E-RESIDENCY IN ESTONIA
E-RESIDENCY IN ESTONIA FOR ENTREPRENEURS AND DIGITAL NOMADS. SOME THINGS YOU SHOULD KNOW
In this particular historical moment characterized by first the health containment measures imposed by some governments and after that all the new regulations regarding the energy crisis imposed by the same governments, the theme of digital nomadism - parallel to that of remote or smart working - is in some cases becoming a necessity for all those who cannot or they do not want to continue to submit to the uncertainty present in the West panorama.
In this article we will talk about Estonian E-residency, we will try to understand together what it is, its advantages and the risks associated with an incorrect or poorly diligent interpretation of the discipline connected to it, which is why in the last period, it has led many criticisms and controversial opinions on the subject.
In fact, some confuse this type of legislation with the legislation on tax residence or on the legislation concerning golden visas (which in the European context would still have relative relevance given the freedom of movement / establishment between Member States) although, instead, it is something completely different.
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What is the Estonian E-residency?
This is a title attributing a special type of virtual and electronic residence in Estonia connected to the holder's digital identity and which provides particular advantages.
The E-residency is part of a Program for non-residents created by Estonian law since 2014 which gives the possibility, regardless of the country of origin, to become e-residents in Estonia and exercise some faculties: opening a business, for example.
Let's clarify immediately, however, that the Estonian electronic residence acquired through this program should not be confused with the Estonian tax residence nor with the Estonian citizenship.
Therefore, if you successfully formalize the E-residency procedure, you will not automatically be a tax resident in Estonia and you will have to continue to pay taxes regularly in your country (except in the hypothesis that your company headquarters is actually in Estonia, as we will see better later).
In summary, the E-residency card has a relative and special scope as it is valid and effective exclusively within the Estonian legal system.
This clarification is not always clearly reported and, since, in this matter, margins of error are not allowed if you do not want to expose yourself to tax checks and assessments with implications also of a criminal nature, before proceeding, we advise you not to improvise.
Doing business in Estonia with E-residency. The specter of the Outer West.
At this point you may be wondering if you can start a business in Estonia with the E-residency. The answer is yes.
You will be able to start your business in Estonia but, unless you also apply for and obtain tax residency in this country, you will continue to be considered resident in your country and have to pay taxes, according to the taxation of your country.
Consider that if you are an entrepreneur and want to apply for the E-residency and start a business in Estonia to take advantage of the lowest tax rate, one day, you may receive a check from the Revenue Agency that verifies that your business is actually being carried out in Estonia.
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Digital Nomads and Remote Workers in Estonia.
The E-residency is a Program considered by several digital nomads who intend to manage their business from Estonia thanks to an internet network.
In any case, start to take into account that you are also a digital nomad and intend to apply for E-residency and do business in Estonia or if you work remotely but do not intend to transfer your tax residence to Estonia as well, you will have to continue to pay taxes in your country.
And here all the notions on the subject of change of tax residence, which we have talked about on previous occasions, are relevant.
We just remind you that to move your tax residence abroad you must comply with both formal and substantial requirements, and it is enough to fail to comply with even just one of these requirements, to allow your country to consider you still fiscally resident (even if transferred to the abroad) and ask you to pay all taxes due also on the earnings generated in the foreign state.
Disclaimer: Always speak directly to an attorney; blog posts are not a sufficient source of information to make decisions, may not be appropriate for your situation, may not be well researched, and may not be current at the time you read them, always speak directly with an attorney.
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