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In its simplest form, e-Residency is a non-location-based online residency. In the country of Estonia.
Non-Estonians who don't live in Estonia can access the same public services used by Estonian citizens and residents. That’s significant because Estonia has an advanced digital infrastructure where almost everything can be done online, including starting and running a company.
Becoming an e-resident means that US business owners can conduct business globally from inside the EU, despite being physically located outside it.
So how does it work? This article details everything you’ll need to know about how to become an e-resident of Estonia as a US business.
Estonia launched e-Residency in December of 2014. It’s a secure, transnational digital identity that anyone in the world can apply for.
The program enables people outside Estonia to enjoy all the same advantages in business as people inside Estonia. E-residents can manage all aspects of their businesses entirely online from banking to signing documents to even paying Estonian taxes.
Estonia was the first country to declare internet access a human right, so it now considers e-Residency to be Estonia’s gift to the world. A way everyone can benefit from opportunities online.
According to Estonia, e-Residency is building a new digital nation where anyone has the opportunity to succeed in business - regardless of where they live or which passport they carry.
The program is also particularly popular with location-independent entrepreneurs or ‘digital nomads’ because companies established by e-residents can be run entirely online from anywhere in the world.
e-resident entrepreneurs from the US can:
- Sign documents and contracts digitally
- Verify document authenticity
- Encrypt and send documents
- Form an Estonian company online
- Use banking services (including remote money transfers)
- Access online payment providers
- Pay Estonian taxes (if applicable)
The most obvious benefit of e-Residency for entrepreneurs around the world is the ability to maintain a business in the EU without having to move there.
e-Residency works for US citizens, although there are a few more complexities to tax requirements that are deterrents for some. It should be noted that e-Residency isn’t tax residency. That mean you will still need to consult your own qualified tax advisor to determine where you should pay taxes.
For many entrepreneurs, the idea of setting up an Estonian business, especially in the software and tech space, makes a lot of sense. Often overlooked as one of the world’s most technologically-advanced nations, Estonia has been ahead of the curve at every step of the digital revolution.
Today, all Estonian citizens and residents are given a secure digital identity, which they can use to authenticate their identity online and access e-services. This innovation minimizes bureaucracy and costs in almost every aspect of life - including when running a business.
The entire company formation process can be completed online. In 2009, Guinness World Records recognized Estonia for the “fastest time to register a new legal entity.” The process took 18 minutes, although most e-residents take a day to complete the setup.²
The start-up costs as a whole are relatively low, too. In fact, maintenance fees aren’t sizable either.
As such, the country has become something of a hub for tech businesses. Many notable startups, like Wise, AdCash, Pipedrive, Monese, and Fortumo, have formed in the country to date.
E-residents can also manage their companies entirely remotely. This saves on the travel costs typically associated with owning a foreign businesses. And even on fixed location costs like physical offices.
E-residents don’t need to take on a local director or representative, either, and can declare taxes online. And if you personally move to another country, you won’t need to worry about establishing a new, local legal entity.
A company established through e-Residency is also a trusted company. In large parts of the world, companies registered locally are unable to access all the tools they need to grow their businesses and are unable to provide consumer protections their customers expect.
An Estonian company benefits from the EU’s legal frameworks and, as such, has access to a very wide range of fintech services. Even the United Nations is now using e-Residency to help aspiring entrepreneurs in developing countries benefit from e-commerce.
E-Residency is typically granted to US applicants who are more than 18 years of age, with no felony criminal record, and at the discretion of the Estonian Police and Border Guard Board.
Although applying for e-Residency as a US citizen is quite simple, there are still some materials you’ll need to have on hand, including:
- A scanned passport photo
- A scanned copy of your government ID
- A written paragraph about your reasons for applying, which is used by the Police and Border Guard Board in their assessment of your application
- Your desired pickup location, which can be any of 38 Estonian embassies and pick-up locations around the world
- A state fee of €100, paid by Visa or Mastercard
|You can get the mid-market rate, and save on fees when you make international payments with Wise Business
Once you’ve gathered your materials, the next step is to apply online for e-Residency. The first thing that will happen when you submit your application is a background check conducted by the Estonian Police and Border Guard.
Getting a secure, government-backed digital identity is no small issue - it enables you to operate with a higher level of trust online. As such, you may be asked to provide more information during the background check process, though it’s not common.
Once you’re approved, you’ll be notified by email of your status. You can then pick up your e-resident smart ID card at the Estonian Embassy in Washington, or other pick-up location you elected in your application (New York or San Francisco).¹
In order to pick up your card, you’ll need to bring the same ID used in your application and be prepared to give your fingerprints to the consular or police official. Then you’ll be given an e-Residency starter kit, which will contain your smart ID card, pin codes and a card reader.
Not at this time. Estonia is the first and only country to offer e-Residency, although other countries including Singapore and Dubai are actively exploring the idea.
No. An e-Residency isn't a citizenship, and you're not eligible for any consular support from the Estonian government.
e-Residency doesn’t automatically make you eligible to open a business bank account in Estonia. Banks have the right to grant or deny their services to anyone. The government in Estonia cannot mandate that e-residents should automatically be accepted.
While it seems like opening an account might be straightforward enough anyway, it’s possible you’ll run into complications. The country’s Anti-Money Laundering (AML) restrictions mean you’ll need to demonstrate a “strong connection to Estonia” in order to bank there.
Connections that are likely to lead to approval include:
- You live in Estonia
- You’re Estonian
- Your parents are Estonian
- You work for an Estonian company
- You manage a business that's physically located in Estonia
- You own property in Estonia
- You manage a business with a connection to Estonia, such as through talent, suppliers or customers. You’ll need to show this to your bank in your business plan.
Even if you don’t meet any of those qualifications there are ways to start your bank account.
At the moment, two major Estonian banks work with the e-Residency card for account management: Swedbank and LHV. Both are widely used within the country.
In addition, the Finnish payment institution Holvi now offers banking for e-residents entirely online. They only let you to make payments in euros within the SEPA area.
With Swedbank, if you don’t meet any of the above qualifications but have already registered your business, you have a shot at getting them to open a business account for your company, albeit a slim one.
With LHV, the same is largely true. However, they recently added another “reason” to the list of qualifications. LHV is now accepting applicants who cite wanting to invest in the Estonian and Baltic stock market as their reason for opening the account, making it significantly easier to do so.
If you’re planning to open a business account at a traditional bank, be prepared to take a trip to Estonia. Regardless of where you choose to bank, you’re likely to need to go to a branch to set up your account.
If you’ve gotten your e-Residency in Estonia, congratulations!
You’re now free to start a business and trade globally from within the EU. If you’re looking for more information about your e-Residency, check out the e-resident website, or visit their blog to see how other e-residents are already benefiting.
All sources checked September 30, 2022.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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