E-mmigrate! E-residency in Estonia.

On track building a sophisticated digital society.

December 29, 2016

I don’t remember where I first learned about Estonia’s e-Residency program. Even though I only had a rough idea about where to look for Estonia on a map, the concept sounded intriguing and thus, I wanted to know more.

As it turns out, the former Soviet republic has quietly created one of the most advanced digital societies in the world. Although only half of the population had a landline following Estonia’s independence from Russia in 1991, by 1997, 97% of all schools in Estonia were online. In 2000, the Estonian government went paperless and introduced e-Cabinet, a state-of-the-art digital solution that enables cabinet members to participate in meetings and polls using their own mobile computing devices. Only two years later, the small Baltic state launched free WiFi in most of its populated areas. This was followed by electronic voting in 2007 and a massive upgrade to fibre-optic cable, which now provides ultra-fast Internet access to most residents and businesses. But don’t let that fast-paced transition to a digital society deceive you. Estonians are in firm control over their personal information. They can check and verify access anytime by reviewing a corresponding log using their smart ID card and PIN on the secure government portal. No doubt, Estonia has undergone an impressive transformation. In less than 25 years, Estonia went from a struggling Eastern Bloc country to a role model for an open digital society.

Success Stories

  • e-Governance
    1997
  • e-Tax
    2000
  • X-Road
    2001
  • Digital ID
    2001
  • i-Voting
    2005
  • Public Safety
    2007
  • Blockchain
    2008
  • e-Residency
    2014

Future initiatives

  • Digital Nation
  • Data Embassay
  • Reporting 3.0
  • Healthcare 4.0
  • Industry 4.0
  • Real time economy

And Estonia continues to push the envelope. It now offers e-Residence status to anyone who applies for it and passes a simple background check. Of course, Estonia’s e-Residency must not be confused with Estonian citizenship, a traditional residence or work permit, or even the right to enter Estonia and thus, the European Union. Nevertheless, it offers Estonian e-Residents full access to the country’s economic and digital services infrastructure. For instance, you can form a traditional private limited company (apparently in just 18 minutes), run a location-independent business, open and maintain a bank account, and manage just about any other administrative task, online. Applications for Estonian e-Residency can be made online1, subject to a €100 application fee and a turnaround time of just about 1 month. If your application is approved, your Estonian e-Residence ID card and starter kit will be waiting for you at an Estonian Consulate near you or at a local police station in Estonia.

There’s a major caveat though. Estonia’s e-Resident program does not automatically establish tax residence in Estonia. So, despite providing one of the most advanced digital platforms to do business and sporting a 0% corporate income tax rate (before capital distributions), Estonian e-Residents will remain taxable in their country of residence. So, what’s the point? Well, I guess, whoever dealt with big government administration in other European countries like Italy, France, Spain, or even Germany, will quickly realize that being able to cut through red tape by tapping a state-of-the-art digital services infrastructure means saving lots of time and money. It’s a smart initiative that has already started bearing fruit for the small forward-thinking Baltic state. In Forbes Magazine’s 2016 Ranking of Best Countries for Business, Estonia ranks #13, well ahead of Germany (#21), the United States (#23), France (#26), Spain (#29) and Italy (#42).

If the Estonian government continues its efforts to pioneer a sophisticated and open digital society, it will only be a matter of time, until Estonia rises to a major hub and hotbed for entrepreneurs from all over the world. Maybe, it’s even more than that. Maybe, we are witnessing the evolution of what will define a prospering country and society in the future.

© 2020 Karl Mohr. All rights reserved.