estonian national audit office releases its latest audit report on e-⁠Residency

Ott Vatter • Jul 29, 2020 • 4 min read

An open letter by e-⁠Residency’s Managing Director to our e-⁠residents and other community members on the audit results

Dear e-⁠residents and friends,

You may have seen in the Estonian media in recent days some headlines and articles about the results of a national audit of e-⁠Residency.

I wanted to write to you all with more information about what the audit is and e-⁠Residency’s response.

As a government initiative, e-⁠Residency is subject to review by Estonia’s National Audit Office (NAO). The NAO is an independent state institution responsible for verifying whether public funds have been used successfully — economically, efficiently and effectively — and lawfully. The fact that the NAO took up the task to audit e-⁠Residency demonstrates the programme’s rapid development and its relevance and repute in Estonia’s public sector environment.

The NAO’s audit report was published on Wednesday, 29 July. It analyses e-⁠Residency’s development from 2014 to 2019, its profitability, and security. Since the start of the audit about two years ago, e-⁠Residency has cooperated with the NAO in fulfilling its duties, including by providing all requested information and documents, making submissions, and commenting on the report.

The publication of the audit report is part of a transparent, democratic process that allows for public reflection and debate. The audit has received great media interest in Estonia and contributed to an ongoing public discussion on the innovative initiative.

The e-⁠Residency team welcomes the introductory remarks to the audit report by Estonia’s Auditor-General Janar Holm, who “considers the development of e-⁠Residency as being unique and recognises its value for Estonia”. We also welcome the main conclusions of the NAO, including that e-⁠Residency is profitable for the country (and has been for at least 2 years) and has introduced new entrepreneurs to the Estonian business landscape.

On the other hand, e-⁠Residency respectfully disagrees with several points raised in the audit. Some of the information the audit relied on is out of date and many bottlenecks identified in the audit have already been resolved or are in the process of being addressed. We also disagree with the NAO’s treatment of the programme’s revenues and expenses, which contrasts with our own intergovernmental agency-developed and accepted methodology and calculations.

Estonia was the first country in the world to offer e-⁠Residency to non-residents. By allowing privileged, digital access to Estonia’s e-services and online business environment, e-⁠Residency has changed the way a government can interact with and offer services to people living outside of its borders.

I do not deny that the journey has included growing pains and hardships. But, having been with the programme since the very beginning, I’ve also seen firsthand the impressive learning and growth of e-⁠Residency from the startup-like excitement of our early years to the more mature, goal-oriented place we find ourselves now. A big part of this trajectory is of course thanks to the e-⁠residents themselves, who have helped our team develop the programme through conceptual discussions, testing, and feedback. I take this opportunity to thank all of you for your trust, encouragement, and assistance in helping us strive to constantly improve e-⁠Residency.

I have also seen firsthand the development of an incredible, international community of entrepreneurial e-⁠residents, service providers, and other stakeholders — many of whom I have developed strong personal and professional bonds with. I am proud of how the e-⁠Residency team, programme, and community have grown and thrived in six years. E-⁠Residency has brought huge value to Estonia both economically and culturally in addition to contributing enormously to global politics and technological progress.

E-⁠Residency is a success story of the entire nation of Estonia and a joint, bipartisan project of Estonian state agencies. While in the report, the NAO suggests that background checks of people who apply for e-⁠Residency could be greater, in reality government agencies can only contribute within their capabilities and resources. Just as people with bad intentions can physically enter Estonia in the Schengen Open Visa Area, it is almost impossible to completely exclude people with bad intentions from the more than 70,000 e-⁠residents that we have today. It’s a delicate balancing act between risk and reward — with the ultimate reward being e-⁠Residency’s valuable contribution to Estonia’s economy and culture.

E-⁠Residency has matured into a significant phenomenon, which is now even inspiring other similar projects around the world. Estonia’s e-Government and e-⁠Residency add value globally and will continue to do so in the future.

Best wishes,
Ott Vatter
Managing Director, on behalf of the whole e-⁠Residency team