Taxes from e-residents exceed €10 million for first time
E-residents paid €10.8 million euros in taxes in Estonia from January to October this year, and for the first time ever the amount of taxes paid by e-residents during a year has crossed the €10 million mark, Ott Vatter, manager of the Estonian e-residency program, said on Monday.
"In December last year we set out, with experts from various fields, the new strategic direction of e-residency 2.0, which is to support an increase in the value of the businesses of e-residents. The implementation of that goal already shows the first results," Vatter said.
Compared with 2018, the average tax income created by businesses of e-residents has increased 30 percent this year.
"The e-residency program contributes to ambitious entrepreneurs who value transparency, a simple tax system and innovative solutions registering their business in Estonia. Through creating, developing and offering to them services important for engaging in business, we will be definitely able to rapidly raise Estonia's tax income also in the future," Vatter said.
The biggest tax inputs this year have originated from the information and communications sector and professional, scientific and technical activity, which accounted for €3.8 million or 35 percent of all e-resident taxes. The number of companies of e-residents in Estonia meanwhile has grown by a third in 2019.
Companies providing programming services accounted for 81 percent of the e-resident tax revenue originating from the information and communications sector.
In addition to the direct economic effect consisting of taxes and state fees, the indirect effect of the e-residency program is important. The latter is formed of the growth of Estonian businesses serving e-residents, investments by e-residents in Estonian businesses and income of the tourism sector earned through serving e-residents. The e-residency program brings a positive image for the state in international media, which contributes to growth in the exports of Estonian businesses.
"E-residency must bring benefits for as big a number of Estonian people as possible. Taxes paid by Estonian companies established by e-residents make an additional contribution to the budget, finding use in education, culture and social services," Vatter said.
The e-residency program was launched in 2014 with the aim of offering foreign nationals secure access to the e-services of the Estonian state. Holders of the e-resident's digital ID-card can digitally sign documents and log onto portals and information systems which recognize the Estonian ID-card. E-residency does not give its holder citizenship, tax residency, a residence permit or a permit to enter Estonia or the EU.
Since the inception of the program, the number of e-residents has surpassed 61,000 and e-residents have established approximately 7,500 companies in Estonia which employ over 1,300 people in total. Direct income from the program is estimated to have reached 25 million euros during the almost five years that the program has been in effect.
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Editor: Helen Wright