Estonia, Financial Services, Good for Business, Legislation, Technology

According to a recent study by pollster Norstat, 63% of Estonia's residents deem tax payments by e-residents' businesses an important additional contribution to the state budget. The role of the e-residency program is also considered important in terms of job creation and development of Estonia's e-state.

Ott Vatter, director of the e-residency program, said that the growth in tax revenue collected from e-residents' businesses is the most prominent example of the program's positive effect on the Estonian economy. "Compared with the first quarter of last year, tax payments by e-residents businesses to the state budget grew 51% during the same period this year, and now total over 1.3 million euros each month," Vatter said.

The focus of the program has shifted from rapid growth in the number of e-residents to encouraging them to establish strong businesses in various economic sectors to foster their growing tax payment in Estonia. Businesses founded by Estonia's e-residents have earned the state close to 31 million euros in tax revenue since the program's launch.

Norstat's recent poll shows that the program's beneficial effects on Estonia's economy are also appreciated by local residents. 63% said they deem e-residents tax payments to the state budget important. People of Estonia also hold in high regard the indirect economic effects of the program, such as Estonia's expanding reputation as a unique digital state, the increasing revenue of and employment provided by businesses servicing e-residents, foreign investors' increasing interest in Estonia, direct benefits to the tourism and cultural sector and focus on the development of Estonia's e-services.

"The survey showed that over half of Estonia's residents are aware that the IT updates and e-services developed by public authorities as part of the e-residency program will also be made available to the Estonian people. For example, the opportunity to have transactions certified by a notary public via a video link, which was made possible in February, will be of help in business processes both to Estonians working remotely from the forests of southern Estonia and abroad as well as German, British and other nationals who are e-residents of Estonia," Vatter said.

The contribution of the program is also regarded as important in terms of job creation by 62% of the Estonian population.  "E-residents have created over 13,000 businesses in Estonia. They are predominantly individual entrepreneurs and creators of small businesses in development stage. Nonetheless, the companies started by e-residents already employ over 1,800 people," Vatter noted. 

The program cooperates with over 40 Estonian businesses whose core revenue is linked to service provision to e-residents. The growing e-resident community entails potential for the sale of services and employee recruitment for local entrepreneurs. Its positive impact on the development of services is also important. A growing need for solutions supporting various types of business also increases local enterprises' motivation to acquaint themselves with international taxation, for example.

"People are increasingly applying for e-residency for the purpose of starting a business here, therefore, e-resident entrepreneurs' demand for services, from accounting to legal advice, also grows. The growth and development of Estonian businesses servicing e-residents is a good example of the program's indirect impact on the Estonian economy. We were also pleased to learn that the awareness of Estonian people of the indirect effects of the program is on the rise," Vatter said.