Thursday, October 18, 2018

Think Outside the Borders How Estonia is using e-Residency

Think Outside the Borders

How Estonia is using e-Residency to support
location-independent entrepreneurs.

“We are the first digital society in the world that has its own state,” says Estonian president Kersti Kaljulaid. While the story of this heavily forested North European land may date back thousands of years, today Estonians are known for building the world’s most digitally advanced nation as well as producing a staggering number of globally successful companies. These include four “unicorn” digital start-ups valued at over $1 billion: Skype, TransferWise, Taxify and Playtech.
This year, Estonians are celebrating the 100th anniversary of the establishment of their Republic in 1918. But for about half that time, the country was occupied, and it was rebuilt almost from scratch in the 1990s after regaining its freedom from the Soviet Union. Unburdened by legacy technology, Estonians entered the internet age with a unique opportunity to build a new kind of country where almost everything can be done entirely online, cost-effectively and fuss-free — a supportive environment in which entrepreneurs can thrive. President Kaljulaid emphasizes that this shift to a digital nation is based not just on new technology, but also on new ways of thinking: “We have succeeded in going digital because we have put people and businesses, their need for rapid data exchange and identity verification, at the center of change.”

I wish the idea of e-Residency to spread even more and not just on a level of being a digital solution to manage a business, but as a broader concept of borderless digital life.
Kersti Kaljulaid, President of Estonia
AT THE HEART OF ESTONIA’S DIGITAL NATIONis an ID system allowing every citizen and resident to securely identify themselves online and supply legally binding digital signatures. Estonians now use their digital IDs for everything from voting to checking which doctors have reviewed their health records, as well as access to almost every government service and thousands of private services. Among the only things that Estonians still need to do in person are getting married and divorced, and transferring property rights, as it's agreed it’s probably better not to be able to do these things instantly online.
In 2014, Estonians asked: If their country could serve citizens and residents entirely online, why not open up their digital borders to more people? This new population wouldn’t need citizenship or physical residency, but would still be issued an Estonian digital ID card, enabling them to operate within Estonia’s digital business environment without physically being in the country. This would allow more people to establish and manage an E.U. company entirely online, helping democratize entrepreneurship globally.

E-Residency Explained: What,Why and How?

Anyone can apply for e-Residency online, regardless of citizenship or location. Applicants undergo background checks by the Estonian Police and Border Guard Board and, if approved, are invited to pick up an e-Residency starter kit containing a digital ID card and PIN codes used for online authentication and digital signatures.
The benefits? Many expats and digital nomads like e-Residency because they can run their businesses entirely online in English, from anywhere they are. Others appreciate being able to run an E.U. company with lower costs and less hassle. This includes a significant number of entrepreneurs already living in E.U. countries where business costs and barriers can be much higher. Finally, many use e-Residency because it’s trusted and can make doing business globally easier. Thanks to Estonia’s digitized business environment, anyone can look up who owns a company established by an e-resident and how it has paid taxes, a transparency valued by location-independent entrepreneurs. They can access the E.U. market, connect with like-minded entrepreneurs and use e-services unavailable to companies registered locally, such as payment providers.
The success of the e-Residency program rests on its being a national initiative, in which state organizations work closely together to serve e-residents and ensure their compliance with the rules. The private sector, both inside and outside Estonia, adds more value by offering products and services to the growing e-resident market.

I think being an e-Residency company made us more trustworthy internationally.
Dante Isil Ozkan, founder of OktoPeople

e-Residency applications

More than 48,000 people from 157 countries have applied for e-Residency so far.

RECENTLY,there’s been a sharp increase in applications from Asia, particularly India, Japan, South Korea and Turkey. One such entrepreneur is Dante Isil Ozkan, founder of OktoPeople, a user-experience design agency based in Istanbul with an international branch in Tallinn. “The first thing that caught my attention was ‘work from anywhere,’’’ says the 35-year-old, who became an e-resident in 2017. “It’s a location-free business.” As a result, she is now interacting with like-minded entrepreneurs from Estonia, Japan, the U.S. and Turkey, and exchanging ideas regarding future technologies such as AI, blockchain and SAAS business models with a bigger focus on e-commerce. “When I think of a new idea, different perspectives help me think globally,” Isil Ozkan adds.
Convenience and not being tied to a location are benefits that encouraged the Ukrainian Andrii Omelianenko to apply. The CEO of Corporate News Agency — an online database that allows users to quickly review, appraise and assess the risks of any company registered in Ukraine — wanted to expand his business to the E.U. after finding initial success in Ukraine. “I was one of the first Ukrainians who applied for an e-Residency card in Ukraine,” he says. “My expenses were reduced significantly, and I don’t need to fly to Tallinn every time I need to make changes in the register or sign contracts.”

Kaspar Korjus, managing director of e-Residency, agrees: “E-Residency was launched to provide access to our e-services, but it also provides access to a community of empowered global entrepreneurs across 157 countries.” To him, it’s all about inclusivity: “More people globally are gaining access to the internet, but opportunities online are still not equal, because there is still enormous variation in the costs and hassle of being an entrepreneur depending on where you live or if you even want to live in one place. e-Residency is helping solve that by empowering more location-independent entrepreneurs.”
Deepak Solanki, founder of Velmenni, a tech start-up in New Delhi that offers wireless data transmission using light, or Li-Fi, as opposed to Wi-Fi, says: “I’m running an E.U. company from India using my e-Residency card. It’s very convenient and simple. It’s just a smart ID that you can plug into your laptop.”

Our message to entrepreneurs is: focus on your business, your product, your passion — not on paperwork and bureaucracy
Kaspar Korjus, Managing Director of e-Residency

E-Residency and Estonia: The Bigger Picture

Years of using
digital IDs

E-Residency is a new concept, but Estonia’s digital ID system has been used by Estonians since 2002.

With the number of e-residentsincreasing at an ever-faster rate, the initiative is turning into an efficient soft-power tool that raises the country’s profile and attractiveness globally. “Most e-residents didn’t know much about Estonia before discovering the program,” says Korjus. “But when they start using our digital services, they become part of the community of Estonia and more likely to conduct business with Estonians and learn more about who we are.”
Moreover, the program generates revenue and attracts investment. According to a recent report published by Deloitte, in the first three years of operation, the e-Residency program contributed €14.4 million to the Estonian economy; it is expected to add an additional €1.8 billion by 2025.
“E-RESIDENCY HELPS MORE PEOPLEfind us on a map and ultimately makes our country bigger,” says Korjus. “By making more connections around the world, we are building a better and more secure future for the Estonian people, too. Like any start-up, though, Estonia will only benefit from this continued growth if we continue to offer real value and good service to people around the world.” In a world where some countries are increasingly turning inward or isolating themselves to protect national interests, Estonia’s unique program offers new benefits to all and brings people of different backgrounds together. “The world is changing at a rapid pace,” says President Kaljulaid. “But Estonia will always remain committed to the freedom, openness and democracy that has underpinned our rapid development as a digital nation. We invite more people around the world to join us online.”

Illustrations by Michele Marconi

Estonia Welcomes Entrepreneurs


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