Estonian e-Residency is lowering business costs around the world

E-Residency of Estonia costs just €100, yet can save companies money and significantly improve the ease of doing international business. Meet some of the entrepreneurs, freelancers, and investors already benefiting as e-residents.

A chance to succeed

“Where on Earth is Estonia?”, Alice Chau-Ginguene from Hong Kong remembers asking back in 2003 when she first met an Estonian.

At the time, Estonia’s most famous startup Skype was just being established and the country’s digital infrastructure — now praised as the most advanced in the world — was still being developed.

Chau-Ginguene had recently moved to Paris, but was having difficulty making friends due to the language barrier until Helen Karolin from Estonia sat down on a bench next to her and struck up a conversation in English.

They’ve been best friends ever since and recently became business partners too. Not only does Chau-Ginguene now know where Estonia is, but she’s also become one of the country’s first e-residents.

Estonia’s advanced digital infrastructure makes it easy to set up a business and run it online from anywhere in the world. It was first designed to make life easier for citizens and residents, like Karolin, but Estonia is the first country to offer e-Residency so that anyone, such as Chau-Ginguene, can receive the same benefits.

Before e-Residency, Chau-Ginguene had to learn the hard way about the difficulties, costs and risks of running a business. After living in France for a few more years, she moved to Ireland and decided to start a cat sitting service after struggling to find one locally.

When she first told people about her idea, she faced a barrage of naysayers who said there would be no interest. Then when she prepared to launch, Ireland fell into a deep recession, which was followed by a global economic crisis.

Yet it turned out that Chau-Ginguene wasn’t the only person who needed a cat sitter locally, even during hard times. As a result, Maow Care managed to boom through the bust.

Chau-Ginguene’s new business idea also originated from a personal need. She recently became a mother, yet struggled to find fashionable baby-carrying slings in Europe and watched other mothers struggling with prams on public transport and busy streets.

As a result, she set up LOVA Sling with Karolin.

Many of her experiences now are similar to last time, like being told the market isn’t ready for her idea. One thing very different now however is the ease at which she can run the business through her Estonian e-Residency, despite still living in Ireland.

“E-Residency is just amazing,” says Chau-Ginguene. “It is so much easier to set up a business in Estonia then deal with customers around the world. Everything you need is online and people get back to you very quick so there’s no need to even call anyone in Estonia”.

Although e-Residency makes it easy to deal with suppliers around the world too, Chau-Ginguene decided to use Estonia as a hub for all their business needs due to the high quality and relatively low cost of materials and services.

Even the slings are designed and made in Estonia.

“Ireland is a very good place to start a business in fairness, but the cost of everything has been lower in Estonia and just as easy to access from here. Estonians have a good work ethic, respond fast, speak good English, are very techno-savvy and are used to working with foreigners. Estonian design and craftsmanship is insanely high quality and they have great ideas too.”

After a year of refining their designs, LOVA Sling’s online store was launched last month and orders have already begun arriving from across Europe and around the world, including as far as Canada and Australia.

Chau-Ginguene now encourages other people to launch a business if they have an idea they are passionate about, but to start with the lowest costs possible in order to test the market before taking a bigger risk.

“The actual process of starting a business is now very easy. You just fill out a form online. It’s the fear of failure that is most difficult, but if you start at a low cost then you have a chance to succeed and if it doesn’t work out then you’ve bought yourself a valuable learning experience instead. My advice is to get e-Residency as soon as possible. I know I sound like a commercial, but it’s saved me so much money.”

Location independence

Applying for Estonian e-Residency is a simple online process and available to anyone in the world aged 18 years or older who either has links to Estonia or has an interest in using Estonia’s public e-services, such as entrepreneurs.

Saskia Vola became interested while working in Germany as a freelancer in the field of artificial intelligence, machine learning, natural language processing and text mining. The work is complex, but increasingly sought-after for governmental, academic and business applications.

As a result, Vola has set up TextMining Services as a platform for herself and other freelancers around the world in the same field to find work.

She had previously set up a limited company in Germany, but describes the administrative overheads as a nightmare, so applied for e-Residency and registered the company in Estonia instead.

The ability to establish an Estonian company online and then run it from anywhere in the world is one of the main benefits of Estonian e-Residency as the programme aims to help unleash the world’s entrepreneurial potential.

In addition to low startup and maintenance costs, minimal bureaucracy, and a clear tax framework, Vola likes the fact that an Estonian company can be truly location-independent.

“There are a lot of generic freelancer platforms, but none for this niche so far,” says Vola. “I believe the demand will increase in future due to the rise of AI and the increasing numbers of remote workers and freelancers. I’m a big fan of digital nomadism and the company should promote that lifestyle as well.”

In addition, Estonian companies do not pay corporate income tax until distributions are made, although e-Residency does not automatically determine tax residency so e-residents should always consult a tax professional.

All that e-residents like Vola require to register an Estonian company is a legal address in Estonia, although this is available from a range of service providers, some of which also offer business services like accountancy to e-residents.

Vola chose LeapIN as they specialise in digital nomads and can provide a turnkey solution for setting up and running a microbusiness with one employee. She has since written about her full experience starting an Estonian company from Germany in a blog post for TextMining Services.

Putting Estonia on the map

An Estonian company is also a European Union company, which provides added advantages for entrepreneurs based outside the EU either at present or in future, such as inclusion in the EU’s legal framework and an increased perception of trustworthiness.

A special website www.howtostayin.eu has even been set up to help Brits, although many entrepreneurs in the UK are already using Estonian e-Residency.

Arvind Kumar is based in India, but became an e-resident of Estonia because of the advantages it provides his company to have a low-cost base inside the EU.

Running companies with greater efficiency is a subject that Kumar knows a lot about. He set up Kaytek Solutions to help companies improve their industrial processes through advanced mathematical modelling.

Their new software is called Process Max + and was developed in Estonia, but is now being marketed in India and Kumar envisions it being used around the world in the future.

Kumar says his biggest concern at first was how to operate an office inside the EU while living in India, but then he discovered how service providers in Estonia are able to provide a virtual office at low cost. He chose 1Office who now support the business with everything from accountancy to translations, as well as mail scanning and call forwarding.

“I’m very impressed,” says Kumar. “Companies have to be careful with their finances, especially in the startup phase, yet you need an office setup that fits your operation.”

E-Residents can also set up an Estonian bank account so they can trade in euros and access payment services that may not be available elsewhere. From early 2017, e-residents will be able to set up Estonian bank accounts remotely so that the entire process of establishing and running their Estonian companies can be completed from anywhere in the world.

Kumar is now encouraging more of his friends and business contacts to discover how easy it is to set up and run a company in Estonia from India. Even though they would be no requirement to visit Estonia or work with Estonian staff and suppliers, Kumar says some are now considering a visit because they are excited about potential opportunities in the country’s highly skilled technology sector.

“Credibility is very important for new technology,” says Kumar. “But when I present myself as an e-resident of Estonia, it demonstrates that connection we have to Europe. We are using Estonia as a stepping stone to the rest of Europe and the world.”

How does e-Residency help you lower the cost of business? Let us know in the comments. Not yet an e-resident? Start your application here.