What is Estonian e-Residency and what are the benefits?

Estonia was the first country to offer e-Residency — a government-issued digital identity and status that provides access to Estonia's transparent business environment. Since the introduction of the program, e-resident entrepreneurs from around the world have used their e-resident status to launch and run their EU-based company, 100% remotely, from anywhere on the planet!

The Basics

When you sign up for Estonian e-Residency, you receive a government-issued smart ID card that provides digital identification and authorization. This smart ID card will enable you to digitally sign important documents, access secure services, and make secure transactions — even if you don't live in Estonia.

For example, e-Residency would allow an Indian entrepreneur to establish an Estonian company that he runs from his home in Singapore to serve his Berlin-based clients. He'll be able to use his digital signature to sign contracts with customers throughout the European Union. And the best part? All of this can be done online, 100% remotely and 100% hassle-free.

While e-Residency is a new concept, the idea of a government-issued digital ID card is not. In fact, Estonians have been using these cards since 2002! A recent UN e-Government survey found that Estonia ranks among the top three most digitally advanced countries on earth (along with Denmark and South Korea). The advanced digital infrastructure allows Estonian citizens to do practically anything online — voting, applying for a marriage (or divorce) license, or buying and selling property, to name just a few. Even the most dreaded activity of all, filing taxes, is completed 100% online in less than five minutes!

What Estonian e-Residency is not

Estonia’s e-Residency program is not a path to citizenship, nor is it a legal residency. You can’t use e-Residency to move to Estonia and live there as a full-time domiciled resident.

Your Estonian e-Residency card is not a physical ID card, and it can't be used as a travel document. It also doesn't grant you tax residency, residence permit of rights, or entry into Estonia (or the rest of the European Union, for that matter). It’s not a visa, a right to remain, nor does it come with any of the social rights that local Estonians have.

E-Residency is also not a way to avoid paying taxes in your home country. And it certainly shouldn’t be seen as a viable solution for anyone looking to avoid paying their fair share of taxes.

Creating a country without borders

"What we aim to do is to create a worldwide virtual business environment, where people from both the developed and developing countries can easily become entrepreneurs and start doing business anywhere in the world. Physical national borders and restrictions will no longer present an obstacle. You can start a business, open bank accounts, make transactions, sign contracts and even declare taxes, all on your computer," said Kaspar Korjus, who served as the e-Residency Program Managing Director during its first five years of existence.

The main goal of the e-Residency program is to make life and business significantly easier for freelancers, digital nomads, business owners, international partners, and any other non-resident who has a connection to Estonia. Whether you want to launch a new business, expand your existing business or invest in exciting new ventures, Estonian e-Residency makes it not just possible… but surprisingly simple.

As an e-resident, you'll be able to:

  • Establish and run a company online
  • Conduct your banking online (e.g. make electronic bank transfers)
  • Gain access to international payment service providers
  • Digitally sign documents (annual reports, contracts) internally and with external partners
  • Verify the authenticity of signed documents
  • Encrypt and transmit documents securely
  • Declare taxes online

A growing number of e-residents

As more people have come to realize the value of e-Residency, the program has continued to grow.

As of August 2021, there are more than 83,000 e-residents and 17,449 Estonian companies founded by e-residents! In fact, the vast majority of people who apply say they do so to conduct business either with Estonia or through the e-Residency program.

How can you apply for Estonian e-Residency?

In short, all you have to do is fill out the online application form. Read more: A Step By Step Guide To Applying For e-Residency

Why run your business in Estonia?

Just as you might switch your traditional bank to one with a modern and easy-to-use mobile app like Wise or Revolut, the team here at Xolo (along with the Estonian public sector) share the vision that you'll benefit greatly from switching your business to a country with minimal bureaucracy, less administrative hassle, and infrastructure that was built to be used remotely.

Specifically, you'll get:

  • A presence in the EU single market, as a trusted member of the European Union business community
  • Access to international payments providers like Google, PayPal etc.
  • A trusted and transparent business entity that's been incorporated through a simplified setup process
  • Possibility to access a simple and fair tax system - 0% corporate income tax as long as you keep your profit earned in the company or reinvest it into growing your business.
  • Full remote control – secure access to your bank and company data via e-Residency, from anywhere in the world
  • Paperless administration
  • Digital signature and encryption tools that come with a guaranteed high level of security
  • Operate within a stable and transparent business environment

In a world where businesses, people, and money can move around with relative ease, having a competitive tax code has become even more important for economic success. According to 2021 figures released by the US-based Tax Foundation, Estonia has the most competitive tax system in the OECD for the eighth year in a row (International Tax Competitiveness Index 2021) and shares a place at the top of the list for Internet Freedom.

Estonia has a unique income tax system where corporate income tax is charged on profit distribution (i.e. dividends) only, and is capped at 20%. As long as you keep your profits within the company, you won't have to pay any corporate income taxes. Estonia has a flat 20% tax on individual income that doesn't apply to personal dividend income.

The catch

In order to register your company, you need an official address in Estonia. And unless you're a resident, you're required by law to have a local contact.

And this contact can't just be some friendly local — it has to be someone with the knowledge and authority to help you navigate the Estonian legal and taxation systems. In other words, a person or a platform who can help you with compliance, accounting, reporting and filing your taxes.

Estonian e-Residency + Xolo Leap: the best way to start a company in the EU

There are a few different service providers, but Xolo is the solopreneur favorite, by far. Estonian e-Residency and Xolo Leap are the ideal combo to put you on the fast track to launching your EU company in the most efficient way possible!

Here at Xolo, we believe that all of the benefits and features we've talked about can be even better — by packaging them into one hassle-free solution for a competitively-priced monthly fee. And the good news continues — there are no hidden costs or surprise fees, ever!

We've selected the best components of the Estonian/European Union ecosystem for your needs, packaged them together and created a highly-automated online company management solution that's powered and secured by Estonian e-Residency.

Our target customers are freelancers, digital nomads, sole proprietors, side hustlers, and/or entrepreneurial expats in need of a way to run their businesses remotely. Our focus is on setting up a trusted micro-business with a simplified company structure, minimal stress, no paperwork and seamless accounting that's based on your revenue model.

Our features when starting your micro-business include:

  • Registering an EU-based private limited company
  • Secure integrated online banking
  • Accounting, taxes compliance handled by Xolo
  • Support for global app stores
  • Support for payment gateways bulk invoicing
  • Create and send branded invoices directly from your dashboard
  • VAT number and VAT calculations added automatically
  • Easy expense document upload and reimbursement
  • Timely updates about admin tasks that require your attention

The cherry on top of the cake is the fact that you can manage every aspect of your business — everything from signing documents to submitting tax reports — completely online so there's no need to travel. Xolo Leap comes with a minimalistic-yet-powerful dashboard which gives you an aerial view of your business in real time.

Start your company online today. Sign up free here.

And if you’re in a hurry to get started, you can access all the benefits of running an EU business (without actually having to register a business) with Xolo Go. Xolo Go is perfect for international freelancers who want to quickly and easily invoice cross-border clients, expense a few business purchases, gain access to their own business bank account and most important of all — get paid.

Xolo Go gives freelancers all of the above capabilities for a flat rate fee of just 5% — no long-term commitments, no contracts, no surprise fees! In less than 10 minutes you can be fully onboarded and clicking 'send' on your first invoice — so what are you waiting for?

Learn more about Xolo Go.