How to get Estonian e-residency in 2020

Written by Andrew Henderson

Dateline: Tallinn, Estonia

In the wake of the Soviet Union collapse, Estonia was faced with the task of building a new kind of nation. Technological development in the late 90s was ushering an unprecedented economic boom and society began to go online almost overnight. As a country focused on building itself for the 21st century, Estonia undertook pioneering efforts to make business more efficient, transparent — and digital.

This tiny European country, which many people would be hard-pressed to find on a map, has continued to offer new solutions for entrepreneurs. Its vibrant startup scene, charming cities, and a trusted foothold within the EU make Estonia a growing powerhouse — despite a population of just 1.3 million.

In late 2014, the media was abuzz about this unlikely place. Everyone from CNBC and The Atlantic to and the startup world were talking about a process that Estonia was calling “e-residency” — the first time such a process had been offered by any country in the world.

The notion was different: creating a “digital nation” that allows its e-residents to access special resources for managing their companies.  

As we frequently discuss second residencies and second citizenships here at Nomad Capitalist, I thought it was important to discuss the Estonian e-residency program and help you determine whether getting one is worth it for you.

Are you interested in expanding your options for conducting business online in a secure way?

How does registering a company within an hour sound?

Working within a high-tech society that understands digital nomads?

Then Estonian e-residency may be for you — read on to see what it is and isn’t, how it works and how it might fit into your nomadic strategy and lifestyle design.

What Estonian e-residency is and is not

To begin, let’s start with the basics.

Estonia’s e-residency is NOT a path to citizenship, nor is it a legal residency. You can’t use an e-residency to move to Estonia and live there full-time as a bona-fide resident.

E-residency in Estonia does, however, allow you to sign documents, start a company in Estonia, open an Estonian bank account and conduct business — even order prescriptions. What’s more, your e-residency card can be used as a “digital signature” that’s valid anywhere in the EU.

With e-residency, you can also use online services in Estonia like government websites or online banking. Bank transfers and managing a company registered in Estonia (including submitting Estonian tax returns) can be done easily from wherever you are located.

As the program takes shape, things are getting easier, and more attractive.

For example, the e-resident card is recognized as an online ID for all EU countries from 2018. The Atlantic, for instance, reports that it can be used as a digital ID to buy a ticket on a German train. It can even be used to send encrypted emails to other e-residents.

E-residency is not a way to get out of paying taxes in your home country. It will not grant you a step towards citizenship or serve as a valid travel document.

In summary, the electronic residence is best suited to those who either want to bank or run a business in Estonia, or both—and can be an attractive tool for nomads wanting to increase their freedom and options digitally.  

Why is Estonia a new safe haven?

I have talked about before why Estonia is one of my seven “new safe havens”: up-and-coming countries that are good for planting your flags and protecting your money.

I first came to Estonia a few years back and, despite the freezing late March temperatures and relatively high prices for the region (Finland absorbs the best talent and drives up prices), I found the place to be quite innovative.

In Estonia, practically everything is online. The government is planning to move its entire infrastructure to the cloud both as a move toward further efficiency and as a “just in case”.

They can afford to do that because the government is far from bloated, to begin with. My lawyer here tells me that most of her clients from around the EU are amazed at how easy it is to do business here.

And a lot of business is being done here. Estonia is not only the birthplace of Skype, but the home of one of my favorite new money transfer companies, Transferwise. Taxify is another company headquartered in Estonia that is making waves in the ride-hailing industry, and many more Estonian startups are quickly vying to become “the next Skype”.

There’s a reason business is booming: companies that re-invest their profits rather than distribute them can avail themselves of Europe’s only 0% tax rate. If you do distribute profits, the tax code is so simple a five-year-old could explain it. On top of that, corporate tax rates are slowly going down.

Estonia has a unique income tax system where corporate income tax is charged on profit dividends only, and is capped at 20%. As long as you keep your profits within the company, you will not have to pay any corporate income taxes. And, Estonia has a flat 20% tax on individual income that does not apply to personal dividend income.

It doesn’t take long to realize that Estonia is interested in shaking things up and being a government that values efficiency—making it highly compatible with the Nomad Capitalist lifestyle. Hence the rise of the Estonian e-residency.

How does e-residency in Estonia work?

E-residency is perfect if you want to do business in Estonia, but not actually live there.

This is especially valuable if you want to bank in Estonia. Unlike banks in the United States and most bankrupt Western countries that require you to show up just to sign some silly form, even if you’re already a customer, e-residency allows you to sign digitally from anywhere on earth. It’s perfect for international business people and digital nomads.

Essentially, Estonian e-residents are given chip cards that allow them to use Estonian public resources, sign documents securely, and encrypt files. Estonia’s digital infrastructure is extensive and banking online, making transactions, and registering companies using this method is among the quickest and fuss-free digital nomads can get.

Back when this first began, within a day of its announcement, people from 168 different countries had signed up to get notified of launch — and thousands applied once the process began taking hold.

Famous holders of Estonian e-residency include German Chancellor Angela Merkel, Japanese Prime Minister Shinzo Abe, Venture Capitalist Guy Kawasaki, and The Daily Show Host Trevor Noah.

How to apply for e-residency: a step-by-step guide


Guide for getting an Estonian e-residency

Applying for e-residency is easy:

  1. Read more from the official e-Residency website at
  2. Go to There, you’ll find an online application form. You’ll need to upload your photos, describe your purpose for applying, and pay the 100 euro e-Residency state fee.
  3. Once your application has been submitted, you’ll need to wait about 10 business days for the background check to be completed.
  4. After you verify your identity at the pickup location, you’ll get an e-Resident starter kit which contains your digital ID card and a smart card reader.’’

E-residency is getting more and more popular. As a case study, in 2016, we interviewed Sebastian from Wireless life who has obtained e-residency for himself. (You can read the full post here).

He said: ‘’The process for becoming an e-Resident was pretty straightforward. It took about two months, from filling out the application to picking up my ID card at the Estonian consulate in Shanghai.

“After paying the fee of 50 Euro (now 100 Euro), the Estonian Police and Border Guard Board performed a background check and notified me one month later. Another month later I shook hands with the Consul, picked up the ID card and downloaded the software for the ID card reader to activate my resident card.’’

How to make use of Estonian e-residency

While I’ve written before about the positive aspect of doing business in the country, Estonian companies are NOT for everyone. Entrepreneurs with good cash flow should NOT use them. Certain entrepreneurs with a fast cash churn rate, however, SHOULD consider them for their 0% tax on non-distributed cash.

Estonian e-residency can be obtained online, although before the process required you to be in Estonia in person for a week or so. If you’re looking for an excuse for a vacation, you could work in a trip down to Riga, Latvia or Vilnius, Lithuania while you wait, or your card can be delivered to the nearest Estonian embassy for pick-up once ready.

If you’re looking for an excuse for a vacation, you could work in a trip down to Riga, Latvia or Vilnius, Lithuania while you wait, or your card can be delivered to the nearest Estonian embassy for pick-up once ready.

Once you have obtained your residency, your card will be set up with a PIN and card reader that enables you to securely sign documents and log into various services. Banking services exist in English, Estonian and Russian, and can often be multi-currency and very modern so that you can make transactions move in your business more quickly.

Regarding physical residency, I do have an excellent attorney here in Tallinn who can help you get legal residency if you want to start a company and actually live here. However, you would need to actually live here a good part of the year. If that appeals to you, Estonian citizenship would be available after eight years of continuous residence and some knowledge of the language.

Banking with Estonian e-residency

I have written specifically about banking with e-residency in this post, but let me sum it up here.

Banks in Estonia are excellent and well-capitalized. While Latvia has become the new banking hub for wealthy Russians after the collapse of Cyprus, Estonian banks are even better.

On top of that, unlike the empty piggy bank that is the FDIC, Estonia’s government is also solvent. The place hasn’t issued sovereign debt in years, and they actually balance their budget. E-residency removes the restrictions and other problems caused by borders, especially for US persons tired of being denied for banking due to FATCA.

Currently, there are only three banks that are open to e-residents.

Two of the banks — SEB and Swedbank — are based out of Sweden and will charge you several hundred euros just to open an account with them.

Fortunately, the third bank is my favorite bank in Estonia and is much more open to nomads. In fact, I consider LHV to be the best bank in Estonia. While it is not a big bank, its small footprint means a lower overhead and more affordable banking for you.

The other benefits of banking with LHV is that the institution is accustomed to working with customers remotely and does not require considerable investments of time and money in order to open an account for foreigners. It is one of the only banks in the country that will accept investments in the Estonian and Baltic stock market as sufficient justification for opening an account.

E-residency allows you to set up an Estonian company from anywhere in the world. While having an offshore company in the European Union can have its downsides, it can also have a lot of upside for many entrepreneurs.

If you have a start-up or growth company that eats up cash, Estonia allows you to compound your gains by not taxing you until you actually pay yourself. It is also easier and cheaper to set up an Estonian company than an Irish company that taxes all profits at 12.5%. You don’t even need to be in Estonia to manage your Estonian company, as e-residency allows you to file and pay taxes from anywhere as well.

Final thoughts  

Estonian e-residency has become easily one of the most revolutionary developments to come out of this small Baltic state. For digitally-based entrepreneurs looking for better efficiency and reliability in their business, it may prove the right fit—but it’s not for everyone.

For digitally-based entrepreneurs looking for better efficiency and reliability in their business, it may prove the right fit—but it’s not for everyone.

If you want to learn more about whether e-residency should be part of your nomad strategy, reach out here and stay tuned for more on developments in the digital residency and international banking world.

Andrew Henderson
Last updated: Dec 28, 2019 at 5:35AM

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  1. Ian

    Xendpay is a great international money transfer provider. Well worth a look at and reporting on. They show the traditional banks and competitors to be the rip off merchants they have been for so many years.

  2. Syed Irfan Ajmal

    Thanks Andrew. I love the information you have shared. I have few questions if you don’t mind:

    1. If I am not wrong, it is not necessary anymore to visit Estonia in person in order to apply for e-residency (even though for opening a bank account it still remains a requirement). Do you agree?

    2. Are you saying that there is no tax on personal gains but a flat 12.5% tax on a company’s income?

    3. I’ve lived in Sweden and Denmark, both of which are at par with the US/UK etc (if not better). Can the same be said about Estonia?

    • prepz

      I”m not Andrew, but I’ve been through the eResidency process. Here’s what i can tell you. Now, I don’t know where you live or what your citizenship is currently. Those are fundamental things to know to answer your questions. I’ll give you answers from the perspective of an American citizen who is taxed on worldwide income, regardless of where I live in the world, or where my companies are incorporated.

      1. This is the only “simple” question that I can answer. You can apply for eResidency online. That’s part of the “innovation” of the program. It’s all done online via the website and email. Once you’re an eResident, I have read that you can form your corporation online and even open a bank account. But I didn’t get that far as I still don’t have my ID card, which Gustav says I’ll need to get fingerprinted for to pickup, either in New York City or Washington DC – depending on who I get on the phone any given day. Or maybe I get the card after I get fingerprinted. I don’t know as there is not good source of accurate info on the process and I’ve only gotten conflicting information from officials inside Estonia and here in the US. YMMV.

      2. What do you mean by tax on “personal gains?” Are you talking about gains on the sale of an asset used by your business or personal assets? Are you referring to company assets located within Estonia (e.g. real estate, stocks, bonds, equipment) or outside? Are you referring to income you earn from an Estonian company paid to you as dividend? You must specify by giving an example of a transaction that illustrates the type of gain you are asking about. But, if you’re asking about *capital gains* I can’t tell you if Estonia taxes gains by your Estonian corporation because I have yet to even get a link to the Estonian corporate tax code, despite having asked for information several times on corporate taxation. The 12.5% tax on corporate income is correct, and about the only thing I know about Estonian corporate taxation. However, I couldn’t tell you what income that tax rate is applied to, what deductions can be taken by an Estonian corp to calculate taxable income, etc. For example, dividends paid are generally deductible from US corporate income before tax in computed. What does Estonia say about different types of deductions for expenses, depreciation, recapture, etc.? What about the problematic retained earning of an Estonia corp? US tax code will require tax be paid on retained earnings past a certain threshold even if those earnings are not distributed. There are also questions about taxes as defined in tax treaties between countries. For example, how does your country handle issues of double taxation? Does Estonia have a tax treaty with the US that deals with issues of double taxation? You’d think Estonia could at least tell me that much information. Alas, I have to go research it myself and see: 1. if there is such a treaty and 2. what it actually says.

      3. This question makes me think you’re mixing apples, oranges and bananas together. You lived in countries with a territorial tax system as opposed to a worldwide tax on citizen here ine good ‘ol US, regardless of where the US taxpayer (or in some cases resident alien) lives. No countries tax system is “on par” with the US for such egregious taxation of worldwide income based on nothing more than US citizenship, permanent residency, or possibly non-resident alien status. Also, no other tax system is a needlessly big and complex as the US system as far as I know.

      eResedeny in Estonia is not *real* residency. If you are an American citizen, i doubt you could call Estonia your *tax home* and be taxed as such (e.g. based on a tax treaty) simply because you are an eResident. If you’re a citizen of another country, are you living in that country while trying to conduct business through an Estonia corp? If so, you may still be taxed based on your residency (depending on the country) despite having your c.orp domiciled in Estonia. Of, if youre living in a country that is NOT your home country, then different rules may apply. But I don’t have that knowledge for anything but US taxpayer.

      Now, unless you are living in Estonia as a resident that qualifies you to pay tax on money earned inside Estonia (as from an Estonia corporation), there is no answer to you question. You’d have to ask about a very specific set of circumstances to be able to begin to give any kind of guidance. And, I couldn’t even begin to tell you how Estonia treats that situation as I am not familiar with their tax code. However, if you’re residing outside of Estonia and your Estonia corporation is paying you a dividend on your stock, that may not be taxable by Estonia (don’t know their tax code), but may be taxed by your home country, or in the case of the US, we will tax it if you reside here more than a certain number of days each year, qualifying you as a non-resident alien. Are you going to draw a salary from and Estonia corporation as CEO, board member, an employee who manages the corp. or perhaps a consultant? Would you be paid in cash, stock, stock options, or other? Would you receive fringe benefits that may be taxed as receiving cash (the way we do it here in the US)? See how there are no answers without knowing precisely what you’re asking about.

      So, nothing can be said about Estonia except what Estonia has to say Estonian taxes — both corporate and personal taxation. Saying that Estonia taxes corporate income at a flat 12.5% is like telling a foreigner living in the US that their income will be taxed at a graduated rate. That doesn’t explain anything about how taxes really work. Also, who’s going to do your Estonia tax filings and compliance? I assume, as Estonia probably assumes, that you’ll hire tax and legal professionals inside Estonia who know what to do — all for a nice fee, of course.

      Even if you can find, read and understand Estonian tax code, you still have to deal with your own country’s tax code and how it treats ownership of and income from a foreign corporation. As an American, you must be keenly aware of IRS code regarding Controlled Foreign Corporations (CFC’s) and Passive Investment Foreign Corporations (PFIC’s). The IRC is so complex that even many tax professions get it wrong unless they have tons of experience specifically with the US tax side of things. Setting up things incorrectly, filing the wrong form, not filing the right forms, making mistakes, etc. can be very costly, with penalties generally starting at $10,000 for honest mistakes, plus back taxes, interest, penalties, etc. Filing requirements are exponentially harder with many more forms than you’d file with a domestic corp or LLC.

      There. It’s getting late and I’ve just shed a little bit of light on the tip of the iceberg that is international taxation of foreign owned corporations. It takes a team of experts in both your own country and Estonia to figure out how your company will be taxed between two countries. This is why the only countries I’m interested in incorporating and doing business in will have ZERO taxation of non-domestic sourced income and very simple tax return filing requirements. At least that side of the tax regime will be worth the expense, time and trouble filing all the correct returns and forms with the IRS and Treasury department to comply with the US tax code and avoid very costly mistakes.

      (probably the longest non-answer you hoped you’d never have to read through, eh?

      • Gustav Kotkas

        What a great answer! Somone should provide a guide for US citizens wanting to become Estonian E-residents and start and run a company from Estonia. It is much easier for people from other European Union countries but the US has a much more complicated tax system.

        • prepz

          Maybe I could be that person as I’ve the experience (success and failures) of establishing business in various countries. Our US tax system is ridiculously complex. Every session of congress only adds to it’s needless complex by introducing new legislation to stop capital flight from the US to other more tax friendly venues.

          There is no guide specifically for incorporating in Estonia and it’s taxation of such to Amercian taxpayers. The guide would be called the entire Internal Revenue Code (IRC). The same rules apply to incorporating in Estonia as it would any other country, unless a tax treaty provides for exceptions that are different for a particular country. That’s why companies spend tens if not hundreds of thousands of dollars annualy for planning, reporting, and compliance. A business person has no choice but to hire experts in international tax planning and filing, or run the risk of making mistakes that are penalized harshly by the IRS.

        • Wacky Tobaccy

          Is it possible to use the e-residency to open a personal bank account?

  3. prepz

    Meh. As one who got the Estonia eResidency, I’m not impressed.

    I applied, paid my fee and eventually got approved for eResidency. Then there was nothing but confusion and misinformation about getting my eResident card and welcome kit.

    For all the innovation in taking their business ecosystem online, Estonia required me to travel to the Embassy to pick up my card in person. They would not send it to me, as I was originally led to believe. Why must I book a trip just to pick up a card? I was already approved. They had my photo. Did they just need to see my pretty face in their office?

    The bigger problem is that no one told me about the travel requirement to pick it up my ID card. The police who sent me my approval email didn’t inform me. The eResidency admin didn’t inform me. It wasn’t until months later — after wondering where my eResidency ID was, that I made the calls to the eResidency people to learn of this confusing requirement. For all the cutting-edge eSignature type tech they tout, I didn’t even get an email welcoming me and letting me know the next steps.

    The final straw for me, and the reason I’m not using eResidency is that neither the Embassy in D.C nor the consulate in NYC could tell me where my card was located for picking up. Each office insisted the other office had it in their possession. I explained my situation to whomever receives messages via the eResidency website. But that fell on deaf ears. I never heard anything back from administrators of the program. They also never answered my simple questions about corporate and personal taxation as an eResident — information I had to find outside the official eResidency site! Simply not acceptable.

    I can apply for and receive an American passport by mail in the greatest bureaucracy on the planet But cutting edge Estonia can’t send me my residency ID and paperwork? I think the idea is the seed of something innovative. But as it is, it’s a half-baked and limited option for the serious entrepreneur, especially the digital nomad who can simply choose a tax-free venue for setting up shop.

    • Gustav Kotkas

      I am sorry to hear about your bad experience but one of the reasons you had to visit the embassy to pick up the card was that the government also requires your fingerprints. Thanks for the feedback and I really hope that it will become much-much convenient and transparent in all the all the areas including tax questions.

      • prepz

        That’s the first time I’ve heard of the fingerprint requirement.

        Well, I don’t know why you want or think you need them, but I have not need to having my fingerprints in yet another government’s database. Since this is not a “real” residency, I can’t fathom why Estonia needs such a thing. I can, and have in the past, setup foreign businesses without any type of residency in countries with ZERO taxation of foreign sourced income, without any need for background checks, fingerprints, etc.

        • Gustav Kotkas

          Otherwise Estonia would become another off-shore country where anyone could open any company no questions asked. The government takes security very seriously and this is the reason they also require fingerprint. If you have any more questions, you can e-mail me at [email protected] . CHeers!

          • prepz

            Wait, you require fingerprints of a eResident founder to incorporate? Why stop there? Why not require fingerprints of officers, and for that matter all shareholders? What security does having fingerprints really provide if even eResidents are not living in Estonia, but only the corporate fiction of their company? What does this “security” provide Estonia and it’s citizens if the only thing residing Estonia is some paperwork, records and possibly a corporate bank account?

            This is not a “no questions asked” scenario. I provided a good bit of information as part of my application. I also went through a background check by your police force as part of the approval process. I’ve incorporated several countries without even that level of security, and certainly without being fingerprinted.

            I could understand fingerprinting requirements if eResidency provided some type of actual residency privileges in Estonia. But since it does not, the requirement makes no sense to me. And if security is so important, why not require fingerprinting as part of the application and approval process, not a condition of receiving your ID card? This seems backwards. I applied, was processed adn approved without fingerprints being taken. Only now does Estonia want them? Why?

            If fingerprinting provides security, then why is it I can fly into Estonia without so much as a visa and stay for 90 days visa-free on my US passport under the Schengen area visa-free travel provisions? My physical presence in Estonia presents more a potential security risk than any eResident status or corporate existence where I not physically present in Estonia — the whole novelty of the program, yes?

            Again, no such requirements exist in other venues favored for incorporation. This all seems like ancient thinking of old-school bureaucrats rather than a new way of doing business. For this and other peculiarities of the program, I still say eResidency is a half-baked idea needing more thought and refinement — at least if you want to attract business and investment from North America.

  4. Arturo


    I am still not clear with the part of why a company in Estonia is NOT for everyone. For example the statement “Entrepreneurs with good cash flow should NOT use them. Certain entrepreneurs with a fast cash churn rate, however, SHOULD consider them for their 0% tax on non-distributed cash” was not explained thoroughly enough for me to understand it.

    If someone can help me to clarify this I would kindly appreciate it.


  5. Qurban

    Is Estonian government gives passport after 4to 5 years in e rsidency


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