Could
Estonia's e-residency program offer a way out of Britain's Brexit bind? Kaspar
Korjus, director of the country's program thinks that digital nomadism could be
the way forward for Britons and British companies.
Since the
referendum result in the UK and the impending Brexit, there’s been a rush of
Britons trying to obtain residency within other EU countries so as to remain
part of the EU. But the strict criteria often prevents many of them qualifying
for an easy route. Now though, the Republic of Estonia might offer a way out of
that bind. It has been offering e-residency permits for a couple of years as
part of a wider program of e-government. This summer the country saw a jump in
the number of Britons applying so they, or their companies, could continue
trading as EU entities. DW talked to Kaspar Korjus, Estonia's e-residency
program director.
Deutsche
Welle: What exactly is e-residency?
Kaspar
Korjus: E-residency in the larger context is the new nation state; we are
building a whole new digital nation for global citizens. That means that every
person on this planet can become an e-resident of this nation. By becoming an
e-resident each person gets a digital identity, contained in a smart ID card.
Once you get a smart ID card you can log in to the nation state services, you
can digitally sign everything and you can be part of this new community.
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| Estonia has 13,000 e-residents currently and hopes for 10 million by 2025 |
Why did
Estonia decide to adopt this method? It's not just e-residency, but the whole
thing is part of a wider program E-government.
Yes, so
E-government has been in Estonia for the last 15 or so years. All Estonians
have been voting on line, declaring taxes, getting e-prescriptions, signing all
contracts, establishing companies; everything is done using that digital
identity. Now we've just opened the borders to everyone else, so that everyone
can be part of this.
The reasons
are twofold: firstly, it's purely economic, so that Estonia can be bigger.
Estonia has a population of just 1.3 million and the internal market compared
to Germany for example is so small that we just need more customers outside of
Estonia. Secondly, it doesn't add too much cost for us to open these things.
There are
billions of people today all around the world who lack access to financial
services or lack access to proper business services. For us to open these gates
to them, it just doesn't cost us much extra. We already have the legal system,
we already have the infrastructure and we already have the services, so we can
just offer the same services to them also.
How many
e-residents do you have at the moment?
KK: We have
over 13,000 e-residents today, and we are still in a beta phase. To become an
e-resident each person needs to pay 100 euros and apply online at
e-resident.gov.ee and then have one face-to-face meeting at the Estonian
embassy. This takes approximately two months and then a person could become an
e-resident and access all the services.
Did you see
the numbers shoot up after the referendum in Britain because of the threat of
Brexit?
That's
true, a few days after the Brexit referendum we had a ten times increase in
applications from the UK. They were mainly from the start-up and
entrepreneurship world. Many start-uppers were afraid of what Brexit could
bring, whether they'd still be able to work with EU companies, whether they'd
still be able to have employees from the EU. E-residency in that sense allows
them and helps them to still run EU-based companies whilst living in the UK.
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| Britons can live in the UK and work with companies in the EU via Estonian e-residency and services |
Because
essentially it gives them EU membership?
It gives
them an EU company, an EU bank account and EU regulations. So you don't need to
apply to each separate EU country for a set of regulations as you would have
the Estonian EU entity. Through that entity, you can sell all your services and
regulations apply there. That means that none of the Brexit people need to move
from the UK to Europe to deal with EU businesses, because they can stay living
in the UK and deal with the EU through their e-residency and business in
Estonia.
What do you
expect from E-residents? Will there be any kind of tax burden?
E-residents
usually pay taxes in the countries where they are living and creating value.
E-residency does not mean tax residency. It means that e-residents can just use
the platform and the business environment to facilitate their businesses.
So is that
how you make sure that this doesn't become a kind of tax haven type scheme or a
"letter box" company?
Yes, it is
exactly the opposite. This is the opposite of something like Panama where
people might have gone to try and hide their taxes and hide their companies;
because e-residency is a transparent business. Each shareholder and manager is
available as information to the public. We are also sharing the tax revenues
with local countries and other governments. As everything is digital and so all
the transactions leave digital footprints there is no way to hide, or protect
any wealth you might have. That's why e-residents who join are those kinds of
people who want to share transparency and show they can be trusted.
What do
e-residents receive in return?
If a person
is outside of the EU, from an emerging market, the main benefit is access to
financial services, access to bank accounts, to online payment providers and
access to crowd-funding sites etc. Most of the people today can't offer this
kind of online business. The second thing is that through Estonia, people and
companies have access to the EU business environment. Estonia makes all that
very easy and convenient because it is all done digitally. So establishing a
company takes just 10 minutes; you can open bank accounts online, everything
can be signed digitally, all the contracts and taxes so it is pretty much cost
free. The third reason why people apply is the freedom which an e-residency
provides. Even if your country offers all the services and is pretty cost
effective, people in today's world travel a lot. Sometimes those people's own
countries might still require them to be physically present to sign something
or declare something, but now people travel all around the world, digital
nomadism is everywhere and e-residency helps run your business without having
one fixed place of abode.
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| The more people and countries connected, the higher the value of the network |
Have other
countries enquired about whether or not they could offer a similar kind of
program?
Yes we are
actually helping many other governments to adopt this. We don't see this as a
competition but rather a partnership because the more governments which offer
this kind of services, the more players will be on the network and then the
more value it brings to the network. We know that Lithuania is about to adopt
it, we are helping Singapore, Japan and the Netherlands. Once a country starts
serving its own citizens digitally as Estonia has been doing for the last 15-17
years then there is really no reason why you can't start serving other citizens
too who want to take part in your business environment.
Kaspar
Korjus is director of Estonia's e-residency program. If you are interested in
applying for e-residency, you can go online to e-resident.gov.ee
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