Number of UK Estonian e-residents triples following Brexit

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An Estonian e-residency poster at a London Underground station recently.
An Estonian e-residency poster at a London Underground station recently. Source: e-residency

The number of Estonian e-residents from the United Kingdom has tripled since Brexit, according to Baltic News Service.

The current figure of U.K. citizens with e-residence stands at 3,100, BNS reports, three times what it was in March 29, 2017 when the U.K. government officially informed the European Council of its intention to leave the EU.

Those Britons who hold e-residence have between them set up around 500 businesses – one of the key selling points of e-residence.

E-Residency is a status provided by Estonia to people who are neither citizens nor residents, but want to run a company abroad using Estonian e-services and their own Estonian digital ID card.

Enterprise Estonia, a body which promotes Estonian business and tourism, says that Estonia's e-residency program provides one solution for those who wish to continue doing business in the EU without physically leaving the U.K.

Ott Vatter, manager of the e-residency program, said that it appears from a survey the program commissioned that a third of the small enterprises in the U.K. are scared of losing access to the European common market post-Brexit.

"More than a third of the British entrepreneurs surveyed said they were considering leaving the country or relocating their business," Vatter said. "The e-residency program will help British businesses and maintain their access to the European single market without them having to physically leave their home country," he added, according to BNS,

The program team recently launched a two-week ad campaign in the U.K. capital, which saw posters appearing on billboards at London Underground stations, as well as other locations.

The campaign has sparked international interest, Vatter says.

"In addition to raising awareness of the e-residency program, the campaign brings a lot of positive attention to the state of Estonia as a whole," Vatter said, adding there are approximately 40 companies operating in Estonia whose main income is linked to providing services to e-residents.

One instance of international interest came from LBC radio broadcaster James O'Brien, who tweeted about the ads thusly:

The e-residency program was launched at the end of 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 confer on its holder citizenship, tax residency, a residence permit or a permit to enter Estonia or the EU.

Since the program's launch, over 65,000 e-residents have created more than 10,100 companies in Estonia, according to BNS. The program has generated over €35 million of direct revenue to the Estonian economy in five years of operation, it is reported, as well as other indirect economic benefits.

Estonian citizens and those holding current Estonian residents' permits already are not eligible to take e-residency.

E-residency expert's comment

The program has also led to the emergence of dozens of firms, mostly in Tallinn, specializing in providing services aimed at helping e-residents negotiate their way round doing business and using its other facets.

Adam Rang, a U.K. national resident in Estonia, works for one such company, accountancy firm Pallas & Partnerid. Rang previously helped with developing the e-residency program itself.

"The U.K. is such an easy and trusted place to start a company that no one would have believed you five years ago if you had said that there would be a surge in interest from U.K.-based entrepreneurs towards starting Estonian companies," Rang told ERR News on Friday.

"Since the Brexit referendum, new e-residents from the U.K. have been a mixture of people who want to defy Brexit by retaining their European identity and people who want to mitigate it in a much more practical sense by preparing an EU company they can run from the UK. As Brexit becomes reality, we're seeing much more emphasis on the latter."

As to some of the practicalities, Rang said that e-residency facilitates ease of doing business for U.K. companies and individuals, both within and without the EU.

"Using an Estonian digital ID card, UK-based entrepreneurs can administer their business more easily and entirely online, they can pay less for business services like accounting, and they can more easily trade with other companies inside the EU or in countries that the EU has a closer relationship with."

This is not to say e-residency is a panacea for any Brexit headaches U.K. businesses might be suffering from, Rang said.

"E-residency has the potential to benefit a lot of entrepreneurs in the UK, but that doesn't mean it's the best option for everyone. If your business is focused on the UK then a UK company is usually best. If you are moving goods between the U.K. and the EU, then you'll need to deal with the friction of post-Brexit borders regardless of which side of the fence your company is registered on."

"E-residency also can't help you avoid tariffs on moving goods into the EU, for example, so it might instead prompt you to start making your goods inside the EU as a workaround that you can manage through your new EU company."

Nonetheless, e-residency is seeing real day-to-day use for business, and not just in the U.K., Rang continued.

"None of the above is purely hypothetical. E-residency is already popular with entrepreneurs in Ukraine and Turkey precisely because these countries are home to large numbers of entrepreneurs who are physically close to Europe, but politically separate, as the U.K. will be soon."

Safeguards also exist to ensure Estonia's e-residency program does not get misused, Rang added.

"If it's not clear how your business operates and how it would benefit from e-residency, then banks here will be reluctant to serve you. However, that leaves a huge number of entrepreneurs who do benefit from e-residency and make an enormous contribution to the Estonian economy, especially those selling services online."

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Editor: Andrew Whyte

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