Hello everyone and welcome to ZD Tech, ZDNet’s daily editorial podcast. My name is Clarisse Treilles and today I explain to you what the Estonian e-residency program is, and why it appeals so much to digital nomads and aspiring entrepreneurs.
Estonia has barely 1.3 million inhabitants. And yet, this European country has “virtually” welcomed nearly 90,000 digital residents since 2014, the year in which its e-residency program was launched. Enough to fill an entire city in the metaverse.
These e-residents come from all over the world. Russian citizens make up the majority of e-residents, followed closely by Finnish and German citizens. Even if France is not the most represented country, it should be noted that nearly 3,700 French citizens have nevertheless joined the program.
To fully understand this status, let’s first talk about what it is not. This virtual status does not allow you to have a tax residence in Estonia, nor to access Estonian citizenship.
This status offers the possibility for foreign nationals to obtain a digital identity in order to launch their business in Europe. Thus, 20,000 new businesses were created through this process. For the past seven years, the program has targeted entrepreneurs, freelancers and digital nomads. IT, online marketing and e-commerce are some of the most popular fields.
Simplify business management
What’s so special about this “virtual passport”? Let’s review the other benefits. First, aspiring entrepreneurs can use a whole host of cloud-based services to simplify running their business. Estonia, in this area, is not left out, since almost all of the country’s services are on the Internet.
At the same time, the administrative procedures are relatively simple. You will need a photocopy of your passport and some documents. For a hundred euros, the request involves a background check by the Estonian police and border guards. This process is followed by a trip of the applicant to the Estonian Embassy to provide fingerprints.
Once this procedure is completed, applicants receive their electronic residency “kit”. In it, a digital identity card, a card reader and pin codes will allow e-residents to sign, encrypt and send documents electronically.
32 million euros in tax revenue in 2021
Moreover, a legal address, as well as a contact person in Estonia will also be requested from e-residents who subsequently wish to register their company online.
For Estonia, this is the guarantee of attracting foreign investors and making its local ecosystem work. As such, companies created through this program are subject to corporation tax when profits are distributed. In 2021, 32.5 million euros in tax revenue thus entered the state coffers.
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