The e-Residency of Estonia is an innovative idea of the modern digital world. In fact, Estonia was the first country ever to offer such a program upon launch in 2014. The Estonian Government designed the program with hopes to attract investments and new entrepreneurs to the new digital nation. Being part of the e-residency program enables non-residents and other global citizens to be part of the Estonian and the European economy. The e-Residency card itself is a government-issued digital identity card that gives access to the digital business environment, where forming and managing a company has never been easier. You can do it without the need to be present in Estonia, as it is a form of digital identification. With it, you can digitally sign documents and interact with all the government services.
It is important to note that e-Residency does not give a residence permit or a visa to enter or to stay in Estonia. Also, many of our customers are led to think that e-Residency itself gives a right to open a bank account in Estonia, or it makes the process easier, which is not true.
E-Residency is perfect for location-independent entrepreneurs, who are looking to run a company that supports their international lifestyle. It provides a gateway to gain temporary residency with an innovative and scalable start-up that may have a promising future in business.
People who can benefit from the Estonian e-Residency are:
Estonia is the perfect business location for people who are looking to work in a transparent and safe business environment along with technology that government has built for everyday business effectiveness - the ease of conducting business is achieved through the lack of bureaucratic regulations that lower with the digital infrastructure.
There are many ways that e-Residency simplifies your business activities in Estonia and in Europe. The primary benefit of the digital identity card giving you easy access to all public e-services, allowing you to operate fully digitally.
Furthermore, as the Republic of Estonia is part of the European Union, having an Estonian company gives better chances for cooperation and competitiveness within the European Economic Area. Even the Estonian tax system favours entrepreneurs and has amazing foreign investment opportunities in relation to the program.
For most people, the management of an Estonian company, which is completely location-independent, and the easy company registration process, are the key motivators to become an e-Resident. Believe it or not, the company formation process with the Digital ID card could be as quick as 18 minutes.
Once you have established your company, you can manage it remotely by using the Estonian e-services, which allows almost everything to be done online. Those e-services enable all e-residents to continue managing their businesses without any hassle or unnecessary paperwork. This is especially good in cases where a company will have remote workers, as gaining access and identification can always be done securely over distance.
Now, with your e-residency card, you will also be able to perform all your business-related financial transactions and document signing remotely. For each of these actions, you will have different PIN codes. PIN 1 is used for authentication, and PIN 2 for performing bank transfers and to sign documents. All this is made possible by the secure e-services that are interlinked and use your digital ID-card to identify you virtually. Digitally signed documents can be later sent out to other parties over the internet, thus making it much more efficient in terms of time, safety, and money, instead of the traditional way of sending documents by mail or courier. Also, online bank transactions can save you a lot of energy in the long run, as it takes a way the need to go physically to the bank.
With your new ID card, you cannot only sign documents but also verify the authenticity of the signatures that others have made on the documents that have been signed.
The Estonian digital signature has the same legal validity as a handwritten signature. The digital signing process is very simple:
Alternatively, you can sign the documents and contracts using your Mobile-ID or Smart-ID credentials. We explain more about these options and how to set them up below.
As mentioned, once you are an e-Resident, you can do almost everything online. This includes personal and corporate taxes. Whether you are doing them in Tallinn or at a beach in the Caribbean, the methods are the same. You just need to log into the e-Tax system and fill out the information needed.
In case when you use accounting services, you will have to use your digital id to give permissions to the accountant, who then can act on your behalf and fill in the information for you.
The website looks like this:
When it comes to corporate taxes, the system is more than fair. As a tax resident in Estonia, the corporate income tax rate is 0% on all profits that are retained and kept within the company. The CIT applies only when the dividends are paid out to the shareholders, and the tax rate for that is 20%.
In case you have employees in your company that work in Estonia, you must pay taxes on having them as well. The country where you must pay taxes on your employees depends on where your employees have their tax residency. In case your employee is an Estonian tax resident, you as the employer are liable to pay social tax to the tax office. The current social tax rate is 33%. The employee is liable to pay the income tax on their salary, which is currently 20%. The income tax is withheld and paid to the state by the employer.
To find out more about the specifics of accounting for an Estonian company, please click here!
In case you have your tax residency in a foreign country, we suggest you consult a local lawyer to find out the laws and the legislation that applies to your specific case.
Since the Estonian e-Residency program enables entrepreneurs to create and manage companies remotely, there has emerged a special niche that helps those business owners to do it effectively and securely. Those are service providers in that niche offer things like a virtual office, tax consulting, accounting, and legal services. These service providers often charge a monthly or a yearly fee for their services, and many business owners choose to collaborate with them, as they can get legal advice as well.
Incorporate in Estonia is part of that sector, and we would be more than happy to help you out!
According to the government statistics, as of 28 of September, there are 72,939 Estonian e-residents from 173 different countries. Together, these people have founded over 13 000 Estonian companies. People from Ukraine, Germany, and Russia have founded the biggest number of companies in Estonia as e-residents.
From those 73 thousand people, only 12% of the e-residents are women. The other 88% are men. This suggests that men have been more interested in this program so far. The 2 most popular age groups from both sexes are 26 to 35, and 46 to 45.
The 5 most popular countries from where the e-residency applicants are from are Finland, Russia, Ukraine, Germany, and China, showing that the program is popular within and outside of the European borders.
When the applicants have been asked, what is their primary motivation to get their ID-cards they have stated:
Luckily, the steps you need to take to become an e-Resident of Estonia are easy and the application process is straightforward as there are only a few things that you need to consider beforehand. Since you will be able to do almost everything online when you have your e-Residency card, it is not surprising that the same goes for the application.
Anyone in the world is welcome to become a part of the government program for e-Residents if they have genuine and reasonable interest in using Estonia’s e-services. So there are no real requirements to be eligible to become an e-resident, you just have to consider that there will be a background check by the Estonian Police and Border Guard to ensure that all applicants are, who they say they are and that they are not involved in crime.
In case that you already are an Estonian citizen or have a residence permit in Estonia, you cannot apply for the program, as the local ID-card serves the same purpose as the e-Residency card.
The cost of the Estonian e-residency in total is 100-120 euros, which you need to pay as the state fee at the time of the submission of your application. Note that the state fee is variable because of your selected pickup location. If you will be able to pick up your e-Residency at an office in Estonia, the state fee is 100 euros. If you will collect it at an Estonian embassy or at a representation office in a foreign state, the price will be 120 euros.
Before you start the application process, prepare the following documents, so everything goes smooth:
Once you have these documents ready, you can open up the online application form and fill it with your personal data that they ask for.
Within the form, you also already must choose your e-residency pick-up location. As of October 2020, there are 39 offices around the world, where you can organise your card to be delivered to. Before choosing the location, please make sure that you will not have problems with entering that specific location legally.
The countries where you can organise a pickup are the following and note that some countries have multiple offices available:
Before the COVID pandemic, it was possible to arrange a pick up in Tokyo, Seoul, Washington, and San Francisco. These locations were removed because of the complications that have come with it. The government hopes that this situation is temporary, and that they will become available again soon.
After you have submitted your application and paid the state fee, you will get a confirmation email stating the submission of your application.
After you have submitted your application, there will be an analysis of your application and a background check by the Estonian Police and Border Guard Board. The background check is done for all e-residency applicants, regardless of their nationality. The analysis of your application with the background check takes usually around 6 to 8 weeks, and after that time-period, your e-Residency kit should become available for pickup at your chosen location. If there is any need for additional information you will be notified, and this may increase the time that will take to fully review your application.
All successful applicants will be given notice and invited to the pickup location to collect their e-Residency kit. In total, you will have 6 months to collect it, starting from the date that they notified you. If you do not collect it within those 6 months, you must apply again and wait for approval.
Many of our customers ask if there is a possibility that someone else can go and pick up the card for them. This is not possible, as the final recipient must do it herself/himself and their identity must be confirmed beforehand. When you are going to your chosen pickup location, make sure you are bringing your passport or ID with you, and prepare to submit your fingerprints to the Estonian government.
In case that you are unable to go and pickup your kit at your selected pick-up location, you have the possibility to change it. You must request the change when you are notified that your card is ready and before it has been sent out to your selected location.
Within the e-Residency kit that you will receive are your new e-residency card, pin codes, and a smart card reader that you will use to connect the card to your computer. The kit looks like this:
Once you have your new e-Residency card, you are officially an Estonian e-Resident and you will have access to all digital services. You can access these government and private sector services with your newly obtained card and the smart card reader. Like the local Estonian residents, you are now a part of the digital infrastructure and all your personal information is stored in the cloud. Before you dive in and start using it, it is important for you to know how to use it.
As the next step, you should verify that your digital ID card is active within the system. This is done by entering your card number into the Police and Border Board database, which gives you the status of your card. In case it is not active right after you have got your card, we suggest you wait 24 hours and then try again. If it takes longer than that, we suggest you contact the e-Residency office.
After you have verified that your card is active, go ahead and download the digital ID software called DigiDoc on your computer. This software is needed to read your card and the information on it. The software is also connected to the database that is responsible for the digital identification. We also suggest you install the browser extensions/add-ons that enable you to use your card in a web browser. Whenever you are using your card, you need to know the PIN codes that came with your card.
We recommend that you take extra care with your PINs because if you lose them, the only way to gain new codes is to order a new card and follow the application procedure again. There are also two alternatives to using your digital ID and your smart card reader - Smart-ID and Mobile-ID. Both options are safe and approved by the government.
Many of our clients have had problems with logging in and signing documents with their ID cards. Most of the time it is because of IT relate problems with using the wrong browsers or browser extensions have been wrongly installed. In case you are struggling with such problems, we recommend you consult ID-help or reach out to them directly through their contact page.
Smart-ID is a quick and a very secure way that enables you to have access to the e-services with just using your phone. It replaces the need to connect your identity card to the computer. All that you need is an internet connection and the application on your smart device. You can download the application from the Google Play store or the AppStore. The application is free and to register on the app, make sure you have your ID-card or mobile-ID at hand and follow the steps on the screen. Using the Smart-id application is also very easy - you just need to know your PIN codes for the corresponding activities when they are asked for.
Another clever way to identify yourself is Mobile-ID. Mobile-id is very similar to the smart-id as it speaks to the same system, but it uses your SIM card to connect to it. With this method, you do not need to install anything on your phone or use a computer. To use this method, you should know that these SIM cards are only distributed by mobile operators Elisa, Tele2 and Telia. Each provider has their own rules for their users. To get one of these SIM cards, you must have a contract agreement with those mobile service providers. Once you have the SIM card, you can activate your Mobile-ID by visiting one of the Police and Border Guard service points or their website. All you need to do is to log in with your e-Residency card and follow the guidelines.
So, now that you are fully aware of how you can use your new digital identity along with other methods of securely identifying and connecting yourself, we will explain to you the e-services that you should know about, when it comes to managing your business in Estonia.
For business reasons, the most important ones for you to use are the e-Tax, e-Banking, and the e-Business Register systems.
Within the e-Tax system, you can electronically file your annual tax reports to the Estonian Tax and Customs Board. Filing for a tax return can only take you up to 3 minutes, and around 98% of all Estonians file their taxes online. Furthermore, in that system you will be able to make all the declarations related to your business: income tax, social tax, unemployment insurance and contributions to the pension funds. You can also make customs declarations, INF declarations, and claim excise duty returns.
e-Banking is arguably one of the most important aspects, but also one of the most controversial topics of them all, to use when you are dealing with a remote and online business. In Estonia, 99% of all transactions are made online, so online payments are always to be expected and is the norm. Unfortunately, there are some regulations that have made bank account formation more complicated than it was before. Electronic payment institutions like PayPal, and online banks like TransferWise can be excellent alternatives.
The e-Business Register is the database where data about every single business is stored. Here you must send your annual reports, state your area of activity, etc. The system also provides real-time data of all legal people that are registered in the country. There are some actions that are free-of-charge, and some that you need to pay to get access to them.
Many entrepreneurs use local job listing websites to search for local talent. On most of these websites, you must confirm your identity to successfully list a job offering. Three of the most popular websites for job offers in Estonia are Töötukassa.ee, CV.ee, and CVKeskus.ee. Also, a great place to look for talent across Europe is eures.europa.eu.
Eesti.ee is a very useful portal where you can download notarial documents, submit a statement of residence, access the register of economic activities to apply for any licences if your business needs one. Through this portal, you can also grant access to third parties to apply for licences on your behalf.
As a small recap, here are the major benefits of starting your own European business in Estonia:
Now, for registering your company, there are other ways to do it, without needing to have the traditional digital identity card used in the country. For example, there is the possibility of using Power of Attorney, which also excludes the need for you to visit an embassy to pick up your digital identity in the first place. Another possibility to open a business is to do it in person during your visit to Estonia.
Whether you are looking to become a small business owner, or already are running a million-dollar company, you should know the possibilities that our country has to offer. So, when it comes to the creation of an Estonian business, you have basically 3 ways to form a company.
All the company types have their pros and cons, as the best option depends on your plans and circumstances. In case you are interested in finding out more about how the complete registration process works, and what it involves, please read our article about Company registration in Estonia.
In case that you might need professional help with the entire process, we would be happy to help you with our services.
Dependent on your primary business activity, there are some banks that fit your business better than others. This is because the banks and payment institutions are functioning based on certain regulations relevant to different industries. Having a bank account is important because this is where your share capital will be contributed to, and it holds the data that will be used to make your monthly and annual statements.
Unfortunately, there are some complications that are caused by banks and their own rules to protect themselves against money laundering and other types of financial crime. If you are a resident of a FATF list country, you will most definitely have difficulty with banking and even company creation in Estonia.
There are many banks in Estonia, but most of them do not accept to partner with businesses that are created by e-residents unless they have strong connections with the country. Again, this is because of banks having their own regulations and they are trying to protect themselves.
The most likely Estonian bank that officially works with e-residents is LHV. LHV itself is a credit institution and is suitable for freelancers, consultants, and OÜ’s that are registered in Estonia. Your company must have a sound business plan, the owners must have an entrepreneurial background and a connection to with the country.
What is great about LHV is that you can do the application process online and remotely, and if the answer is negative, you have wasted no time with travelling. Other banks require you to show up personally to initiate the creation process.
When the feedback from LHV is positive, only then you must travel to Estonia to complete the creation of your bank account in a face-to-face meeting. You must sign the contract with LHV within 2 months. Once this process is complete, you will get access to your bank account with your e-residence card from their homepage, and conduct business from there.
Alternatively, you can have a bank account in a foreign bank that is and operates within the European Economic Area.
As an alternative to physical banks, there are many electronic payment institutions that accept Estonian companies and agree to work with them. These institutions are businesses that have licenses and may legally provide financial services to third parties and businesses. They store their funds on special segregated accounts, and this method is also very safe to use as they follow all governmental and EU regulations necessary for them to function. There are also some institutions that enable to have multiple currencies, thus enabling and making cross-currency transactions easier.
Some electronic payment institutions that you can use are Payoneer, Paysera, Stripe, and TransferWise. PsP accounts are accepted and are suitable for share capital contribution for the Estonian tax authorities and the business register.
As an alternative to the e-Residency program, if you are able, you may get a residence permit through work. This will give you the same e-service opportunities as all the e-residents have. As a resident, you can start a company as easily as mentioned before, but you will have the upper hand by legally living in Estonia.
Another way to gain residency in Estonia is through business. This can be done if you have a holding company or operate as a sole proprietor and have invested in business activities in Estonia. As a sole proprietor, you must invest at least 16,000 EUR, and in a bigger business, the threshold is 65,000 EUR.
Furthermore, there is a Start-Up Visa programme for innovative and scalable tech businesses, which must go through an evaluation process by and committee of experts. If you get approval, you may be granted a temporary residence and a visa.
There is some good news for digital entrepreneurs, digital nomads, and remote workers. From August 2020, there is a possibility to apply for a Digital Nomad Visa, which allows them to gain a temporary residence permit and legally live and stay in Estonia for a year.
You should apply if:
Also, there have been rumours that in the future, the government will try to make the Digital Nomad Visa and the e-Residency into one single offering that enables the Visa applicants to enjoy all the comforts that the digital nation offers with its infrastructure.
For more information about the DNV, please click here!