E-residency: democratizing access to the EU business and financial environment

Event report

[Read more session reports from the UNCTAD E-Commerce Week 2018]

The session, moderated by Mr Andre Pung (Ambassador, Permanent Representative of the Republic of Estonia to the UN and other International Organisations in Geneva) discussed the e-Residency programme, a digital identity provided by the Government of Estonia that grants the ability to use the country’s digital platform to access the European market.

Ms Victoria Saue, (Head of Legal, Risk and Compliance, e-Residency, Estonia) provided more details about the programme and the specificities of the national context. A single digital identification document is used in Estonia (by 97% of the population) for purposes as diverse as driving and using public transportation to accessing over 4 000 e-services in the public and private sectors, e-voting, and banking. A few years ago, the government introduced a similar system of digital ID cards for non-residents of Estonia. The procedure is relatively simple: the application procedure is done via the Internet and takes about 20 minutes following which there is a 30-day wait period for background checks and verification. Once the confirmation is received, the digital ID card can be issued once the biometric information has been physically collected (in Estonia or in its consulates abroad). The card can then be activated by downloading free digital ID software. Currently, there are more than 37 000 e-residents from 152 countries, Saue explained.

With an e-residence, a company can be started online or in Estonia (once a physical address is secured) within a day. Relatedly, opening an EU IBAN business account can be done via a traditional bank or a FinTech firm. Paying taxes in Estonia is also an online process, but it is important to note that e-residency does not give tax residency and EU rules are applied concerning taxing where value is created.

Mr Antti-Jussi Suominen (CEO, Holvi) provided the private sector’s perspective. As a payment institution founded in 2011 to provide business banking services to micro-entrepreneurs in Finland, Germany, and Austria, his company extended its offer to the e-residents of Estonia when the government introduced the programme. Souminen presented statistics from the EU regarding micro-businesses and cited studies in the field estimating between 60 and 90 million independent workers in the EU. This change to different models happens for various reasons, but those more prone to being micro-entrepreneurs can be divided into four categories: free agents, casual earners, reluctants, and financially strapped.

Taking about his experience in the e-residence programme, he presented the profile of the typical e-resident customer: male, 30-50 years old, European (though not necessarily inside the EU), technically savvy, and a heavy user of one functionality. Souminen went on to describe some of the strategies adopted by his company to help micro-entrepreneurs, including an integrated view to business and an easy-to-use invoicing tool. Holvi’s values behind the service are: humane, expert, of fanatic quality, genuine.

The user perspective was brought in by Ms Arzu Altinay (Founder and Owner of Walks in Europe), an e-resident. Based in Istanbul, Altinay started looking at options outside Turkey back in 2015, when her travel business (tours in the city) lost profits due to the political changes in the country, leading to travel warnings for tourists. Around the same time, PayPal stopped operating in the country, limiting her possibilities for receiving payments for the services provided. Via the e-residency programme, she was able to establish a company in January 2017. Notably, no capital share was required and she could obtain her travel license quickly, allowing her to expand her business to 14 European cities.

The questions that followed focused on business models, licensing activities and taxation, as well as security safeguards for the e-residency programme. When asked about the possibility to register a cryptocurrency firm or to accept payments in virtual currencies, Saue responded that it is not (yet) legal in Estonia.

By Roxana Radu