What is Estonian e-Residency and how to take advantage of it?

The details, rules, and procedures you need to know about Estonian e-Residency.

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!

What is Estonian e-Residency?

The advanced digital infrastructure allows Estonian citizens to do practically anything online — voting, applying for a marriage license, or buying and selling property, to name just a few. Not all of these will apply to Estonia’s growing community of digital citizens, but 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).

Even the most dreaded activity of all, filing taxes, is completed 100% online in less than five minutes — which is a major attraction to all entrepreneurs. So today, e-residents include a diverse range of digital nomads, freelancers, remote workers, and forward-thinking business people from around the world.

Since the scheme’s introduction in 2014, the Estonian e-Residency scheme has helped more than 85 000 entrepreneurs from around the world register and operate over 18 000 EU-based businesses entirely online, and operate those businesses from anywhere — and everywhere, as a significant proportion of e-residents are nomadic citizens of the world.

At its heart, Estonian e-Residency is a special type of digital ID that lets you log into government websites, verify your identity, and digitally sign documents. But that simple ID card unlocks a world of international digital power.

Who can benefit from e-Residency in Estonia?

Some e-residents are simply located far from their customers or suppliers, or cannot access the legal business infrastructure they need. For example, e-Residency allows an Indian entrepreneur to establish an Estonian company that she runs from her home in Singapore, to serve her Berlin-based clients. She can use her digital signature to sign contracts with customers throughout the European Union. All of this is done online, 100% remotely and 100% hassle-free.

But there’s no such thing as a typical e-resident, and the beauty of the scheme is that it offers access to Estonia’s open business infrastructure to a diverse international cohort. So now, everyone can access many of the advantages which Estonians have enjoyed from birth, since 2002!

People who might benefit from e-Residency in Estonia include:

  • Digital nomads
  • Freelancers
  • Location-independent entrepreneurs
  • Solopreneurs
  • Consultants
  • Content creators
  • Innovators
  • Startup founders

… And many more.

What does it mean to operate a borderless e-Resident business?

"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 accessible, affordable, and frictionless!

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What are the benefits of Estonian e-Residency?

The power of the e-Residency scheme is expanding all the time, as new service providers enter the marketplace, and the community grows.

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

  • Establish and run a company online — using Xolo Leap or any other service provider, which offers local office representation and access to the Estonian digital infrastructure.
  • Conduct your banking online (e.g. make electronic bank transfers) — whether your enterprise requires access to traditional clearing bank services, or the latest fintech apps and services (including some notable Estonian success stories, like Wise (formerly Transferwise.)
  • Gain access to international payment service providers — with all ecommerce and payment gateways supported via direct integration into accessible business dashboards, and global app stores and content distribution networks.
  • Digitally sign documents (annual reports, contracts) internally and with external partners — from professional service providers to the tax office.
  • Verify the authenticity of signed documents — using 2048-bit ECC public key encryption, via simple online tools and two PIN numbers.
  • Have political representation to Estonian decision makers, via EERICA — The Estonian e-Residents International Chamber.
  • Encrypt and transmit documents securely, to and from any location.
  • Declare and pay taxes online — within the exceptionally transparent and accessible e-financials infrastructure.
  • Take advantage of the intelligent, advanced, and frictionless business operations software of Xolo Leap — fully integrated with all financial services, digital signing, and operational documents, to make business administration not just a breeze — but a great value too!

Why should I choose Estonia for my e-resident business base?

Since Estonia’s pioneering genesis of e-Residency as a concept, the world has changed considerably — not least with the pandemic lockdowns triggering first, an unprecedented demand for paperless digital pathways to all personal and business administration, followed by a wave of unlocked demand for mobility and choice.

Unsurprisingly then, many other nations are following Estonia into proposed or launched e-Residency offers, from Azerbaijan to Ukraine. All of these schemes offer different benefits and have different requirements, in terms of income, share capital, cost, and access to the all-important digital infrastructure and EU business ecosystem.

Some are aimed at specific demographic targets, such as high net worth individuals, or those seeking access to specific marketplaces. Most are just starting out and lack anything resembling the support and marketplace on offer in Estonia, but you can compare the different schemes and what they require/provide in this round-up, in case there is a program better suited to your individual needs — particularly if you do NOT require digital signatures and transactions for your business operation.

Above all, be careful to understand the tax implications for your proposed business, both now and in the future.

Is Estonia a competitive tax environment for my e-resident business?

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. Estonian’s tax and total financial ecosystem is uniquely transparent and authentic.

Estonia also 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, and all of your tax filing and payments can be frictionlessly managed via your business service provider.

Become an Estonian e-Resident and launch your Estonia-based business with Xolo Leap

As a founding member of the government-approved e-Residency marketplace of service providers, Xolo has 7 years experience of advising, supporting, and onboarding e-residents of Estonia from all over the world. So if there’s a question still on your mind, just ask us.

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. Just a simplified company structure, minimal stress, no paperwork and seamless accounting that's based on your revenue model.

The winning combination of our cutting-edge business automation software with our exceptional team of intelligent, multilingual, and deeply knowledgeable personnel, means that Xolo is the perfect resource for any further questions you might have about Estonian e-Residency, Estonian EID, and forming a location-independent fully legal EU-based business. We hold your hand through every step, from applying for your ID to paying yourself a well-deserved profit dividend.

And right now, you can enjoy an amazing THREE MONTHS FREE access to our flagship business portal, Xolo Leap, to help you kick-start your e-resident business success, with zero risk.

So the only remaining question really, is… What are you waiting for?

Frequently asked questions about Estonian e-Residency

Is Estonian e-Residency equivalent to an Estonian passport?

Your Estonian e-Residency can be thought of as a digital passport, which gives you access to the digital infrastructure of e-Estonia, in much the same way as is available to citizens of Estonia.

However, your E-ID does not confer the physical access or domiciliary rights that a passport would, nor can it be used as a travel document. E-Residency is purely an e-citizenship in Estonia, as opposed to the rights that a primary physical identity document brings.

Is Estonian e-Residency a remote work visa or digital nomad visa?

Estonian e-Residency is great for those who want to operate their business remotely or nomadically, because it enables you to create your business in a completely digital way. However, e-Residency should not be confused with a visa, which would give you varying rights to physically live within Estonia itself.

If you would like to move to Estonia and experience the social and business culture it offers in the physical world, there is a new Estonian digital nomad visa which enables you to legally live in Estonia while working remotely for an overseas business, for up to one year. There is also a start-up visa for Estonia, which can help non-EU founders create a physical presence in Estonia, for themselves and their team.

Does holding Estonian e-Residency make me a tax resident of Estonia?

Tax residency is a complex question, which is best resolved through personalized advice from a qualified professional. But in most cases, becoming an Estonian e-resident does NOT make you tax resident in Estonia. What e-Residency gives you is the opportunity to form a business which is legally resident in Estonia.

You may pay some personal and business taxes in Estonia as a result of your business activities there, but usually, you will be a tax resident (and pay the bulk of your personal taxes and social security) in the country that you live in for the majority of the time. Estonia has bilateral double taxation agreements with more than 60 countries, so in most cases you will not be taxed on the same income twice over.

For the avoidance of doubt, Estonian e-Residency is NOT a tax haven or tax avoidance scheme, and it does not provide any pathway to avoiding tax in your country of residence.

Can e-residents travel to Estonia to visit?

E-residents have no rights beyond any other guest, but Estonia’s thriving tourism industry welcomes visitors from around the world, to enjoy the rich experience of this diverse and fascinating country.

Visas may be required, for extended stays, or for those travelling from outside the Schengen region — your local travel agent can best advise.

Can I live in Estonia if I become an e-Resident?

Estonian e-Residency does not give you any rights to live physically in Estonia, beyond those to which you are already entitled, which will be determined by the passport you hold.

EU, EEA, and Swiss citizens can move to Estonia without a visa, but must register as resident within three months of arrival, in order to work legally.

Non-EU and EEA citizens moving to Estonia for longer than six months will need a temporary residence permit. This may lead to eligibility for a permanent residency and citizenship application after five years, provided you meet qualifying criteria (including income, accommodation, health insurance coverage, and speaking fluent Estonian.)

What does it cost to become an Estonian e-resident?

Becoming an Estonian e-Resident requires the payment of the state fee of €120, which includes your physical EID card and reader. The procedure is straightforward, and described in detail in our step-by-step guide to applying for e-Residency.

How long does it take to become an Estonian e-resident?

The e-Residency application processing is in the hands of the Estonian Police and Border Guard, who will contact you by email once your application is approved at their discretion. There are very few specific requirements for Estonian e-Residency; however, a clean criminal record is a prerequisite.

This can take up to 30 days, following which it may take 2-5 weeks for your personalized e-Residency kit to be available for collection at your chosen pickup location, at which point they will invite you to schedule an appointment to visit, at any time within the next 6 months.

This processing time is outside the hands of Xolo or anyone else in the e-Residency marketplace, but may happen much more quickly than the maximum periods indicated above. And after you have your Estonian digital identity, everything happens digitally, and far more rapidly!

Not only does Xolo help you with every step of applying for and acquiring your Estonian e-Residency, you can currently take advantage of 3 months FREE use of our main business portal, Xolo Leap. To find out more…