e-Residency. Your business opportunity as an Estonian?

e-Residency. Your business opportunity as an Estonian?

There is not a single day here in South-East Asia when someone is not asking: “Where are you coming from?”After hearing my answer, people usually repeat “E-S-T-O-N-I-A” as it’s something next to Utopia.

Although the ones who know, can’t stop talking about e-Residency. And how beautiful their visit to Tallinn was.

I definitely recommend everyone to visit Tallinn’s old town one day, and could keep on talking about cool things to do there. But e-Residency? Yes, I have read about it in Estonian newspapers, but really how do they know about this?

This has made me question if I really know enough about my country. And so I dived deep into the world of e-Residency. (Basically read about Estonia, while I should have read Lonely Planet’s guides about South-East Asian countries instead).

What’s so special about e-Residency?

For Estonians, nothing has changed after offering, for us so common, e-services to foreigners. Services have been there for many years and it’s normal that we can do almost all interactions with government online. But it turns out that most of the world doesn’t have this privilege. For others the fact that a citizen can access to 99% of all public services online is exceptional.

And now our country offers all those convenient possibilities to everyone. (Tho there is a background check, no criminals). That’s a game changer. Never has any country opened its public services for everyone, foreigners who have not born or doesn’t have any connections there. Overall tendency in the world is rather counteractive with building walls and fences, not online “bridges”.

With e-Residency, we actually challenge other countries, as now their citizens have a possibility to bring over their enterprises to Estonia (without a need to ever visit the country itself). And together with the change of the company’s location changes the company’s tax residency. Estonia > other countries.

Our country’s move opens up a possible marketplace for government services. If more countries follow our lead, then they start to compete with us in terms of accessibility, taxes, service level etc. Just like enterprises.

Alright, but what gain is there for Estonians?

E-Residency batches at the Running Remote conference.People know about us. E-Residency have made thousands of foreigners to support and fan of our country. We are known as “digital nation” and “start-up nation”. Marketing is done so effectively, that there even was an Estonian speaker in Running Remote conference in Bali island, 10800 km from Estonia.  There are e-residents like Japanese prime minister and Angela Merkel.  For a small country, e-Residency has brought us a huge amount of attention. Maybe only Iceland’s football team in the World Cup earned more.

First question for every enterprise, is it financially profitable? Yes. Experts from Deloitte have made an analysis to see how much income have e-Residency brought to Estonia. On contrary, costs have been relatively small as most offered services have been there before the project launched. Currently, the scale is tiny with only 30 000+ e-residents, but if the goal is to reach 10 000 000 by the year 2025 then it’s a totally different effect to our economy.

Statistically most popular reason for foreigners to become e-residents have been an opportunity to open a business online in Estonia. (All numbers are seen here.) The government has made the process of applying for e-Residency and starting a company relatively easily.  Still, there are many fields where new foreign business owners in Estonia would need services from private companies. That’s the opportunity for Estonian businesses to benefit from e-Residency movement.

How can Estonian private companies make money from e-residents?

More and more people around the world enter Estonia.

Well, first of all, e-Residency has been there already for over 3,5 years. I assume that the question, how to make a profit from e-residents, have come to many entrepreneurial minds. There are also already many companies positioning their services directly to e-residents.

Unfortunately, I have not been so aware of the e-Residency movement nor been foresightful enough. The first train to jump on is probably gone for me.

But numbers of e-residents and their business are only growing. If an e-Residency team achieves its goal – 10 million e-residents by the year 2025 – then there is a marketplace 7-8x bigger than we currently have in Estonia with a population of 1.3 million. Meaning there will be definitely room for new service providers.

After reading many blog posts, listening to podcasts, scrolling in different communities, and talking with interested people, I have written down a list of possible business sectors that could be offered to e-residents and their companies.

  • Taxation consultations. Stereotypical freelancer: lives in Thailand, has company in Estonia and is actually a resident of USA. Where she or he should pay their company’s taxes and private taxes? What are the tax rates? How to optimize their taxes? These are the question most freelancers and digital nomads have before opening the company.
  • Accounting and bookkeeping services. Although it is theoretically easy and everything can be done online, it’s doubtful that new e-residents will dive into Estonian accounting principles and do those quite monotonous tasks themselves.
  • Legal address, contact person and virtual assistant services. Every Estonian company has to have a legal address in Estonia to receive postal mail. And if the company’s board resides in the foreign country, there also be authorized contact person in Estonia. For those reasons, most e-residents need someone in Estonia to provide them with the address and forward them mails if something will pop-up. And if e-residents already buy virtual office service, then it’s possible to offer them many other assistant services as well.
  • Banking and payment tools.  Estonian law allows opening a bank account without visiting the bank itself. Although so far banks have still demanded to see all applicants physically. In this spring banks even started close e-residents’ bank accounts.  And on the other hand, companies also need to make their customers paying process as simple as possible. That’s an opportunity for fintech companies to offer e-residents IBAN accounts, debit/credit cards, payment tools and other fiscal services.
  • Tourism and meetups. Well, technically e-residents don’t have to ever visit Estonia. Still many do. (Thanks to Estonia’s great marketing?) And if they come, they want to have a great time! Maybe there is a need for tailored tours for e-residents? Visiting local start-ups? Tour to new potential partners? Also, meet-ups, conferences, and other events directed to e-residents can be possibly monetized.
  • Co-working spaces. There is already a fine list of co-working space in Tallinn. But is it enough for serving an increasing number of curious freelancers visiting the country where their businesses are? And if added all Estonians who are dreaming of location independent lifestyle? Probably not. There can be cool co-working space directly positioned towards e-resident travellers. Maybe even co-living space.

The list could be a lot longer. There are missing many services like legal advice, auditing, HR services etc. And there are areas I’m not aware of or couldn’t come up yet.

Also, there is already a fine list of companies providing those services on e-Residency site.

Cool research, but what am I going to do with it?

First I will proudly announce that I am an Estonian. Tell about our digital nation, about our start-ups, and about e-Residency. I share the basic information to everyone willing to listen. And later exchange contacts if they have more interest and further questions.

If it goes well, it will help me to get further insight into new e-residents’ needs. And could help me to get my first possible customers in the future.

Meanwhile, I will read further, study, and request further information from specialists about taxation, accounting and setting up new businesses in Estonia. This will definitely support me with managing my own business. And make me more knowledgeable specialist to assist others.

At then I see 4 possible scenarios in the future for me:

  • Start offering simple consultancy services as a freelancer
  • Open a consultancy business and partner with accounting, taxation and legal specialists
  • Start a company in a specific niche (after I have gained more information regarding needs of e-residents)
  • Live my life with new connections and new knowledge, but without extra income in that field

Whichever scenario will wait for me in the future, I will start networking.  I promote the possibility of e-Residency to people I meet. Exchange contacts. And learn how I could help them.

What ‘s your take on e-Residency? Am I missing something? Please feel free to comment!

And if you are an e-resident or thinking about becoming one, please contact me. I would love to know more about your struggles and hesitations. Hopefully, I can help. And if not, then I can recommend some companies who can.

 

2 Comments
  1. You just took up my thoughts as an e-Resident. I offer my consultancy services to the insurance industry through my Estonian OÜ for a while now and still wonder why there isn’t more of an economic biotope around e-Residency. Especially when it comesto insurance issues. Looks like as an entrepreneur I’ll pull up my sleeves and will try to design products here myself. Especially in the fields of professional indemnity policies and global health insurance for travelling digital nomads seems to be a high demand with no offer.

    1. Thank you for your comment! I guess the insurance industry is really dependent on residency country. Before coming to travelling I also made quite deep research about different service providers and found out that Estonian companies are generally much cheaper than some global providers like World Nomads https://www.worldnomads.com/. Of course one should always first compare all terms and limits before comparing prices, but for us, it made sense to buy global health insurance package from the local company.

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