Digital nomad visa opens new opportunities in Estonia and across the EU

Estonia is one of the most business-friendly and innovative nations in the European Union (EU). Its unique e-Residency program paired with a business-friendly tax environment makes Estonia attractive for young entrepreneurs seeking to build their fortunes. With its new digital nomad visa, the nation reaffirms its commitment to growth.

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Open for today’s innovative businesses: Estonia’s digital nomad visa program

Recognizing that businesses grow and thrive when they have access to the best and brightest members of the workforce, Estonia has taken steps to ensure that it is a welcoming place for non-citizens who wish to study, work or reside there. In today’s digital economy, individuals and businesses work across borders and desire the freedom to travel while working. The digital nomad trend is driven by an increased emphasis on flexibility and remote work.

The provisions of Estonia’s European Union Act and Aliens Act define the country’s immigration and visitation policies and protect them from abuse. By amending the Aliens Act, Estonia’s legislature sought to strike a balance between the needs of modern employers and individuals while ensuring that Estonian employers behave responsibly when sponsoring alien workers in Estonia.

In particular, these amendments, scheduled to take effect on July 1, 2020, will

  • Strengthen laws preventing misuse of Estonia’s visa program
  • Eliminate bottlenecks that slow the processing of residency and visa applications
  • Establish the digital nomad visa and define its application process
  • Update the regulations regarding long-term visas and visa extensions

The modern, global economy is not fixed in place

The modern, globalized workforce is mobile and diverse. People’s connections are not limited to a single place–they can live in one country, work in other countries, and travel to still other countries. Remote work enables modern workers to live and work outside the home country for extended periods.

Digital nomads travel the world while maintaining employment with a single employer or working as independent contractors or freelancers. Some no longer have a permanent residence in any country.

As technology continues to support innovative living and travel, this way of life has become more widespread. Some experts estimate that by 2035, more than 1 billion people will be digital nomads.

Nations and employers are eager to capitalize on the human potential of these world travelers who bring many sought-after talents with them. Knowledge workers with expertise in information technology, marketing, education, and finance use remote technology to choose where they want to work and live.

But are their country’s immigration and taxation laws prepared for a workforce on the move?

“Nomads are looking for opportunities to legally live and get on with their work,” reports Jobbatical. A survey conducted by the organization revealed that complicated or restrictive visa rules made it difficult for digital nomads to travel and work freely.

Estonia, a country known for its innovative technological solutions, is an attractive location for businesses and individuals alike. Among the factors that draw people to Estonia are the startups founded there, the supportive startup ecosystem, and the population’s English language skills.

Additionally, Estonia’s access to the EU market, opportunities for long-term residence, and its e-Residency program are reasons many choose Estonia as their home base.

Now, Estonia is again at the forefront in welcoming the 21st Century workforce with its digital nomad visa program. This program is one of the first of its kind specifically designed to support remote workers.

Estonia’s digital nomad visa: a new option for a new economy

Under Estonia’s pre-amendment Aliens’ Act, non-citizens must have a sponsoring employer to apply for a work visa. If someone wishes to travel to Estonia and does not have an employer to register with, they may only apply for a tourist visa.

But traditional tourist visas are not the appropriate visa for digital nomads who want to live and work in Estonia. This creates an impossible situation for digital nomads who do not have a local employer to vouch for them. 

The 2020 amendments address the existing law’s shortcomings. Once in effect, the new law will allow individuals who wish to live and work in Estonia but don’t have an employer to sponsor their visa to apply for a digital nomad visa.

The basics of Estonia’s new visa program works

Estonia’s digital nomad visas are for individuals who perform work that can be delivered using telecommunications (e.e., remote work).

Most importantly, the visa permits individuals to live and work in Estonia without an employer’s invitation if certain conditions are met. The maximum length for a digital nomad visa is 12 months, alien workers who plan to stay in Estonia for less than 90 days may request a short-stay visa.

If an individual is granted a nomad visa, their spouse, minor child, or dependent adult child will also be granted a visa. Nomad visa holders may also have a Schengen visa and travel to other nations in the Schengen Area for up to 90 days.

An alien applicant must be able to demonstrate that they meet one of the following criteria to qualify for a visa:

  • They work for a non-Estonian (foreign) employer and plan to continue working remotely for that employer while residing in Estonia
  • They are a shareholder in a non-Estonian company and plan to conduct the company’s business remotely while living in Estonia
  • They have contractual relationships with and provides services to businesses or individuals the majority of which are located outside of Estonia

Safeguards against misuse: proof of income and sponsorship by intermediaries

Estonia’s traditional work visa requires the applicant to be invited to work in Estonia by an Estonian employer. This ensures that individuals traveling to Estonia for work have a job and can support themselves once they arrive. But, the digital nomad visa does not have this requirement.

Instead, individuals must work for or be a shareholder in a foreign company or has independent contracts that demonstrate a source of income.

To prevent individuals from obtaining digital nomad visas and residing in Estonia without a means of financial support, both existing and new provisions of the Aliens Act will apply. In particular, applicants must demonstrate that they have “sufficient financial resources” to live in Estonia.

Additionally, digital nomads will need to submit confirmation of suitability from a reliable intermediary or undergo an alternative assessment when applying for a visa.

The law directs the Interior Minister to establish a list of approved intermediaries that may include companies or persons who have been vetted by the state and deemed credible.

A flexible program for non-citizens who wish to work or operate their business in Estonia

The main purpose of the digital nomad amendments to the Aliens Act is to permit workers without a fixed worksite to live in Estonia while earning income. However, an explanatory memorandum accompanying a draft of the amendments notes that it would be unreasonable to forbid digital nomads from contributing to Estonia’s economy by preventing them from working directly with Estonian companies or clients.

The memorandum adds that if the work is temporary, the visa holder may not be required to register for or pay Estonian taxes.

We believe the nomad visa option will open up opportunities for e-residents who previously could not obtain a visa because much of their business activity was outside of Estonia. And, the flexibility offered by the amended law adds to the many reasons we recommend that founders choose Estonia for their next business formation.

The country’s business fees, taxes, and registration and payment processes are all designed to help companies grow and innovate.

Why choose to live and work in Estonia?

Business owners, freelancers, consultants, and other professionals move to Estonia to live and work because of the many opportunities they find there.

In particular, people are drawn to the following benefits of living and working in Estonia.

EU membership affords Estonian businesses access to the world’s largest single marketplace

Residents of Estonia benefit from the nation’s participation as a member of the EU, the Eurozone, the North Atlantic Treaty Organization (NATO), the Organisation of Economic Co-operation and Development (OECD), and the Schengen Area.

Estonia’s EU membership grants it access to the largest international single market in the world. EU members have built a standardized system of laws which streamlines travel, commerce, business formation, and law enforcement across the Eurozone. The EU’s Single Euro Payments Area (SEPA) makes completing transactions via electronic payment seamless.

Residents and citizens of EU states can make fast, secure transfers between bank accounts located anywhere within the SEPA. Non-EU citizens who establish a business in Estonia can use that business as their launching point into other EU markets.

Estonia’s central European location serves as a gateway connecting east to west

Estonia is in the heart of the Baltic Sea Region – Europe´s fastest-growing market with a population of more than 80 million people. Tallinn, the capital city of Estonia, is within a 3-hour flight from other major European capitals. Residents enjoy the country’s political and economic stability, accessibility, investor quality, and low costs of doing business.

Situated at the geographical mid-point of Northern Europe, the nation serves as a vital link between Western and Eastern Europe. Estonia is an ideal location for regional logistics and distribution centers.

Innovative technology empowers digital businesses to thrive

Estonia is a front-runner in applying modern IT solutions that render physical distances between digital businesses and their customers and partners irrelevant. Estonia’s deployment of government e-services is one of the most progressive in the world.

Individuals may file applications, pay taxes, and conduct most government transactions via online portals. Estonia’s rapid adoption of advanced mobile communications and internet applications further the country’s advancement.

A well-educated population contributes to Estonia’s stability and growth

Estonians are intelligent, eager adopters of new technologies and use them willingly. According to the OECD, basic education in Estonia is the best in Europe and among the strongest in the world.

The OCED’s Program for International Student Assessment (PISA) 2018 results place Estonian students in first place among European countries for reading, mathematics, and science.

Estonia’s academic excellence attracts not only businesses seeking an affordable, educated workforce, but also families seeking a place for their children to learn and grow.

Estonia’s business-friendly environment draws founders and investors from around the world

Estonia is financially stable. The country has weathered the current economic downturn well its national debt is lower than most other European nations.

Additionally, Estonia features one of the most liberal tax regimes in the world. The Income Tax Act  provides that Estonian companies’ undistributed profits are not subject to corporate income tax, regardless of whether they are invested or retained in the company.

The Estonian tax system is also among the simplest in the EU. The government’s online e-Tax system allows businesses and individuals to declare and pay taxes entirely electronically. Estonian officials are also readily available to answer questions or assist taxpayers with administrative issues.

Many foreign investors choose to do business in Estonia because of its friendly yet well-regulated business environment. World-renowned foreign companies exert a powerful presence in several sectors of the Estonian economy, attracted to the country’s location, workforce, and regulatory environment.

Wrapping things up: your options for living and working in Estonia

From e-Residency to a digital nomad visa, non-citizen individuals and business founders have many options for living and working in Estonia.

The following sections summarize a few of the primary ways in which a non-Estonian may lawfully work in the country.

Temporary employment in Estonia

Non-Estonians may work in Estonia for short periods if specific conditions are met. These short-term employment periods are limited to employment for no more than 365-days within a 455-day period. The length of the term may be extended for individuals who are employed in selected professions such as research, education, or technology specialties.

For certain seasonal workers, the permissible stay is limited to no more than 270 days per year.

To be eligible to work temporarily in Estonia, the non-citizen must hold a visa permitting them to be in the country or have a right to be in the country visa-free. Once this condition is met, the non-Estonian must have a right to work granted by a law or treaty or their short-term work must be registered by an Estonian employer. This registration must be filed with the Estonian Police and Border Guard.

Individuals performing supervisory or directorial tasks for a legal person or a branch of a foreign company registered in Estonia are allowed to work in Estonia during the period in which they are permitted to stay in the country. This enables business owners and managers to work on behalf of their Estonian-registered business while in Estonia.

Types of Estonian residency permits and visas

Estonia’s new digital nomad visa is scheduled to take effect in July of 2020. In the meantime, individuals who wish to live or work in Estonia may choose from among the following residency and visa alternatives.

Short-stay (Schengen) visa

A short-stay or Schengen visa allows you to travel to any state that is a member of the Schengen Area and stay for up to 90 days within a 180-day period. However, Schengen visas are usually single-entry visas, which means that you can enter the Schengen area only once.

If you wish to enter and leave the Schengen area a number of times during the validity period of your visa, you should apply for a multiple-entry Schengen visa which allows several entries during the visa’s validity. This visa may be used for tourism or business purposes.

Holders of this visa may travel within or exit the Schengen area. Nationals of countries that are not participants in the Schengen visa-liberalization agreement must obtain a visa before they arrive in the Schengen Area.

Long-stay (category D) visa

An Estonian long-stay visa is valid for up to twelve months and permits the holder to remain in Estonia for up to 365 days. The visa allows the holder to come and go from Estonia during its period of validity.

Someone who has an Estonian long-stay visa may also obtain a Schengen visa that permits them to visit other nations in the Schengen Area subject to the standard short-term visa rules. Non-Estonians must apply in person at an Estonian agency, such as an embassy or consulate, or at the Police and Border Guard Board in Estonia to obtain a long-term visa.

Startup visa

Beginning in 2017, the Estonian Ministry of the Interior launched the Estonian startup visa program with Startup Estonia. Startup visas are valid for up to 365-days and eligible for an extension of up to 183 days.

The main condition for a startup visa is that your stay must be related to the foundation or development of a startup company in Estonia. The determination of whether or not your business qualifies is made during a qualification phase. During the qualification phase, an expert committee evaluates whether your business meets the definition of a startup. This review will take approximately 10 working days.

Startup businesses seeking startup visas, temporary residence permits for founders or employees, or attempting to register non-Estonians for temporary employment must all pass through this qualification process.

If your business passes this qualification phase, you will receive a unique code that must be used for all of your non-Estonian team members’ applications. The code allows team members to get a Schengen visa that is valid for 18-months. The code also enables team members to obtain a business-related residence permit that is valid for up to 5 years without the usual EUR 65,000 investment requirement.

Temporary residence permit

Aliens who are not associated with a startup and wish to stay in Estonia for an extended period may request a residence permit. Holders of Estonian residence permits are allowed to live in Estonia and travel within the EU.

The permit is valid for up to 5 years and can be granted to applicants who wish to operate a business, work, study, or live with a spouse or close relative in Estonia. Individuals may also request a residence permit if they wish to settle in Estonia permanently.

If an individual seeks a residence permit for business purposes, then they must make an investment of 16,000 EUR if they plan to operate a sole proprietorship and 65,000 EUR for other business forms.

Applicants may also ask for residence on the basis of a treaty, that it is in the national or public interest of Estonia, or that they are participants in a criminal proceeding. An EU Blue Card may be granted for employment in positions that require high qualifications.

Estonia issues a limited number of residence permits each year. Once this quota is met, anyone wishing to live in the country must apply for a visa or qualify for an exception to the residence permit quota. Some applicants may qualify for an exception to the residence quotas.

Among others, exceptions to the quota may be made for

  • minors or close relatives of Estonian citizens
  • minors or close relatives of persons who hold a residence permit of Estonia
  • minors or close relatives of individuals who have a residence permit related to startup business
  • investors who have made a direct investment of at least EUR 1,000,000 in Estonia

If there are no residence permits available, non-Estonians may alternatively apply for a visa.

Long-term residence permit

A long-term residence permit is issued to an alien for entry and residence in Estonia for an unspecified term.

To qualify for a long-term residence permit, an individual must

  • have stayed legally in Estonia for 5 years
  • hold a valid temporary resident permit
  • have permanent legal income
  • be covered by Estonia’s health insurance program
  • comply with the integration requirements (e.g., obtain an Estonian language level of at least B1)

Once a non-Estonian is granted long-term residence status, they have similar rights to other EU citizens.

Gain the freedom to work from anywhere by choosing Estonia

Incorporate in Estonia partners with hundreds of entrepreneurs each year who recognize the value and flexibility they can gain by founding their business in Estonia–the heart of the Eurozone.

Our team of experts helps both individuals and businesses handle the necessary administrative steps to obtain their e-Residency cards, register their businesses, and comply with Estonia’s tax regulations, all of which are made easier because of Estonia’s focus on technological solutions. 

The benefits of Estonian e-residency

Everyone who has carried out business activities in foreign countries knows how much time paperwork usually takes. Estonia’s business-friendly policies eliminate these procedural bottlenecks and make it easy for organizations and individuals to conduct business in the country. The e-Residency program is one example of Estonia’s innovations on behalf of companies. 

Individuals can register as residents of Estonia without physically visiting the nation. Their e-resident card can then be used to transact business in the nation, including incorporating their business and filing corporate income taxes.

E-residency cards also eliminate much of the fraud associated with paper transactions. We recommend that non-citizens who wish to grow their business in Estonia take advantage of e-Residency to smooth their way.

Businesses formed in Estonia do not have to maintain a local director and are allowed to conduct business using online communications. This enables entrepreneurs to operate their business while residing or traveling anywhere in the world (as long as they have an internet connection).

With an Estonian e-resident card, you can

  • digitally sign legally-binding documents and contracts over the internet
  • declare Estonian taxes online and use online banking
  • encrypt and transmit documents securely
  • establish an Estonian company online within 1 business day
  • check their company’s registration data, property, and legal records online

Disclaimer: This article provides general information, which may or may not be correct, complete or current at the time of reading. No recipients of content from this site should act on the basis of content of the article without seeking appropriate legal advice or other professional counselling.

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