The Republic of Estonia is the first country to offer e-Residency. As the name suggests, e-Residency gives foreigners its ability to apply for a secure digital residency in Estonia even without actually living there. This is a government-issued digital identity. It gives empowerment to foreign entrepreneurs in setting up and running a location-free business organization.
For instance, e-Residency would allow a Chinese entrepreneur in establishing an Estonian company that he runs from India to serve Germany-based clients. He is capable of using his digital signature in signing the contracts with customers throughout the EU. It is completely hassle-free since everything is done online.
The motivation behind e-Residency is pretty simple, it is to create a country without borders. According to Kaspar Korjus, managing director of e-Residency, “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.”
Its main goal is to make life and business importantly easier for the digital nomads, freelancers, international partners, business owners and other non-resident who has a relation to Estonia. Estonia e-Residency makes it simple and possible whether you want to make investments, start or expand your business or even to just study in the European Union.
Entering the e-Residency
A lot of confusion about the e-Residency has risen, so, the following list below are the things that explain what the e-Residency is not:
- It’s neither an actual residency nor a citizenship. Being an e-Resident in Estonia doesn’t give you any rights to stay in Estonia, the Schengen zone or the European Union.
- It’s not a way in avoiding to pay tax. Running a business in Estonia is very possible, however, you will be paying your personal taxes in your country of origin.
- It’s not a travel document. It is not an ID picture and not a “real world” form of identification.
How to acquire an Estonian e-Residency?
The whole process is feasible in just a month without visiting Estonia. Its application process is online. A nearby Estonian embassy will receive the card so you can easily pick it up.
- Fill out the application from the e-residency website. Both a scanned copy of your passport, passport photo are needed. Also, MasterCard or Visa in completing the payment. The current application fee is €100, with an additional fee of €1.99 to cover the payment processing. This works out to about €20 per year since the card has a validity of 5 years. Also, you will choose which consulate or embassy the card must be shipped to or if you want to get it in Tallinn, Estonia.
- You will know the result of your application via an email. It might take longer especially if there are many applications to process at the moment.
- You can wait for around two weeks to get your e-Residency card at your specified consulate or embassy. An appointment will be set up by you in picking up the e-Residency card within their working hours.
- You will need to present your ID document. ID such as your passport at the embassy and a couple of forms will be signed and fingerprinted by you.
- Important notice: If you immediately want to use your e-residency card, you must ask embassy or the consulate’s staff. You will report back to the Police and Border Guard Board that you already picked up your card as soon as possible. Also, ask them about the activation of the card. This is important as your card wont be functioning if your don’t do this.
- You are now an e-Resident of Estonia.
What are the functions of e-Residency?
As an e-Resident, you’ll be able to:
- Set up and run a company online
- Conduct online banking such as electronic bank transfers
- Has the access to global payment providers
- Documents such as contracts, annual reports can be signed digitally which is within the company and with external partners
- Verify if the signed documents are authentic
- Securely transmit and encrypt documents
- Declaration of taxes online
Once you’re an e-Resident, a smart ID card will be given to you that allows you to safely access all of the aforesaid services wherever you are in the world. What you need most is both computer and internet connection.
How can Digital nomads benefit from being an Estonian e-Resident?
The lifestyle of the digital nomads is all about freedom in choosing your location and lifestyle. The role of the internet is a provider of ways in supplying online services and become location independent for digital nomads. It is quite challenging to start a company as a digital nomad because out of all the world’s jurisdictions. The choice on selecting the one that fits to the lifestyle of a digital nomad is going to be challenging. A company that supports your lifestyle is basically what you need. The one that is flexible to any location and fully manageable online. An e-Residency is the closest that a digital nomad could get in starting and running a company. This will lead you to getting a fully location independent company.
Building a global business
Deepak Solanki, founder of Velmenni, a tech start-up in New Delhi that offers high-speed, wireless data transmission technology called Li-Fi. As opposed to Wi-Fi, told New York Times, “I’m running an E.U. company from India using my e-Residency card. It’s very convenient and simple. It’s just a smart ID that you can plug into your laptop.” He immediately joined the e-Residency program when he learned about it in the late 2014.
e-Residency and Tax Residency
E-residency doesn’t have direct influence on the tax residency. So, holding an e-Residency doesn’t award Estonian tax residency.
Regardless of someone’s e-Residency status, an individual should always pay personal tax in the country in which he or she is a tax resident. For instance, in Estonia, an individual is regarded as a tax resident of Estonia if his or her place of residence is in Estonia or if he or she has been living here for at least 183 days over a period of 12 consecutive months.
It is important to consider especially for the e-Residents that there’s a difference between corporate and personal tax obligations. An Estonian company that is registered through e-Residency is automatically an Estonian tax resident. In accordance to the Income Tax Act that a legal person is a tax resident if it is established pursuant to Estonian law. If a legal or natural person is regarded to be an Estonian tax resident, it must also be taken into account. Whether the same person is a tax resident of any other country under the law of the foreign country. In this case, the Estonian tax residency is depending on the tax treaty between the foreign country and Estonia
Benefits of e-Residency
The main benefits in e-Residency are the simple taxes, full remote access worldwide, international banking, low maintenance cost and bureaucracy. It is possible to do all of these on your own starting from incorporation to opening up a bank account. However, there are a lot of service providers that offers help in establishing and running a company as an e-Resident. Estonia is the place for your business as a digital nomad either you’re a digital nomad or an entrepreneur.
E-residency promotes essential business activity and growth in Estonia’s economy. It helps bringing investments and jobs. Regardless of residency or citizenship, it’s desirable to keep in touch with expat Estonians. Also, in creating access to information and digital services. The e-Residency program was launched in order to make Estonia’s digital market and economy bigger with new customers. Thereby sparking innovation and attracting new investments. Also, Estonia e-Residency is seeking of an efficient private and public networks of Estonia. They do this by using the existing infrastructure while catering a transnational digital identity available to anyone in the world.
Hence, if you’re looking for digital efficiency may you be an entrepreneur or otherwise, you could do so much more in Estonia. There’s a free, public WiFi in everywhere you go. The people there seemed to have an obsession in the internet in improving their daily lives. You can buy a ticket online. You can get a prescription from your doctor online too. Estonia simply invites more people around the world to join them online.