The UK electorate has now voted but with so much uncertainty still surrounding Brexit, many business owners, particularly those without a presence on the continent are concerned they will find themselves facing a costly bureaucratic uphill battle to continue trading with the EU. However, for those businesses trading online, a corporate European HQ can be achieved virtually through an initiative set up by the Estonian Government. E-Residency is a transnational digital identity available to anyone in the world interested in administering a location-independent business online.
We speak to Kaspar Korjus, E-Residency Programme Director at E-Residency about the programme:
So, tell me a little bit about who you are hoping to attract to the e-residency programme?
E-Residency is the most beneficial to business people from outside the EU, who want to have access to the EU Single Market; freelancers from emerging markets who need the possibility to accept online credit card payments but who currently do not have the access in their country; digital nomads who travel the world and who want to administer their company comfortably online from wherever they happen to be; startup entrepreneurs who want to have access to cross-border capital; and businesspeople from the EU who want to lower their company administration costs and who have multiple EU members from different EU countries. As with the digital ID cards, board decisions and contracts can be legally signed online instantly (it removes the hassle and cost of sending documents via international couriers).
What are the types of benefits they'll be able to tap into?
E-residents can digitally open a company within a day and run the company from anywhere in the world, apply for a business banking account and credit card, conduct e-banking, use international payment service providers (like Paypal, Braintree, etc), declare Estonian taxes, and sign documents and contracts. This can be done without the need to hire a local director. This means that they can open and run a global EU company fully online from anywhere in the world.
E-residents join one of the most advanced digital societies by the World Bank's World Development Report 2016 and the most functional virtual business environment in the world. They are part of the EU business ecosystem and benefit from the EU Single Market's harmonised rules. They have low startup and maintenance costs for their company as the state fee for registering a company is 190 EUR and accounting services by private sector start from 60 EUR per month. In Estonia, growth is incentivised. There is zero per cent corporate tax on re-invested profits, which means that there is more money to reinvest. There is also minimal bureaucracy and clear tax framework - Estonia ranks 1st in EU in the 2017 Index of Economic Freedom by the Heritage Foundation and 1st in the 2017 International Tax Competitiveness Index by the Tax Foundation. There is very low level of corruption and a very transparent business environment.
Can anyone apply or do you have to meet certain criteria?
Everybody from anywhere in the world can apply.
How many applications do you refuse?
Approximately one per cent of the applications have been refused. Please see the statistics board for more info - https://goo.gl/O5cQwI (opens in new tab)
Obviously with security being so important, how strong are e-Residency's encryption algorithms?
The e-resident eID itself as well as the programme’s services are built on state of the art technological solutions e.g. 2048-bit public key encryption. Estonia is globally known for advanced cybersecurity competence. We take good care to mitigate the possible risks of e-Residency.
And how about other third parties - who else has integrated e-Residency into its services?
There are several partners who have already integrated e-Residency in their services and several are currently preparing to do it.
For example, NASDAQ is currently piloting a blockchain-based e-voting service to allow shareholders of companies listed on Nasdaq's Tallinn Stock Exchange to vote in shareholder meetings. E-residents can get information on best places to live and work from Teleport.org, invest in startups via Fundwise, lead and trade investments on the Funderbeam's worldwide startup marketplace, and are able to securely sign and seal everything from business contracts and professional negotiations to personal email communication and creative works with Stampery who provide blockchain-based certification and authentication service.
Tell me a little bit about the number of applications from the UK - have you had an increase in applications from the UK following the Brexit vote and do you foresee applications increasing after this week’s election results in the UK?
During the first week after the Brexit vote over 50 applications were submitted from the UK and up to today the average weekly number of submitted applications has been constantly bigger than before the Brexit. Since the launch of the e-Residency programme in December 2014, 1097 applications have been submitted by UK citizens in total. It is difficult to predict what will happen after this week’s election.
Long term what is the future vison of e-Residency?
Estonia is building a new digital nation state for everybody. Our vision is to offer every world citizen, regardless of nationality or location, access to Estonian e-services and e-services of international service providers to allow a hassle-free way to open and run a global EU company fully online from anywhere in the world. By launching e-Residency, the Estonian government aims to make Estonia bigger, to grow our digital economy and market with new customers and at the same time help to empower entrepreneurs the world over.
Kaspar Korjus, Programme Director, e-Residency (opens in new tab)
Image Credit: Luxas Alexander / Shutterstock