take advantage of these 4 exciting opportunities of e-⁠Residency

‘Opportunity’ is one of e-⁠Residency’s four core values. Find out how you can access opportunities for your business to thrive when you become an e-⁠resident of Estonia. 

Earlier this year, e-⁠Residency introduced its core vision and values to the world. These propositions not only reflect its commitment to e-⁠residents, but also differentiate e-⁠Residency from other countries' e-⁠residency programmes and business jurisdictions. We’ve already provided deeper looks at our ‘ease’ and ‘trust’ values. But what about the 'opportunities' of e-⁠Residency?

This article will take you in-depth into our core value of 'opportunity', which we express as:

In addition to Estonia’s competitive tax system, e-⁠residents can certainly take advantage of unrivalled opportunities, including:

• Trade within the EU, 
• Reach a pool of investors and partners to help you scale, and 
• Benefit from a government that incentivises growth and innovation.

Let’s dig into these in more detail below.

1. Access the European Union

At the top of the list is the opportunity that Estonia’s membership in the European Union provides. Estonia has been an EU member state since 2004 and had the Euro as its official currency since 2011. 

Estonia is Northern Europe’s hub for businesses with global ambitions. It is where entrepreneurs come to succeed and grow. It has the highest VC funding per capita in Europe. A decade ago, the UK and the US were the only options to get big funding. Nowadays, having a company in Estonia is trusted and accepted by investors.

For e-⁠residents already located in the EU, e-⁠Residency offers the opportunity to do business and trade in the EU with much less bureaucracy. For those located outside the EU, e-⁠Residency of Estonia is your digital business gateway to the world’s biggest single market, and all the advantages this provides.

Get all the benefits of the EU: the single market, euros, credibility and rule of law

Once you become an e-⁠resident and register your Estonian company, you’ll have a genuine EU business. Your company will even have a registered address in the EU.  You’ll be trading in euros and able to make use of the bloc’s free trade of goods, services and labour. Plus, you can benefit from increasingly harmonised regulations, such as streamlined VAT regimes (One Stop Shop and Import One Stop Shop). 

E-resident Olena Iosifova incorporated her business Ender Turing in Estonia according to the desire to look beyond Ukraine and build a scalable business. When Olena decided to move her company into the EU, she evaluated other potential home countries based on ease of doing business, the presence of an IT cluster, cost of living, environment, and other factors. Some other countries that were under consideration were Austria, Germany, the Netherlands, and Poland, but Estonia topped out the list. "By the math, Estonia won the number one place," recalls Iosifova. "So we decided to settle in Estonia without having ever visited, just based on the math." 

EU residents can of course start a company already in their own country and have the same benefits of being in the EU. But maybe it’s expensive or there are other barriers to entry like language restrictions. Or maybe their own country’s business environment is mired by red tape. In other countries, like Germany, Portugal or Spain for example, it’s incredibly labour, time and paper intensive to raise funds for a startup and requires founders to jump through many hoops. 

In which case, you should look no further and…

Enjoy the advantages of fast, digitised, business-friendly and bureaucracy-free Estonia

Regardless of whether you are located in the EU or outside, Estonia is the smartest and most efficient option to start a company in Europe. This is due to its advanced digital services, e-Residency programme, and the fact that business is easy to manage at every stage. 

Estonia is ranked 7th in the world for Economic Freedom by the Heritage Foundation and number one in the EU’s Digital Public Services Index. 

All Estonian companies are eligible for Estonian government and EU grants, and have the ability to take part in local support programs that encourage venture capital funding, such as accelerators and incubators.

And, just like Estonian citizens and residents, foreigners can benefit from Estonia’s advanced digital infrastructure, minimal bureaucracy, and business-friendly culture when they become e-⁠residents. 

So said Fabrice Amalan, founder and CEO of PayQin, an e-⁠resident originally from the Ivory Coast.

Which brings us to the second opportunity!

2. Grow and succeed in a country that’s pro-innovation

Estonia has built a trustworthy, secure, efficient and entrepreneur-friendly business ecosystem with minimal red tape and innovative regulations. Its favourable business climate allows anyone, from solopreneurs to micro-enterprises, startups to large multinationals, to build sustainable and successful ventures.

Estonia is built on entrepreneurship

Estonia has a long history of digital transformation that has resulted in a secure and straightforward approach to digital services. All of the Estonian government's online services are available in English, while the secure Digital ID saves you a huge amount of time when signing contracts and engaging government services. This frees up time from paperwork and administration, allowing you the energy and focus to build and grow your business.

Estonia has a favourable tax system that rewards early stage reinvestment (see below for more on this opportunity). Estonia also has low level regulation, minimal bureaucracy, and founder friendly business laws, such as the most rewarding employee share regime in Europe and no taxes on share transfers. Moreover, Estonia has programs such as Accelerate Estonia that invites entrepreneurs to treat the country as a test bed for new ideas and products with the goal of “solving wicked problems.” 

E-resident Luke Seelenbinder has experienced the benefits of Estonia’s business environment: 

Estonia’s entrepreneurship-friendly government regularly consults business stakeholders and is open to regulatory change to permit new technologies and innovations to flourish. This means that Estonian companies have direct access to the state’s policymakers. It has also helped create a vibrant business ecosystem that incentivises startups and small businesses to scale. 

This probably explains why Estonia is…

A magnet for start-ups

The Estonian business ecosystem prides itself on having supported the creation and growth of 10 unicorns, the highest number per capita in the EU. Estonia is the birthplace of globally recognised unicorns like Wise, Bolt, Pipedrive, and Skype. This is an unrivalled amount of globally successful tech companies in one country. Due to their success, Estonia has a positive reputation amongst global startup communities around the world. 

In fact, Estonia has the highest startup density of any European country with 1,107 startups per million inhabitants, ahead of Ireland and Iceland, according to the State of European Tech 2022 report.  See extra statistics in this Invest in Estonia blog post. Estonia leads Europe as the most entrepreneurial country for tech startups (according to Atomico's State of European Tech 2021).  The Estonian start-up ecosystem is the sixth fastest-growing in the world. 

Estonia is a magnet for startups because of its rapid digital transformation, fast development and transparency. The continued growth and success has had positive knock-on effects for Estonia’s startup ecosystem more broadly. More and more foreign founders are confident in testing their moonshot ideas in Estonia. 

E-⁠resident-founded startup Glia became the country's 10th unicorn after securing $45 million of funding in Spring 2022. 

Glia is just one example showing that e-⁠resident businesses can…

3. Find funding opportunities in the e-⁠Residency and Estonian business networks

As mentioned above, e-⁠residents get all the perks of having an EU-registered company, including being eligible to receive European grants. Having an Estonian company makes your company attractive in the eyes of clients, partners, and investors in Europe, and will allow you to reach new customers.

Plus, e-⁠residents can access funding opportunities through the e-⁠Residency and Estonian business networks. Watch the recording of our webinar discussing fundraising, grants and growth prospects in Estonia.

Estonia attracts start-up investors

Investors recognise and prefer Estonian companies as legitimate EU legal entities. A lively angel investing scene has developed in the last 10 years to support pre-seed, seed and early stage startups. Many of these investors are successfully exited founders of some of Estonia’s most famous unicorns like Skype, Wise and Pipedrive.

Startup Wise Guys has been investing in and accelerating European startups for over a decade. Their Head of Business Development Mariia Tintul has this to say about incorporating in Estonia:

Just like Estonian founders, e-⁠residents with Estonian companies can access private investors, accelerator and incubator programmes. E-⁠residents can also join local business chambers across a broad range of industries or attend business conferences, such as Latitiude59 in Tallinn or sTARTUp Day in Tartu. Here, you can find opportunities to network, pitch your business ideas, and find clients or investors.

E-residents have won pitching contests at some of Estonia’s biggest business conferences. For example, Ukrainian e-resident Olena Iosifova, Ender Turing won the big prize at Latitude 59 in 2022. Latvian e-resident Kalvis Petersens, Taut also won a sTARTUp Day pitching contest in 2021. 

E-⁠resident companies are eligible to apply for funding from Estonia and the EU

E-⁠residents are eligible to apply for all kinds of public grants, both from the Estonian government and from the EU. 

The proof is in the pudding and there are e-residents who have successfully raised grants through Estonia and the EU. British e-resident Dave Fortune’s security consultancy Saher (Europe) SA raised EU money as part of a consortium to drive greater awareness of the EU’s terrorist content online (TCO) regulation through the Tech Against Terrorism Europe (TATE) project. He couldn’t do this through his UK entity due to data security and protection considerations so started his Estonian entity for this very purpose.

4. Estonia’s tax system is the most competitive in the world

Estonia’s clear tax system and network of over 60 tax treaties can be a huge opportunity for foreign entrepreneurs looking for cross-border tax clarity and a place to base their borderless business. 

The world’s most competitive tax system for 9 years running

The Tax Foundation has ranked Estonia ranked number one in the International Tax Competitiveness Index for 9 years running.  Its top score is driven largely by its unique corporate income tax (CIT) system where the taxation of corporate profits is postponed until the profits are distributed as dividends. 

With the most competitive and neutral tax code of all OECD countries, Estonia’s transparent, competitive tax system encourages entrepreneurship, and makes a company’s path to market much easier and less risky. 

It’s important to note though that e-⁠Residency is not a tax residency and will not exempt e-⁠residents from their foreign tax liabilities in other countries. International tax is not black or white, but many shades of grey. Between the diverse array of domestic tax laws, countless intra-country tax treaties, and assorted regional tax agreements, the question of where a person or business pays tax is complicated to answer. A response largely depends on the specific circumstances of each case and the interplay between the various legal frameworks. 

This means that e-⁠residents need to…

Build up your business presence in Estonia to benefit

E-⁠residents can take advantage of Estonia’s tax system if they build enough business substance in Estonia. There are many ways for your business to have the substance to fully take advantage of Estonia’s unique tax system, for example by renting an office, hiring employees, owning assets like intellectual property or holding Board meetings in the country.

E-residents can access a network of tax consultants with expertise in international conventions, the tax codes of Estonia and dozens of other countries, from the e-⁠Residency Marketplace.

Regardless if you don’t have business substance in Estonia, there are still benefits to having a company in the world’s most competitive tax code country:

• Estonia’s simple tax rules and uniform tax rates keep compliance costs low.
• Tax filings take minimal time thanks to a fully digital tax environment.
• E-⁠resident companies with dual tax residency or a permanent establishment in other countries should not be double-taxed.