e-⁠Residency reports close to 40 million euros in state revenue 

During the first half of 2023, companies owned by Estonian e-⁠residents delivered 37,7 million euros in tax revenue, amounting to a 57% increase compared to the previous year. To date, the e-⁠Residency programme has generated altogether 183 million euros in economic impact for Estonia.

The majority of tax receipts – 55% or 20.6 million euros – came from labour taxes paid by e-⁠resident companies registered in Estonia. The remaining 45% – 17.1 million euros – was collected from special case income tax, mainly dividends. In addition to taxes, e-⁠residents also paid 1.4 million euros in state fees, raising the programme’s economic impact to 39.1 million euros for the first six months of 2023.

According to Tiit Riisalo, the Estonian Minister of Economic Affairs and Information Technology, the e-Residency programme continues on a strong course, confirming that the rest of the world has a keen interest in the IT solutions Estonia has to offer. "For an increasing number of foreign entrepreneurs, e-Residency is a convenient way to conduct business in the European Union, providing a digital solution for safe and transparent operation, with low administrative cost. Although the maintenance and development of national IT systems is costly, in the case of e-Residency our return on investment is considerably higher. For every euro that Estonia spends on e-Residency, the programme generates 7.6 euros in return," explained Riisalo, adding that, for Estonia, e-⁠Residency is not only a revenue machine marketed to foreigners, but a public e-service that also benefits a large number of local Estonian companies, service providers and entrepreneurs, delivering an additional boost to the national economy.

Liina Vahtras, who assumed duties as the new managing director of the e-Residency programme in the beginning of June, confirmed that these results – achieving nearly 65% of the 60-million-euro target set for 2023 – have exceeded the most optimistic estimates. "In our pursuit to further improve the overall quality and international competitiveness of e-Residency as an international business service, our main challenge is to optimise the customer journey. However, it also offers us an opportunity to make a qualitative leap forward. We are working hard to accelerate the issuance of digital ID cards so that our e-residents would face no delays when setting up their businesses in Estonia, and could start generating tax revenue at an even faster pace," said Vahtras. 

In the first half of 2023, the majority of tax revenue – 12.6 million euros – was generated by e-⁠residents engaged in professional, scientific and technical activities, followed by information and communication companies with 10.5 million euros, and finally, administrative and support service activities with 3.7 million euros. As at the end of June, e-⁠resident companies employed 5,027 Estonian residents, up by 284 compared to 2022. 

Despite a slight decline in major markets, Estonian e-⁠residents established 2,302 new companies in the first half of 2023, a 6% increase compared to the previous year. The largest number of new companies have been set up by the citizens of Spain, Ukraine and Germany, with Turkey demonstrating a fast growth spurt, followed by France and Italy.

As at the end of June, Estonia has issued e-⁠resident digital IDs to 5,428 foreign nationals, which is comparable to the annual average in recent years, i.e., approx. 1,000 new e-⁠residents per month. The largest numbers of new applications have come from Spain, Ukraine and Germany, followed by Turkey and France, both showing a strong upward trend.

In 2022, the e-⁠Residency programme generated altogether 51 million euros in direct economic revenue for Estonia, whereas the programme’s total costs (incl. contributions from partner agencies) amounted to 6.68 million euros*.

To date, Estonian e-⁠resident status has been granted to 105,500 people from 176 countries (excluding repeat applications and invalidated identity cards). Over the years, these e-⁠residents have established more than 27,000 companies in Estonia. Currently, there are 61,350 active e-⁠resident digital ID cards in use. As of March 2022, citizens of Russia and Belarus are not eligible to apply to the Estonian e-⁠Residency programme.

Estonia launched the world’s first e-⁠Residency programme at the end of 2014 with the aim of providing foreign nationals safe access to its public e-services, while also promoting cross-border entrepreneurship and generating additional revenue for the national budget. As such, Estonia is the only country that offers a 100% digital entrepreneurship solution for foreign nationals, providing them with a state-of-the-art toolbox for setting up and running a location-independent international business.Over the years, the programme has generated around 183 million euros in tax revenue and state fees for Estonia. In 2022, the Estonian government endorsed a new growth strategy for e-⁠Residency, which envisions the programme’s annual revenue to reach 100 million euros by 2025. In addition, the programme will continue to boost Estonia's international image and spur the growth and investments of Estonian companies that offer services to e-⁠residents and their businesses.

* Contributions from partner agencies include the Police and Border Guard Board with 0.62 million euros, the Ministry of Foreign Affairs with 0.53 million, the IT and Development Centre of the Ministry of the Interior with 0.38 million, the Centre of Registers and Information Systems with 0.13 million, Estonian Tax and Customs Board 0.08 million and others.