*Tough break on being virtually Estonian if you're North Korea, Syria, Iran, Iraq, Bosnia and Herzegovina, Ethiopia, Uganda, Vanuatu, and Yemen. Or American: "The only other notable difficulty is for US citizens who face complexities with international finance as a result of the Foreign Account Tax Compliance Act (FATCA), which can create added work for either them or their financial services provider. As a result, not all international financial providers are able to serve US citizens yet."
*I haven't heard much grumbling blowback about this Estonian arrangement from the powers-that-be, like "Boy you better not become virtually Estonian because of downsides to us including X, Y, and Z," which makes me wonder what major appeal this program actually has. In exchange for paying Estonian taxes (that's what's in it for them, apparently), you get to digitally sign documents and pay and get paid in Euros. And maybe there's a little prestige involved in successfully pretending to be European. Especially if you're Ukrainian.
*Since I'm a "global nomad" type who earns a more-or-less virtual living with books, lectures, consulting and suchlike vaporous activities, you'd think there would be some immediate promotional hook and call-to-action for the likes of me in this, but I don't see one. If I took the trouble to become a company, I'm want my company to buy me a car and a house.
https://youtu.be/vzknLXQfnSM
https://medium.com/e-residency-blog/heres-how-you-can-create-an-eu-company-with-eu-banking-anywhere-on-earth-cbba47386489
This article contains the most up-to-date advice from the e-Residency programme when it was last edited in October 2017. In this article:
Introduction
— Who is e-Residency for?
— Is e-Residency a loophole?
Step 1: Apply for e-Residency
— Why does Estonia offer e-Residency?
Step 2: Start a limited company through the e-Residency programme
— Special offers in October
Step 3: Open an EU IBAN account connected to your limited company
— The ‘traditional’ banks
— The fintech firms
Step 4: Conduct business globally
— Comply with regulations
— Paying taxes
— Paying share capital
— Make and receive payments globally (including through PayPal)
Good luck!
— Further resources
Location, location, location.
Those are arguably the three most important factors that determine your chances of succeeding as an entrepreneur right now.
Your location affects the costs and hassle of starting and running a company, as well as your access to customers and vital things you need to acquire them such as talent, funding, trust, legal frameworks, and financial services (like a PayPal business account).
You could move to a different location to give yourself a better chance of succeeding, but what if you can’t… or just don’t want to? And what if you don’t want the costs and constraints of a fixed location at all?
Thanks to the internet, we now have the technology to connect and conduct business globally like never before. Unfortunately, our new digital world has new digital borders too. That means your ability to start and grow a company online is still restricted based on your offline location.
That’s now changed. Estonia is the first digital borderless nation and believes no business should be bound by physical location.
Estonia now offers e-Residency so that anyone can access the country’s public services entirely online and therefore operate within its EU business environment from anywhere in the world*.
E-Residency is a government-issued digital identity that gives you the freedom to run a global EU company entirely online.
The programme was launched in beta mode, which in startup jargon means that not everything is perfect yet, but e-Residency is being improved based on the feedback of real e-residents using and benefiting from the platform. At first, e-residents actually had to travel to Estonia four times in order to complete the entire process below, but this has now been reduced to zero.
There are plenty more improvements under development right now — including more services from more companies, better usability for public services, and a community platform that will make it easier to connect and conduct business with other e-residents and Estonians.
We now believe e-Residency is the best way on Earth to run a trusted location-independent company with minimal cost and hassle-free administration. So below is a step-by-step guide from the e-Residency programme about how to set up a complete company.
*Actually, you can conduct business as an e-resident anywhere there’s internet connection so that now includes the International Space Station too. We are looking forward to hearing about the first e-resident to establish a company off Earth! (((Wry Estonian geek humor.)))
Who is e-Residency for?
Anyone can apply for e-Residency no matter where you live or which passport you carry.
At present, the main advantage of being an e-resident is that ability to establish and manage a company online. There are an enormous range of companies already benefiting — from the makers of eco-friendly toilet paper to a social enterprise that employs ex-offenders and provides them with environmental work.
Depending on their circumstances though, some entrepreneurs will benefit from that more than others. The people who tend to benefit most from the ease of conducting business through e-Residency are:
Entrepreneurs who sell services online.
Entrepreneurs with no fixed location (perhaps because they are traveling ‘digital nomads’, want to move countries in future or simply reject the costs and constraints of an office and fixed location).
Entrepreneurs who want to easily operate across borders, but without requiring a physical presence in multiple countries.
Entrepreneurs who work alone (as freelancers, contractors or solo entrepreneurs).
Entrepreneurs who want to lower the administrative costs and reduce the hassle of running their company (including for private sector services such as accounting).
Entrepreneurs who are unable to access financial services and business tools they need (like PayPal) because they are restricted from companies registered in their territory.
Entrepreneurs who want to operate inside the EU’s legal frameworks in order to benefit from increased trust online.
Entrepreneurs who want to operate inside the EU business environment for greater ease of conducting business globally and with other EU companies.
Entrepreneurs who want to operate within the EU business environment in order to increase their chance of accessing funding.
Entrepreneurs who want to trade in euros (which may be more convenient and/or a more stable currency) or more easily make payments within the Single Euro Payments Area (SEPA).
Entrepreneurs who speak English or Russian (or Estonian!). Estonia’s digital infrastructure, as well as almost all private services, can be accessed in these languages, although business service providers are adding their own languages too (1Office now serves clients in all three, plus Finnish and Latvian).
More people discover e-Residency every day though so more uses for e-Residency are being discovered beyond starting and managing a company.
For example, the secure digital identities provided by e-Residency can help support KYC (Know Your Customer) requirements for companies that need to authenticate their customers online. This can enable companies to onboard customers from the e-Residency community quicker, easier and at lower cost than other customers.
In addition, e-Residency is used by investors because they can use their secure digital signatures to instantly sign documents from anywhere. This means, for example, that shareholder meetings can take place remotely with investors instantly approving decisions online instead of having to travel, or scan/post their signatures.
However, here are some people who won’t benefit from starting a company through e-Residency:
People who want to avoid paying tax. E-Residency does not override existing international tax rules so all entrepreneurs must fairly pay their taxes where they are owed.
People seeking citizenship or the right to travel or reside in Estonia or the European Union. E-Residency provides online access to Estonia’s public services and business environment, although you are welcome to speak to our friends at Work in Estonia or Startup Estonia (who even have a Startup Visa).
People with criminal intentions. E-Residency is a trusted, government-issued digital ID that provides access to our open and transparent business environment. All applicants receive background checks by the Estonian Police and Border Guard Board to ensure that it is used by legitimate entrepreneurs. You can not use e-Residency to hide your business interests because data about shareholders, owners and taxation is public.
Larger companies, particularly those involved in manufacturing. These companies have complex needs and considerations, as well as fixed locations, so do not benefit from reducing their administrative overheads online through location-independence in the same way that smaller and single-person companies can. However, larger companies do benefit from e-Residency in other ways — such as using the digital signature to replace ink signatures or integrating the digital ID to improve their KYC and onboarding processes.
People who are unable to obtain international financial services because they live within a jurisdiction categorised as ‘high risk and non-cooperative’ by the Financial Action Task Force (FATF). At present, these are North Korea, Syria, Iran, Iraq, Bosnia and Herzegovina, Ethiopia, Uganda, Vanuatu, and Yemen. Note that this is based on residency, not nationality, so people from these countries living abroad have still successfully benefited from e-Residency.
So far, about 25,000 people from 139 countries have applied for e-Residency and they’ve established around 2,500 new companies.
In this article, I’m going take you through the steps for how to join them....
