Estonian E-Residency and Me: The Future of Entrepreneurialism

 

What's it like to run a company as an e-resident?

 
Illustration by  Eddie Stok  for Are We Europe

Illustration by Eddie Stok for Are We Europe

 

Ten years ago, when we decided to exercise our freedom of movement to live and work anywhere within the EU, I would have been hard-pressed to point to the tiny Baltic nation of Estonia on a map. Nor had I ever given much thought to what being an EU citizen for most of my life actually meant.

We were headed for Spain and the Mediterranean lifestyle and climate, and we rented out our place back home. It didn’t take long for us to find a new home on a six-month contract, so we set off on an adventure. We put our girls into international schools and treated the whole thing as one of those regrets we didn’t want to be left with, if we never had the courage to give it a try.

The experiment turned into a long-term lifestyle for our family; we always unquestioningly assumed our daughters’ generation would be free to travel and study and do business anywhere they chose, that it didn’t matter if they’d quickly outgrow the limitations of a small Spanish town, and we anticipated a bright bilingual and multicultural future for them. Like all parents, we assumed that their world would grow to be socially and technologically richer and more developed than ours, giving them the chance to flourish and become contented human beings.

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Certainly we never dreamed that the country of our birth would one decade on be engaged in the greatest act of political and economic self-harm of modern history. That British society would become polarized and split, driven by austerity and fear and hate, into political and commercial isolationism and destruction. A situation which would ruin the lives of millions, and which would impact our mobile household’s every decision, from travel to higher education planning.

Or indeed business decisions. Because a year or so ago, I needed to set up a new business, and was considering my options. I love Spain, but it’s legendary paperwork and bureaucratic process is beyond a joke. After 10 years we’ve got the hang of it, but operating a Spanish limited company was something I had done once with no desire to repeat. And due to all the uncertainties about the U.K.’s future, it was easy to rule that out as well, even though it’s much cheaper and easier to set up and run a UK Ltd Company than a Spanish Sociedad Limitada.

I needed a structure which would allow me to work as a sole trader collaborating with other consultants around Europe and further afield, for clients anywhere in the world, and cope with international currency receipts—even cryptocurrencies on occasion. I was keen to find an option with a stable fiscal relationship with the country in which I was tax resident and paying my social security. I wanted the flexibility to operate my business completely digitally, aware that we might choose or need to move around more in the next few years. At a time which felt more uncertain than ever, I did not want to be tied to a single location.

In the end, all of my research pointed me towards the other end of Europe, to thriving, modern Estonia, which created its flagship e-residency program in 2014. It allows non-Estonians access to Estonian services such as company formation, banking, payment processing, and taxation. In the years since, a small economy of multilingual business support services has sprung up to ease the way for “e-residents” (I used one called LeapIn).

The first thing I had to do was complete a straightforward online application, followed by a visit to the embassy in Madrid to collect my digital ID. Acceptance of the application is at the discretion of the Estonian border police, and you do need to state a reason for your wish to become an e-resident.

It allows non-Estonians access to Estonian services such as company formation, banking, payment processing, and taxation. In the years since, a small economy of multilingual business support services has sprung up to ease the way for ‘e-residents’.

How to answer that, I wondered, as someone about to have their EU citizenship and freedom summarily stripped away from me against my will? But rather than opining about politics, I focused my application instead on the philosophical and practical reasons I had for becoming an e-resident of a country I had never visited. That Estonia was creating a global, entrepreneurial, digital nation without borders, which really appealed to me and resonated with the way my own work was developing; that Estonia offered a basis from which to do business anywhere in the world; that its internationalism and global outlook was a refreshing change from having once been told by a Spanish bank that I couldn’t use a .co.uk email address for their online banking app!

Within a few weeks my application for e-citizenship was accepted, and then it was time for a visit to the Estonian Embassy in Madrid—a small, friendly office, where my ID was checked, and my fingerprints were taken electronically to be added to the country’s blockchain-based identity database. I then signed for my ID card, and headed for a celebratory coffee. All in all, it took less than 10 minutes for a polite, multilingual official to confirm my status as Estonia’s latest e-resident.

Using my new ID, I was quickly able to set up my company, it literally took an hour to do this (though getting all the certificates and updates sorted to use the digital ID with my ageing mac was slightly more protracted, the e-residency helpdesk offered extremely helpful online assistance). When it was all done, I was able to operate my business without interruption. All that was left was a brief visit to Estonia later in the year for a face-to-face meeting with my bank under international “Know Your Customer” requirements—the irony was not lost, considering that my business is a communications consultancy for blockchain startups, whose raison d’être is to provide confidence and “trust” between parties that don’t know each other. I didn’t mind so much, as Tallinn is a lovely place to visit anyway. If only it had a Mediterranean climate to match the warmth of its people.

When I became an e-resident, it was all about the practicality of being able to operate my business entirely online and collaborate administratively and financially in a wholly digital way with my clients and associates.

What I wasn’t anticipating was the emotional and personal way I’d come to see my e-residency of this tiny European state. The way I have come to feel about my intrinsic “Europeanness,” having lived on the continent for so long, and now facing the official loss of my European citizenship. When the Brexit referendum happened, I was so angry about everything I and future generations were losing in terms of freedom of movement, that I hadn’t really considered the symbolism of it. It made me feel increasingly distanced from my British identity and the country I grew up in.

Right now, I at least have my Estonian e-residency. Even though the status does not confer any physical right of entry or residence, I am proud to be among thousands of entrepreneurial Brits taking advantage of this transnational identity status and to be associated with a country that is open, transparent, inclusive and forward-looking. As more and more UK businesses hedge against the coming uncertainties with dual incorporation, it’s a slight comfort to know that there are options to transcend the limitations of geography and local politics.

I am proud to be among thousands of entrepreneurial Brits taking advantage of this transnational identity status and to be associated with a country that is open, transparent, inclusive and forward-looking.

Certainly I am in good company. The Estonian e-residency programme now boasts over 55,000 e-residents, and the formation of over six thousand companies. In Tallinn, somebody expressed their vague concern about there one day being more e-residents than permanent ones, but there’s still some way to go to catch up to Estonia’s 1.3 million citizens. My fellow e-citizens are dispersed across 136 countries, and most seem to be operating online, service-based businesses in writing and marketing communications; activities where the physical location of either the business or the client is simply irrelevant.

The e-residency programme was given a “2.0” makeover in late 2018, and is now officially out of its beta mode. I was glad to take part in their research and share my experiences with it, though they also extensively consulted native Estonians for their input. A 2017 economic impact analysis by Deloitte estimated that e-residents had contributed €14.4 million to Estonia’s economy, and were projected to contribute €1.84 billion by 2025 based on the forecast growth of the e-resident population. This comes from e-residents paying taxes in Estonia, conducting business with other Estonian companies, investing in Estonia, or simply traveling there (as I did) for a mixture of business and pleasure.

For a young, nimble and forward-looking nation, still rich in its unique culture and history, the outlook feels bright for Estonia. And for a globally-focused entrepreneurial Brit living in Europe, it’s the best solution on offer right now—a chance to be part of something bigger than Brexit, bigger than the EU, and truly focused on the future.


 

This article appears in Are We Europe #5: Code of Conscience


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