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HomeEstoniaE-residents have established over 30,000 companies in Estonia

E-residents have established over 30,000 companies in Estonia

Estonia’s e-residency program, launched on Dec. 1, 2014 and being unique in the world, has seen 113,341 foreign citizens  become e-residents of Estonia, and 30,813 of them, or 27 percent, have also established a business here, Statistics Estonia said on Friday.

Each of the companies may involve one or more e-residents, and each person can have more than one company. In total, there are now 30,253  companies with an e-resident involved in their establishment. E-residents can use the digital ID card issued by Estonia to digitally sign documents and log in to portals and information systems that recognize the Estonian ID card. This enables an environment for e-residents to do business across borders.

The goal of the e-residency program is to make the economic space of Estonia larger and offer citizens of foreign countries the opportunity to use Estonian e-services. Among other things, they can establish and manage a company in Estonia digitally, regardless of where they are located physically.

Kirsti Vill and Mart Leesment, senior analysts at Statistics Estonia, have delved deeper into the profile of e-residents and the companies associated with them, as well as the benefits these companies bring to Estonia.

After the launch of the innovative program, the number of e-residents began to grow rapidly, with growth peaking in 2018 with 20,520 new e-residents added in one year. Subsequently, the number of new e-residents started to decline, with slightly over 12,000 new e-residents registered in 2020 and 2021, and dropping below 11,000 in 2022 and 2023. The number of companies established by e-residents grew gradually in the early years of the program along with the number of new e-residents until 2019, experienced a slight decrease in 2020, and has been stable in recent years at around 4,500 companies annually.

While in 2020 and 2021, the decline was probably due to the pandemic, which prevented foreign citizens from going to Estonian embassies to obtain a digital ID, in recent years the geopolitical situation has also had an impact. As recently as 2021, the largest numbers of new e-residents came from Russia, and Belarus also featured in the upper part of the list. However, following the outbreak of the war in Ukraine, the government decided to no longer accept first-time applications for e-residency from citizens of these countries. As a result, the number of new e-residents from Russia and Belarus dropped significantly in 2022, and the number of businesses created by citizens of these countries has fallen to near zero.

To date, e-residents have been registered from 185 countries in total. As at the end of March 2024, the largest numbers of e-residents were residents of Ukraine, 7,081 persons, followed by Germany with 6,747 and Finland with 6,229 persons. Over the years, the top countries where e-residents come from have changed. In the early years of the program, the largest numbers of new e-residents were residents of Finland, while Japan and China climbed to the top by 2018. Russia was the number one country in 2020-2021, and since 2022, the largest numbers of e-residents have come from Spain.

Spanish citizens, who are associated with 2,516 companies, have established the largest number of companies here. Ukraine is in second place with 2,410 companies and Germany third with 2,345.

Companies can show activity and benefit the state in several ways, for example, by declaring turnover or paying labor taxes, dividends, board member’s remuneration, salary or other remuneration. As at the end of 2023, 6,407 companies related to e-residents showed such activity.

Year after year, the value created by companies grows with them. In February 2024, the turnover of companies owned by e-residents totaled 182 million euros and the labor taxes paid by them amounted to 4.7 million euros. The total turnover generated over the nine years since the inception of the program amounts to 15 billion euros and labor taxes to 263 million euros.

By country, companies of e-residents from Ukraine topped the list with 462 million euros in turnover in 2023. Next came Finland with 361 million euros, Russia with 201 million euros, Germany with 183 million euros and Spain with 160 million euros in turnover. Businesses established by e-residents from Finland paid the most in labor taxes, 15.8 million euros, followed by Russia with eight million, Sweden with 6.4 million, and Ukraine and Latvia with 6.2 million each.

In February 2024, 5,218 people worked in companies related to e-residents. The number of employees has grown steadily over the years, with the biggest increase occurring in 2021. Persons who have received either board member’s remuneration, salary or sick pay are considered to be employees for the purpose of statistics.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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