
Estonia, the Digital Republic - jkaljundi
https://www.newyorker.com/magazine/2017/12/18/estonia-the-digital-republic
======
phil248
Just a fun geography tip, you can easily remember the locations of the 3
Baltic states because they go in alphabetical order from North to South.
Estonia, Latvia, Lithuania.

~~~
_acme
Estonia, however, is more Nordic than it is Baltic, other than in geography:
its people and language are Finnic (neither Indo-European nor related to
Latvian/Lithuanian) and it's been part of Denmark or Sweden for most of its
history; there were even Estonian vikings.

~~~
tikums
That's not quite correct. There were also 'Latvian vikings', the Curonians.
Latvia was also ruled by Sweden for centuries. There's not much difference
there, apart from language. They were a mix of Baltic tribes, some combination
of which formed the modern nation states.

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masswerk
I know, this may be unpopular in context, but are there any updates on the
Estonian ID-cards?

News as of November were that they were (temporarily) locked-down [1] and are
to be reissued until next March [2] in reaction to the RSA related security
flaws [3] in the libraries bundled with the Infineon chip. Is this even an
issue, or is everyone using a phone app, instead of the cards, anyway?

[1]
[https://www.theregister.co.uk/2017/11/03/estonian_e_id_lockd...](https://www.theregister.co.uk/2017/11/03/estonian_e_id_lockdown/)

[2]
[http://www.bbc.com/news/technology-41858583](http://www.bbc.com/news/technology-41858583)

[3]
[https://www.schneier.com/blog/archives/2017/09/security_flaw...](https://www.schneier.com/blog/archives/2017/09/security_flaw_i.html)

~~~
sccxy
Most people who use ID card every day have updated certs remotely or went to
police office. I would say government handled it pretty well.

Problematic was communication with card maker Gemalto, who didn't inform
Estonia about security flaws properly. Gemalto was informed by researchers in
March. These researchers informed Estonian government in August. Few days
after that prime minister announced security problems.

Things would have been a lot of easier if Gemalto didn't hide the problem from
the government.

~~~
adrianratnapala
Chances are that the contractual arrangements that routinely exist between
governments and contractors like Gemalto make "blameless post mortems" non-
profitable. It's a tricky thing to do right, because you do want to have
accountability in the contract.

Governments (rightly) want contractors like this as experts-on-tap in the
technology under consideration. But what you really want is not exactly a
provider of the technology, but rather an advisor or partner in the process of
implementing your process. I don't think we know how to structure a non-
nepotistic relationship of that kind.

~~~
r00fus
That's usually why projects of this size have multiple parties involved aside
from directly contracting with the vendor.

As much as it's easy to hate on the Big4 consulting companies, they exist for
this reason among others (some of which have more to do with how to grease the
skids with pork).

------
fijal
Just opened a company in Estonia. The experience so far has been incredible.
It's not quite the future - all the technologies should exist everywhere etc.
It's the present that should have been, but somehow it's not.

~~~
icey
I'm getting ready to do this but haven't figured out a way to open a bank
account there without visiting the country. How did you do that? I saw there's
a service that will do it for you but it seems like an expensive monthly fee.

~~~
logronoide
I opened my company with Leapin. Easy and fast.

If you don’t need a bank account and you can live with PayPal you don’t need
to go there. I needed a bank account and credit card so I traveled to Tallinn
and opened a bank account at LHV. You have to sign the documents at the bank
office.

I think LHV Bank is working on a remote process with an interview using Skype,
but it was not available several months ago.

Still, I have faced several issues setting up my small SaaS service: Stripe is
not available and my Braintree application was rejected because they did not
understand why I wanted to create a company in Estonia! It took me two weeks
to explain that I was a nice guy and then everything went fine. I also had
issues creating a merchant account in Coinbase, so I had to use Bitpay.

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mbrock
[https://president.ee/en/media/interviews/13471-our-
citizens-...](https://president.ee/en/media/interviews/13471-our-citizens-are-
going-digital-and-global-if-the-state-doesnt-keep-up-it-will-become-obsolete-
the-telegraph/index.html)

Article by Estonia's current president, Kersti Kaljulaid.

"As the President of Estonia, I represent the only truly digital society which
actually has a state. And this position has made me question whether the state
as we know it today is fit for the 21st century."

------
unitboolean
Meanwhile in Germany:

\- you can't even send an email to tax authorities and have to print/send
paper letters

\- mobile internet is very slow and super expensive.

\- until recently it was not even possible to share your wlan

~~~
expertentipp
I don't think something working for 2 mln nation scales up for 80 mln nation.
Anyways the German paper and post fetish, and active fight against any
internet in wireless form is obnoxious.

~~~
icebraining
_I don 't think something working for 2 mln nation scales up for 80 mln
nation_

Why? There's proportionally more manpower, and even more than money than that.

~~~
karussell
Try to drive a small car. Then try the same with a big truck and you know
there _can be_ scalability issues ;)

In case of Germany the problem might be that they do not need to change much
as everything is okayish. In Estonia they knew they had kind of nothing after
the 90's and there was a real need to reinvent themselves.

------
joelrunyon
I got estonian e-residence and wrote about it here (for those interested).

[https://impossiblehq.com/estonian-
eresidency/](https://impossiblehq.com/estonian-eresidency/)

~~~
itake
> unless you count the Consulate, which technically is sovereign ground

Actually, consulates are not considered sovereign ground [0]

[0] - [https://www.quora.com/Is-an-embassy-sovereign-
territory](https://www.quora.com/Is-an-embassy-sovereign-territory)

------
puranjay
I keep seeing a ton of ads for starting a company in Estonia.

To those who've done it, what are the pros/cons?

For the record, I'm based out of India and have been advised to setup in
Singapore

~~~
logronoide
For me, it’s cheaper to run a company in Estonia than my country (an EU
country). You don’t pay taxes if you company has benefits. You pay taxes for
the dividends only, which makes the company perfect for very early stages.

Also, for an international business a company based in Estonia looks more
reliable and “techie” than other countries. And this is important if You sell
digital goods or services.

I think Singapore can be a good place too, but it’s much more complicated for
me.

~~~
kabes
I guess you can only do this for some kind of companies? I've got a Belgian
company and it's mostly just me doing consulting work. I live in Belgium and
most of my clients are other Belgian companies. So I guess Belgian taxes
wouldn't allow me to invoice from my Estonian company?

~~~
germanier
I don't know anything about Belgium but it's probably similar: If you have a
branch located in Germany (which is definitely the case if you are the sole
employee permanently living there) you need the pay the same taxes as an
equivalent German company for all income derived from there.

The Belgian tax authorities must allow you to invoice from the Estonian
company (that's part of EU freedoms) but it probably won't save you much
taxes.

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freedomben
I think it's time we expected more from our government.

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markvdb
E-government in Estonia, all fine and dandy[0]. But there is so incredibly
much low hanging fruit to fix on an administrative level, all over the EU...

I recently completed an advanced level of "Kafka quest": a 40-day fight with
the city administration of Leuven, Belgium. The goal? Change the marital
status of my Latvian(EU!) girlfriend in the Belgian(EU!) civil registry. From
"undetermined" to "single".

-"No, we can't accept printouts from an electronic service. It doesn't look like our examples, nothing at all like what we have."

-"But it's the only marital status the Latvian civil registry gives out since a few years. Have a look at this explanation on the relevant Latvian government website. In English. With a Dutch translation I made to help you."

-"I'll have to ask my boss."

-(two weeks, several emails and phone calls later) "OK, we can accept this document. You don't even have to get a court stamp to legalise it. But it needs to be translated. To Dutch. All eleven pages, even if we need only that single word "single". No, google translate for the relevant bits won't do. No, you can't translate it yourself. It has to be done by a certified translator. Here's a list."

\- Leuven official sends me a list of certified translators. No certified
translator for Latvian on it. I find one online, in a city 100km away.

\- Certified translator translates the 11 page document for us. Gives us a
discount because it doesn't need a certified translation.

\- Make an appointment a week in advance (the fastest possible) with the city
government, then back to the Leuven city hall.

-"Ah, when we said it the civil registry excerpt was free of legalisation, we meant the original only. The certified translated copy needs to legalised. By the court of the city the translator is attached to."

\- Back to the translator in the city 100km away, to request legalisation by
the local court of her translation of a source document that is free of
legalisation.

\- Wait another two weeks for the stamped document to arrive by snail mail.

\- Make another appointment with the city services.

But fear not, for there is hope! In a few years, so I learned, standardised
paper forms will be developed to exchange this kind of information within the
EU, hopefully eliminating the need for certified, legalised translations.[1]

[0] ...except for the fundamental conceptual insecurity of voting from home of
course.

[1] [http://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/?uri=CELE...](http://eur-lex.europa.eu/legal-
content/EN/TXT/HTML/?uri=CELEX:32016R1191) for a bit more context.

~~~
zaarn
In germany I'd call this tuesday and everyday that isn't tuesday. The amount
of paperwar that I had to deal with at times was insane.

------
jpelecanos
How closely does the KAPO (Estonian Internal Security Service) monitor
e-Estonia?

~~~
boomboomsubban
Unauthorized collection of data is a crime, and there hasn't been much
scandal. Fairly impossible to be certain, but there's no reason to suspect it
is occurring.

------
patkai
I'm a big fan of Estonia, Estonians and during my many visits I admired how
quickly they transformed their small but not insignificant country to an
innovative model nation. I hope they can stop brain drain and our Estonian
colleagues realise that they have a 10 times bigger impact on the world if
they stay there than if they move to Silicon Valley or other bigger hubs.

------
amai
Estonia also has a very interesting and unique scheme for taxation of
corporations:
[https://en.wikipedia.org/wiki/Taxation_in_Estonia#Corporatio...](https://en.wikipedia.org/wiki/Taxation_in_Estonia#Corporations/legal_persons_income_tax)

~~~
lucaspiller
How do things like director expenses work? If I setup a company that rents me
a house, a company car, and caters all my meals, I don’t need to pay any
taxes?

~~~
Strom
There's a principle concept that every expense has to be for the purpose of
doing business. If it's not, then it will get hit with income tax, and
sometimes even payroll taxes.

In practice nobody really monitors these things and many do abuse the system
to cater for themselves etc. However if you find yourself an enemy who will
report you (even just on suspicion), then you better have a convincing case
for the tax authority and/or judge as your accounting gets audited.

There are a bunch of special benefit rules that can be used for lawful cost
savings though. There are lawful ways to split car costs with company money,
there are lawful ways to get a tax-free daily allowance if you're traveling
for business, limited to some X days per month.

In general I think the company tax rates are low enough to do everything
lawfully. Taking out profits as an owner incurs a 20% income tax to the
company and zero taxes to the individual. In addition, if you've taken out
profits before, then the company income tax is 14%, up to the amount that
equals the average of the last 3 years. So if you take out similar profits on
a regular basis, the tax rate is only 14% on everything.

~~~
davidverhasselt
> In addition, if you've taken out profits before, then the company income tax
> is 14%, up to the amount that equals the average of the last 3 years. So if
> you take out similar profits on a regular basis, the tax rate is only 14% on
> everything.

As I understood it, this is only so for distributing profits to legal
entities. If you're distributing to a private person, the private person will
have to pay a new 7% income tax which sums up to a total of about 20%. This of
course only matters if the private person is tax resident in Estonia.

I find the PwC tax alerts very informative to be kept up to date on the tax
laws in Estonia: [https://www.pwc.com/ee/en/press-room/tax-alerts/estonian-
tax...](https://www.pwc.com/ee/en/press-room/tax-alerts/estonian-tax-
alerts.html)

~~~
Strom
You're very much correct, thanks for pointing that out!

I hadn't seen any mention of the new 7% individual rate in any newspaper
articles or even accounting firm articles. I now inspected the actual income
tax law [1], and sure enough the 7% clause is there.

One one hand this means a slight net tax increase to 20.02% [2], on the other
hand if the total individual income is less than 25200€/year then a part of
that 7% will be returned.

\--

[1] Unfortunately not yet translated to English
[https://www.riigiteataja.ee/akt/107072017022](https://www.riigiteataja.ee/akt/107072017022)

[2] 100 * 0.86 * 0.93 = 79.98

~~~
davidverhasselt
Indeed, I too had difficulty finding exact information on this new change. I
then stumbled upon the PwC tax alerts where it was very transparently
explained. Personally I wouldn't mind if they would take a bit longer to
implement changes like this, so everyone can be accurately informed and
optimise in time.

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blahedo
The most interesting part of an interesting article was the bit near the
bottom about "kratt law"—conceptualising the idea of wanting to "make it
possible to hold accountable whoever gave a drop of blood." It's a beautiful
and highly comprehensible metaphor.

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zerowellies
[https://en.wikipedia.org/wiki/2007_cyberattacks_on_Estonia](https://en.wikipedia.org/wiki/2007_cyberattacks_on_Estonia)

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sexydefinesher
Imagine if they one day actually got invaded and we would see the start of the
distributed republics of Neal Stephenson.

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superdug
I might actually have an idea of what the article was talking about, but after
reading 5 paragraphs about the road and lawn I just kind of gave up.

~~~
twelvechairs
I agree - I prefer dry facts and really dislike the trend of news written like
narrative. I usually turn off after the first sentence (invariably an attempt
to write like a 19th century novelist) because I know its going to be 10
minutes before i figure out if there's anything of value to me in its content
(I acknowledge that sometimes there is and I'll miss out).

~~~
jfoutz
It is disconcerting for an upstart like the New Yorker of co opt a dickens
style. You’d think after 90 years they would realize it is just a fad.

------
shortnamed
jou jüri

