identity in person before you can open an account.
This can be a bit of a roadblock for some e-residents, so it’s important to plan ahead. However, don’t worry – there are alternatives. Fintech solutions like Wise, Payoneer, and digital banks like Revolut and N26 offer more flexible and accessible banking options for e-residents. While these options may not provide all the features of traditional banks, they are often more convenient for managing business finances across borders.
And here’s the good news: you don’t have to have a bank account at an Estonian bank to open or run your business. This opens up more opportunities for e-residents to work with a variety of banking solutions that best suit their needs.
Final thoughts
E-residency is an incredible tool for entrepreneurs looking to expand their business globally and tap into international markets. It offers a great deal of flexibility, especially for those interested in running a location-independent business. But it’s crucial to understand what the program actually provides – and what it doesn’t.
By keeping these common misconceptions in mind – like assuming e-residency automatically grants residency rights, tax residency, or banking services – you’ll be better prepared to navigate the program and leverage it effectively.
With a clear understanding of e-residency’s limitations and benefits, you’ll be in a great position to build and manage a successful business. Stay informed, consult with professionals when needed, and enjoy the freedom and flexibility that e-residency can offer!
