
One of Estonia's first "e-residents" explains what it means - lukebennett
https://work.qz.com/1241833/one-of-estonias-first-e-residents-explains-what-it-means-to-have-digital-citizenship/
======
edwin01
I incorporated in Estonia few years ago because of what their promo materials
say. It’s a total shitshow unfortunately and while it’s true that you can do
everything online, it’s not what you think. All user interfaces are straight
from the 90s, only the most basic forms are in english and they want to know
everything about your business while setting ridiculous limits. For example,
you need to have half of your capital available always. If you end the year
even with 49% of your capital, you have to submit a report how you are
planning to fix the situation. This is highly limiting requirement for any
startup. When you need to do anything else than submit the most basic forms,
you have to fill in forms that are available only in estonian. If you need
help, good luck finding a person who can serve you in english. Don’t get me
wrong, estonian people are very nice and will try to help you but the language
barrier is very awkward to deal with.

If you plan to incorporate in Estonia, make sure you hire a local accountant
because you really can’t decipher their accounting requirements yourself, put
the lowest amount of capital required in (2500€) and mentally prepare for
overall frustrating experience.

I applaud Estonia for all the efforts they have put into rising from the ashes
of russian control but if I knew back then what I know now and had to make a
choice now where to incorporate, I would skip Estonia.

~~~
juskrey
Just having a legal address for your legal entity now costs EUR 300-500 a year
for e-Resident, depending on whom you ask. They have added ridiculous
"official local contact person" requirement this year, and consulting firms
have immediately jumped on the bandwagon with additional 100-300 EUR row in
the price list.

My bank account I have opened by traveling to Estonia, in Swedbank, was closed
"due to inactivity" after two years, despite I was paying 5 or 10 EUR a month
for the account. Yes, my account was inactive, waiting for a chance to receive
money when suitable, so what???

~~~
0xcde4c3db
> They have added ridiculous "official local contact person" requirement

Is this similar to US "registered agent" requirements [1], or is it somehow
more involved/restricted?

[1]
[https://en.wikipedia.org/wiki/Registered_agent](https://en.wikipedia.org/wiki/Registered_agent)

~~~
juskrey
No, it's not even an agent. It's simply a contact god knows what for (for
receiving documents they claim), like it can help in the case first person in
question doesn't want to be contacted. Basically it duplicates legal address
functionality, and even given that I was successfully contacted by email when
Estonian tax or statistics board wanted me to correct reporting mistakes.

------
wiradikusuma
I'm still unclear of the benefits.

Could anyone shed some light: What can we do with it that we can't do now?
Let's say that I'm a solo entrepreneur or small SaaS owner from a developing
country (e.g from Asia, Africa or LatAm) -- basically, typical HNer who's
_not_ from Europe/US.

~~~
gwbas1c
From the article, the author is able to be on the board for an Estonian
company and take payment in Euro as a consultant. He can also e-sign
documents.

~~~
thinkloop
> take payment in Euro as a consultant

Isn't it relatively easy to open a Euro denominated account in most countries?

~~~
rihegher
For an individual it is, not so much for a company

~~~
cmadan
I don't know about other countries but in India it is fairly simple to open
one for a company (they are called FCNR accounts). I don't see any government
having issues with foreign income making its way to local businesses.

------
fcolas
I'm within the 1st year of e-residency + incorporation.

Here're a few of my experiences.

1\. Setup is not as straightforward as they claim, but it's still quite easy.
It compares well to what I've seen in France (LegalStart, CCIs, etc.) and the
USA (Clerky/C-corp, Delaware, etc.). Actually there's no (printed) paper work
because all is digitally signed with your e-residency card—only that is a big
plus.

2\. Running the company is similar to a C-corp but it's 10x easier than an SAS
in France—where you've to register for, know about, and manage nearly 10
different tax agenda. It's also 2x to 5x cheaper to run than in USA and
France.

3\. However, it's true that banks are lagging a little behind but to their
defence they face AML/KYC requirements, and e-residency is a lot of randomness
for them—needless to say (?) that banks are risk averse.

For comparison, note that Clerky was launched in 2013 to streamline the legal
paperwork for C-corps when e-residency started in 2014. And see how long it
took before Stripe partners with Silicon Valley Bank (SVB) for its Alpha
program.

\- So I feel like banks do a good job although there's room for improvement.

4\. Internationalisation of some institution's websites has bugs—basically
your preference for english is reset to Estonian once in a while, but most of
it is translated in English (and Russian and Finish?).

5\. Some institution's websites are old looking but it's not worst than in
Delaware or in France. So far, institution's websites are quite clear. For
comparison: when paperwork in e-Estonia is done with digital signing, in 2017
I still had to (surface) mail or fax documents to France's and Delaware's
institutions, sometimes with credit card number written in clear, or with a
check enclosed—this is prehistory.

6\. For the legal setup and accounting, I use LeapIN. So far they're very
professional, their website has an extensive Q&A and knowledge-based
section—that I read. Their pricing segments are clear. And they seem to have a
growth mindset—reach out for more advice on how to onboard and their price.

7\. Money-wise I was unaware of the 50% social capital requirement left on
your account at the end of the fiscal year (note that it also exists in France
and, by inference, probably in some other European countries)—maybe they could
communicate more on that, it's not nice to figure that out later.

\- Still, so far I feel I've got value for my money and I can pull out if
needed—no commitment which isn't the case of many B2B SaaS solutions with long
term contracts (if we compare).

~~~
edwin01
> I can pull out if needed

According eesti.ee, it will take around six months to close limited liability
company in Estonia. So yes, technically you can pull out but if it's anything
like other more obscure legal procedures in Estonia, good luck. Conveniently
this is not mentioned anywhere in the nice looking promo sites either ;)

~~~
fcolas
Yes, I read something like that too :-) It's definitively not clearly
mentioned and we could (still) qualify the procedure as 'obscur'. Though the
same would hold for France- or Delaware-based comps.

Generally:

\- on boarding is easy and relatively cheap,

\- off boarding is more difficult.

And if you want to close then:

1) you better do it right—it's a process with rules that can take weeks if not
months;

2) you gotta pay unless you declare the business bankrupt;

3) it takes a lot of off-the-path back-and-forth exchanges with people that
have limited incentive to help you.

------
peatmoss
Musing here, but would E-stonian residents have any protection / recourse
under GDPR?

~~~
chrismeller
GDPR applies to "EU residents". Unless you also had a residency permit and
were residing in Estonia, it wouldn't help.

------
smcl
I signed up and got my ID delivered to my local embassy ... but they never
replied when I tried arrange the appointment to pick it up (I got heaps of
"your ID is in the embassy!" reminders via email however). Oh well, I'm sure
it's useful if you manage to get it.

Anyone picking their ID up in Vienna have a different experience?

~~~
AYBABTME
Just show up.

------
nstj
The article claims that Japanese PM Shinzo Abe and French PM Emmanuel Macron
are Estonian “e-residents”. Has anyone seen any non-Estonian reports which
support this claim?

~~~
SyneRyder
I did find a German news article from 2016 saying that Angela Merkel is an
Estonian e-resident - presented to her by the Prime Minister of Estonia. So it
seems plausible, but that it's something presented to them as a symbolic PR
stunt.

 _" On Thursday, Prime Minister Roivas will present Merkel with an e-residency
card - allowing the chancellor to become a digital resident and try out
Estonia's digital solutions firsthand."_

[http://www.dw.com/en/in-estonia-merkel-and-roivas-talk-
russi...](http://www.dw.com/en/in-estonia-merkel-and-roivas-talk-russia-and-
internet/a-19499732)

There's an Estonian story with photos about that here:

[http://estonianworld.com/technology/angela-merkel-becomes-
es...](http://estonianworld.com/technology/angela-merkel-becomes-estonian-e-
resident/)

~~~
nstj
But she didn’t “sign up” for residency, they “presented” it to her which is a
whole different scenario.

~~~
SyneRyder
I don't think it's a different scenario. Even the Estonian press says Shinzo
Abe was presented with his e-residency, rather than him applying:

[https://news.err.ee/115597/japanese-prime-minister-
becomes-e...](https://news.err.ee/115597/japanese-prime-minister-becomes-
estonian-e-resident)

 _" Abe's e-residency card was presented to him by Taavi Kotka, the Deputy
Secretary General at Estonia's Ministry of Economic Affairs, currently on a
visit to Japan._

 _Kotka told ERR that e-residency was Estonia 's gift to Abe, which he
accepted."_

------
inertial
\- Are there any good (easy to use) payment processors available in Estonia
(like Stripe) ?

\- Is your startup governed by specific laws for data privacy etc.

\- What about legal disputes, arbitration. How does that work for startups
based out of Estonia ?

~~~
martkaru
1\. There is EveryPay [https://every-pay.com/](https://every-pay.com/) . You
need to open an account in the LHV bank first before receiving payments.
(disclaimer: me and our dev team built their tech platform)

2\. All the EU data laws apply.

3\. I guess it depends on how you specify it in your contracts, you could do
the disputes/arbitration wherever you want. There is an overview of dispute
options here: [https://www.eesti.ee/en/entrepreneur/legal-aid/resolution-
of...](https://www.eesti.ee/en/entrepreneur/legal-aid/resolution-of-legal-
disputes/) . For example, if you have a customer not paying their invoices
that are below 6400 euro you could file an a request in E-toimik/E-file (a
paperless court system) and the collection is automatic. You could also sue
people "online" there. (disclaimer again, I lead the software
architecture/development work on the E-file project.)

~~~
fcolas
LHV is for the merchant account, it's needed for EveryPay.

Their price structure is not fully pay as you go:

\- there're no setup fees; but

\- there's a fixed monthly fee—a so called terminal fee of 20EUR; and

\- then there're the transaction fees—about 2.2% which is much less (!)
competitive than Stripe's fees in the EU—1.4%.

Although I like what I've seen so far, as an app-developer, the fixed monthly
fee wasn't acceptable. Plus, interaction with LHV was kind of painful (in this
particular case, english was an issue).

~~~
martkaru
True, but EveryPay has 1 day settlement, instead of Stripe's 7 day settlement
in the EU area, if that matters.

~~~
fcolas
Ok

And back to LHV, I've seen the PayPal account verification deposit (two
payments of a few cents made to one's account) appear extremely fast on the
account—I think it was less than one hour.

------
ex3ndr
I have several friends from russia that wanted to build their startups in a
global way, at least not in russia (receive and send money across borders is a
nightmare - basically everyone in the country doing it illegally). And they
decided to became e-residents. What's now? All their funds are blocked and
accounts are closed in one day without notice.

------
njarboe
"Estonia wants to be a role model and leader for a different way of seeing the
world: a world that is more open, meritocratic and reflective of the
demands—and opportunities—of the 21st century."

Meritocratic seems highly promoted in many circles (seems like on first glace
a good idea as opposed to say, despotic), but in a meritocratic world, what
happens to the dumb and/or lazy (unmeritable?) people.

~~~
lwhalen
Is it bad if they just fall by the wayside? If one puts forth zero effort,
they should get zero reward.

~~~
njarboe
"fall by the wayside" is a bit hand wavy. Do you mean they become poor, broke,
with nothing to loose, ripe for a revolution? Or that they are killed by
automated drones when they come over the fence of your/my/our/their gated
community?

~~~
lwhalen
if they were prone to revolution, you'd think "get a danged job" would be the
path of least resistance (pun fully intended).

~~~
mathgladiator
I've been thinking about this with respect to America's future. Basically,
suppose people want a revolution. Well, that would require a competent leader
to make the mob effective. This is the rub, if you have leadership skills then
you make bank and would be in 'the system'.

~~~
ACow_Adonis
The implicit assumption here is that American firms actually higher leaders
based on some kind of objective leadership skills (and that the market will
suck them all up).

I'm guessing whoever wrote this hasn't grown up poor/discriminated against,
didn't beat their peers and find themselves never-the-less judged/ousted
because they "weren't of the right background/proper means/cultural fit".

And remember, all it takes is a few key leaders. And that includes those who
may have been part of the system but were unjustly ousted...(or those who just
think they are getting a wiff of the winds of change and want to be on the
right side)

/I'm not making any actual prediction of revolution the US incidentally. I'd
be inclined against any theories of imminent revolution. Just pointing out
that simple theories of "it wouldn't happen here because of our fake-
meritocracy" are pretty off the mark.

~~~
TangoTrotFox
The problem with your statement is that many people did and continue to do
exactly what was stated going from rags to riches. Elon Musk is probably the
most well known example. Now one of the most influential business and
technological leaders in this nation, he immigrated from South Africa with
little more than to rely on than his ability, motivation, and work ethic. A
soft spoken immigrant with a slight speech impediment and South African accent
is not exactly what you'd call 'the right background/means/cultural fit', yet
it posed little issue.

More fundamentally the problem is that in America there is a very distorted
sense of self. A total of 4% of Americans think they are less intelligent than
the average American. [1] And so the vast majority of people in this nation
who are not particularly meritorious think they absolutely are, or at the
worst no less meritorious than average. Yet that, no matter how you measure
it, is simply not the case.

[1] -
[https://today.yougov.com/news/2014/05/11/intelligence/](https://today.yougov.com/news/2014/05/11/intelligence/)

~~~
gonvaled
Elon Musk is the exception used to sell you the american dream.

~~~
TangoTrotFox
The reason I chose Elon Musk is because he's a household name and most people
are familiar with his story. However, 67% of all "high-net-worth" Americans
are self made, with only 8% directly inheriting their wealth. [1] If you
consider only men (as women have an easier time marrying into wealth) it's
76%.

I used to be more aligned with what you're saying. An eye opening paper for me
was this [2]. I ran into that when actually searching information on the
chiseling out of the middle class. And that paper does describe that. In 1979
the middle class controlled 46% of all income, and the upper/rich classes
controlled 30%. Today (well at least today as of 2014) the rich and upper
class control 63% with the middle class left with 26%. There's even been a
chiseling out of the middle class as a whole declining from 38.8% of society
to 32% of society.

But the eye opener is this. This is the change in the size of each economic
group between 1979 and 2014:

\- Rich: 0.1% -> 1.8%

\- Upper Middle Class: 12.9% -> 29.4%

\- Middle Class: 38.8% -> 32%

\- Lower Middle Class: 23.9% -> 17.1%

\- Poor or Near-Poor: 24.3% -> 19.8%

If you're concerned that partisan bias may be tilting those numbers (as such
figures are certainly subject to a variety of different interpretations), wiki
has a section on the political stance of the Urban Institute [3]. Beyond that,
that paper is quite readable and their methodology very transparent. It's
extremely eye opening.

[1] - [https://www.fa-mag.com/news/most-millionaires-self-made--
stu...](https://www.fa-mag.com/news/most-millionaires-self-made--study-
says-14565.html)

[2] - [https://www.urban.org/research/publication/growing-size-
and-...](https://www.urban.org/research/publication/growing-size-and-incomes-
upper-middle-class)

[3] -
[https://en.wikipedia.org/wiki/Urban_Institute#Political_stan...](https://en.wikipedia.org/wiki/Urban_Institute#Political_stance)

~~~
gonvaled
Is the "size" of the economic groups given in population or income/wealth?

~~~
TangoTrotFox
Population.

------
wemdyjreichert
Correction: Japan PMs name is Shinzo Abe (not Shinto)

------
ohazi
> can open Estonian bank and securities accounts

Does anyone know how well this works in practice for US citizens?

I've been led to believe that FBAR requirements are so onerous that most non-
US banks would rather turn away US citizens than take their business.

~~~
carlmr
I'm not an accountant, but wouldn't a foreign business with an associated bank
account count as a foreign person?

I mean I'd assume that incorporated businesses in Germany (e.g. GmbH which
roughly translates to LLC) would count as a German person and the same for
Estonia. You as the owner would still have to do your taxes and FBARs on the
income you receive and what you have in your accounts. But I wouldn't expect
to file FBARs for the business.

~~~
ohazi
There might be some questions about beneficial ownership of the company, but
maybe?

My original question was more along the lines of the individual with
e-residency opening a personal bank account.

------
MPSimmons
Anyone remeber Cyber-Yugoslavia?

[http://www.juga.com/](http://www.juga.com/)

~~~
the-dude
Yeah, it bitrotted :
[http://www.juga.com/list.php](http://www.juga.com/list.php)

~~~
hippich
and most likely broken in already -
[http://www.juga.com/idpage.php?id=23%27%22](http://www.juga.com/idpage.php?id=23%27%22)

------
awalton
Does being an "e-resident" make you subject to the GDPR? So you can tell e.g.
Facebook and not have to lie about your country of residence?

If so, I could see this becoming _very_ popular over the next few years...

------
dwighttk
>Japanese prime minister Shinto Abe was the first

err...

>My e-Residency is not a passport. It’s more than a tourist visa, and far less
than citizenship.

what? Slip that into the last paragraph? What is it exactly?

~~~
zhengyi13
I saw that too, and personally thought it was probably not deliberate, but it
could be a poke at his uyoku leanings.

------
hetfeld
What Estonia's e-residency actually means.

Let's assume you have a startup and you want it to be registered in Estonia,
paying taxes and using the Estonian banks for financial purposes.

1\. With e-Residency you can't enter Estonia, you need a separate business or
travel visa [1]

2\. At present, it’s still necessary to travel to Estonia in order to apply in
person for an Estonian business bank account. [2]

3\. Good, fancy and catchy name "e-Residency" is actually an infinite loop of
bureaucracy. You can't remotely open a bank account, you need to travel
personally to Estonia, and you have a chance that banks will approve your
application. But you can't enter Estonia with this "e-Residency" for this to
happen.

[1] [https://e-resident.gov.ee/faqs/about-e-residency/#coming-
to-...](https://e-resident.gov.ee/faqs/about-e-residency/#coming-to-estonia)

[2] [https://medium.com/e-residency-blog/banking-for-e-
residents-...](https://medium.com/e-residency-blog/banking-for-e-residents-
your-key-questions-answered-99519bb28d85)

And this is just a little tip of the iceberg, there are a lot of articles
about real experience of e-residents of how unfriendly for "e-residents" the
banks in Estonia are. And without a bank you can't make your startup work.

Today it's just better with the same level of bureaucracy to open a company in
other, more startup-friendly countries that grant a residency and have decent,
more digital-friendly banks.

I hope something will change in near future, the main idea of e-residency is
actually really amazing.

~~~
shishko
> You can't remotely open a bank account, you need to travel personally to
> Estonia

Unless you're from US, you can open bank account remotely

[http://www.zdnet.com/article/borderless-banking-estonias-
e-r...](http://www.zdnet.com/article/borderless-banking-estonias-e-residents-
can-now-open-accounts-without-going-there/)

~~~
kabu
[https://about.holvi.com/e-residents/](https://about.holvi.com/e-residents/)
\- try here o)

------
kelvin0
Maybe I'm too cynical, but also looks like a nice way to e-vade taxes?

~~~
craftyguy
How so? It explicitly says[0] that is not possible..

0\. [https://apply.gov.ee/](https://apply.gov.ee/)

~~~
flipp3r
e-Residency doesn't but you could set up a company in Estonia and I've read
that basically all b2b transactions would be untaxed, and simply holding money
inside the business would be untaxed (from my interpretation of their website)
which would allow you to have a basically tax-free business in the EU which
could then forward the cash to some offshore entity in any way you'd like.

~~~
Strom
Sure, that's possible. A pretty similar scheme is possible in pretty much
every other EU country as well. In Estonia you can take your sweet time with
transferring the money offshore, in other EU countries you have to do it
yearly so it looks like you have no profits on the yearly report.

------
polm23
Given the date I thought this might be fake, but it seems the program is real:

[https://en.wikipedia.org/wiki/E-Residency_of_Estonia](https://en.wikipedia.org/wiki/E-Residency_of_Estonia)

That said, the article also claims "Shinto" Abe was the first person to enter
the program, but besides mispelling his name I can't find any other reference
to him being involved with it at all.

~~~
pwinnski
Technically, it only claimed he was the first prime minister to do so, but the
sentence was ambiguous.

~~~
polm23
Ah, you're right - my mistake.

