Makers and founders across the world are exploring different countries which would be best for their business or freelancing operations, whether it be for legal reasons, or to help support people of different nationalities. Countries with well developed technological infrastructure like Estonia have been working on eResidency programs that are revolutionizing the way we perceive citizenship and making it easier to incorporate a business as a maker, nomad, and a freelancer.
The Estonian eResidency program, founded on December 1st, 2014, is a new digital nation for global citizens, that provides people with the liberty to easily create and manage a global business in an EU-based country. The program was created in order to encourage individuals and freelancers to do business in Estonia, as well as spread the Estonian culture of technological innovation around the world. So far, the Estonian eResidency program has reached over 35,000 residents as of 2018, from 1,000 residents in 2014, and has been recognized by the maker community as a great way to get started as a maker, founder, or freelancer in the EU.
eResidency for Entrepreneurs
One of the many applications of the eResidency program is the ability to incorporate and manage a company based in Estonia, without having to worry about visiting in order to start your business. This allows you to scale up your business and start building a global presence and work from anywhere that you want, without the need for travel. Imagine you are starting your first company and do not have the capital to relocate. Estonia creates an easy framework for entrepreneurs in this situation to get started, without having to make any commitments to the country, and instead focus on what matters — building their business.
In addition to providing incorporation services, eResidents can also set up business banking which means that you can develop international payment solutions that are suitable for a variety of use cases, including PayPal and Braintree. Having access to an Estonian bank account should also make it easier to control your finances and streamline your entire financial pipeline which means that your money is both safe and secure, and easy to manage. You can also register to services that are available in EU countries, so you can access more tools that can help you grow and scale your business that would otherwise be unavailable.
Another exciting benefit of the eResidency program is the community that you have access to as an eResident. When you become an eResident, you will be able to participate in a global community of entrepreneurs, freelancers, and makers, who have incorporated in Estonia or manage their business in the country, allowing you to grow your network while building your business or freelancing. Having access to this community will also provide you with access to a support group that you can tap into whenever you experience any issues, or when you need help with any Estonian-related services which the community may be able to assist you in.
eResidency for Nomads and Freelancers
Many people are hesitant to make the commitment to being a Nomad for logistical reasons, whether it be due to tax, or legal issues. As an Estonian eResident, digital nomads from around the world can set up and manage their business, while they travel. The Estonian eResidency program integrates well with the lifestyle of a nomad, especially considering you can start a completely location-independent company.
Therefore, you need to make no specific commitment to a country in order to incorporate and maintain a bank account on flexible terms, so you can continue to nomad while building your business. All government services that you need are accessible anywhere in the world through the eResident portal. There is also a network of over 30,000 residents who can help you if you need assistance in understanding how to freelance or run a business in Estonia as an eResident.
Estonian eResidency also makes it easier to manage your taxes as a maker. As an eResident, you can declare all of your income as a maker or freelancer in Estonia, which reduces the amount of time you need to take calculating international taxes if you travel frequently. You can also keep revenues, costs, and financial reports in Euros, which makes it easier to manage your currency as you travel throughout different countries for nomads.
There is also minimal bureaucracy involved with eResidency, which means that managing your taxes is as simple as filling out a few online forms, rather than spending weeks or even months filling out paper forms, mailing them, and dealing with tax agencies like you have to do in other countries. This is coupled with the fact that you can sign any official documents or contracts using your digital signature and under your Estonian entity, which means that you can manage all of the legal aspects of being a maker or freelancer online.
The Application Process and Estonia
Perhaps the most important part of the program is the fact that you can apply and handle your application online, with no requirement to visit Estonia to process your application. You can have all of the legal paperwork and fingerprint kits delivered to you at a local pick-up point, and manage your application online, which means that there is a minimal amount of hassle involved in achieving eResidency.
Even though the eResidency program is one of the more well-known digital accomplishments made by Estonia, they have recently become one of the most technologically-advanced governments in history. According to the Estonian Government, 99.6% of all banking transactions are done electronically, and they are listed as number one on the EU Digital Economy and Society Index. In addition, Estonia is a founding member of Digital 5, an international alliance of governments who are using the latest technologies available to revolutionize the way citizens interact with government.
The commitment that Estonia has to technology is one of the major reasons why becoming an eResident is so enticing. Estonia is setting an example for other governments, and showing that technology and government is a great combination. Many governments have not yet evolved into the digital age, while Estonia has moved all taxation and incorporation services online, so you can manage your business in Estonia online.
Because most of the work we do as makers is remote, the culture of reliance on online systems in Estonia is relatable to all of us and makes it easy for makers around the world to maintain a presence in the EU, without actually residing there. Having a presence in the European Union will help you overcome international regulatory barriers which may get in the way as you grow, and make it easier to scale your business into new markets across the EU.
Estonia has also established partnerships with a plethora of different businesses, which make it simple to get an Estonian legal address, manage and grow your business, sign legal documents, amongst other things. These partnerships make it easy to get started as an entrepreneur or maker in Estonia, without having to worry about compliance or any regulatory issues, as local businesses with expert experience are there to help new eResidents. Estonia has also partnered with a few relocation and HR companies, which makes the transition from life as a nomad to a permanent resident in Estonia simple.
Limitations to the program
There are a few limitations to eResidency that critics have mentioned since the inception of the program. Firstly, eResidency provides no clear path to citizenship or permanent residency, which means that becoming an eResident does not permit you to live in Estonia without additional paperwork, nor act as a citizen of the country. This is because the eResidency program is separate from other naturalization and residency programs that Estonia offers, which means that you are not entitled to the same services as actual residents or citizens.
eResidents also do not have tax residency in Estonia, and thus may still have to pay regular taxes in their country depending on their particular situation. This means that Estonia is not considered as a personal tax haven or a place to hide your assets, but rather a place where you can manage your business affairs and taxes under Estonian law. In addition, eResidents are not entitled to physical entry into the European Union as eResidency cards are not official forms of identification that can be used for travel purposes. Therefore, this program is not best suited to those who are looking to become an eResident solely for the ability to freely travel in the EU.
The success of the program so far indicates that Estonia will most likely continue to develop their eResidency platform and maintain their title as the pioneers of the latest in government technology. Estonia’s commitment to advancing government tech also shows that they are ahead in the digital age, and signals that they may try to focus on using tech to make more government services accessible to their citizens in the future.
The Estonian eResidency program is an ideal solution for all makers — from indie makers to those starting a company in the EU — and provides the perfect environment for incorporating and managing your work or business. While there are limitations to the program, eResidency provides an easy way to establish a legal presence in the EU as a business, work as a freelancer or indie maker, and also manage any obligations that may come with running a business. The program has a lot of potentials — and may just be what indie makers have been looking for to scale their operations.