(by Virginie Hours)
Do you want to become an Estonian e-citizen and to continue to do business within the European Union while residing in the UK, or to set up a business from France or Finland in a country with more favorable taxation? Thanks to Estonia, it is possible! Since the fall of the communist bloc, the country has relied on new technologies to make a difference and to prove its legitimacy to be part of the European Union. But for a number of years now, Estonia has gone a step further by putting in place a genuine e-citizenship … and by seducing entrepreneurs based in the European Union, but also outside the European Union. And it works!
A national project
Estonian parliament spokesman Eiki Nestor said: “Digital development is an integral part of the political, economic and administrative reforms that have been going on for 25 years. E-solutions make the state simpler, services more accessible to citizens and decision-making procedures more transparent“.
The idea emerged in the 1990s when, with the fall of communism, Estonia reflected on the means to develop economically knowing that its assets were meager: a small country with a small population and weak natural resources . Internet development was seen as a boon and in 1996 an innovative project called Tiigrihüpe (“Tiger Leap”) was voted. Its purpose? Give priority to information technology infrastructure, notably by providing computers to training centers and schools, thus training generations of students.
The legislation followed and allowed the creation of infrastructure such as the ID-card project and the “X-road” (which is considered to be the “backbone of e-Estonia”). This environment allowed the different databases in the country to connect and operate in harmony, both in the public and private sectors.
The private sector also quickly realized that they could benefit from it, and banks developed online services that were pioneers compared to what was being done in Western Europe.
In 2005, the country was the first to organize elections via the Internet and in 2007, it became famous for defending itself efficiently against a large-scale cyber attack, which gave its systems great credibility and justified the establishment of NATO’s cyber defense center in Tallinn.
It is therefore not a coincidence that Estonia decided in 2014 to be the first country to offer e-residence, meaning granting a transnational digital identity to anyone in the world has an interest in managing a “homeless online company “, e-residence offering” security and proper digital services that facilitate credibility and online trust”, according to Estonian official portal.
Simple as a click!
What is the procedure for becoming an e-resident?
- Apply for e-residence online
- Pick up your ID-card at the Estonian Embassy of the country of residence
- Contact a “virtual office service provider” to obtain an address registered in Estonia. The e-residence then allows to:
- Create an Estonian company online in one day, using the business registration portal
- Open an account in an Estonian bank to access financial services
- Administering the company from all over the world,
- Enjoy the benefits of e-banking
- Remote control your money transfers
- Declare your taxes online. The e-resident can then:
- Digitally sign documents and contracts
- Verify authenticity and sign documents
Crypt and transmit documents securely
So the e-resident can conduct business while remaining a resident in a non-member country (or member state) of the European Union.
But E-residence does not grant Estonian citizenship, nor the right to vote, nor the right to reside or enter Estonia or any other country of the European Union. The ID card of the e-resident is also not a physical identification document and is not a travel document since it does not have a photo ID.
Moreover, getting e-residence is not automatic: the requests aree checked by different services before confirmation.
Success is there
In April 2016, Estonia reported that it had already issued more than 10,000 e-resident cards, most of which were domiciled in Russia, the US or Ukraine. The e-residents have created 500 companies in Estonia, of which 129 are registered as paying VAT and taxes. The companies have paid 1.5 million euros in local taxes. And the Brexit will certainly accelerate the trend as Estonia sees a tremendous opportunity.
What about Finland
This Estonian initiative is quite interesting, as in addition nobody seems to question this model from an EU law point of view. The question is: why Finland does not seem interested?