The Weekly (4/28)

Friday, Apr 28th 2023


When you think of Estonia, a tiny Baltic country, you might imagine a picturesque medieval scene, but there's something happening beneath the surface:

Estonia offers virtual residency to entrepreneurs across the globe, allowing them to set up and manage an EU-based company without ever setting foot in the country. As of 2021, over 78,000 e-residents from 170 countries have joined the program, adding more than €55 million to the country's bottom line.

At first glance, this might sound like an elaborate marketing scheme for a small nation seeking to punch above its weight. But the implications of e-residency are far-reaching, touching on everything from global business to the very idea of citizenship.

So how does e-residency work? For a fee of €100, you can apply online and receive an Estonian digital ID card. This card gives you the ability to open a bank account, file taxes, and legally operate a business in Estonia–even if you’re in South Beach, Miami. 

As you may have guessed, one significant benefit of Estonia's e-residency program is its favorable tax environment. Estonia has a unique corporate tax system where profits can be reinvested tax-free, and only distributed profits are subject to a 20% corporate income tax. 

More than the ease of launching an international company, Estonia's e-residency program is a fascinating experiment in redefining the concept of nationhood in the digital age.

In an increasingly interconnected world, the concept of citizenship has become more fluid. People move across borders for work and education. Yet, traditional notions of citizenship still tie us to the nation of our birth or residence, with all the attendant bureaucratic headaches. Estonia's e-residency challenges this paradigm, offering a glimpse of a world where citizenship isn’t confined to physical borders.

Countries such as Georgia, Lithuania, and Malaysia have introduced their own versions of e-residency, which brings up an interesting thought exercise: if countries could register each of us, countries would start to compete to welcome new e-residents (and hence taxpayers). This competition could lead to better government service. 

If we like one thing at Titan, it is a good ol’ competition. 

Have a great weekend.

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