Now that the U.K. has voted to leave the European Union, British businesses are wondering how they will maintain the benefits of trade as a member of the massive, tariff-free single market of the EU.
Estonia has just the thing: join its e-residency program.
Set up in 2014, the program was meant to give Estonia, the small former Soviet republic on the Baltic sea that joined the EU in 2004, an edge in attracting business. Once you become an e-resident, you can set up an Estonian company online in a day, administer it remotely and sign all documents digitally. The tax on retained profits is 0 percent.
Since the Brexit vote, the number of U.K. residents applying for the program has increased by a factor of 10, according to Kaspar Korjus, managing partner of the e-residency project. In the week after the referendum, there were 70 applications from the U.K., he said. Fintech executives and firms are particularly keen, because “they want an EU entity for passporting and the euro to avoid currency fluctuations,” Korjus adds.
As interest in the program surged, the country decided to create a landing page aimed at the U.K.: howtostayin.eu.
So far, the program has attracted applications for around 12,000 e-residencies and 1,000 companies, from 135 different countries. According to an appropriately high-tech dashboard, 88 percent of e-residents are men and the most popular types of companies are consultancies and computer programming firms.
Estonia is fast becoming the tech darling of Europe. In 1991, only half of the country had a phone, but according to Wired:
…by 1997, 97% of Estonian schools were online. In 2000, cabinet meetings went paperless. By 2002, the government had built a free Wi-Fi network that covered most of the populated areas. By 2007, it had introduced e-voting, and by 2012 huge amounts of fibre-optic cabling were being laid — promising ultra-high-speed data connections — and 94 per cent of the country’s tax returns were being made online.
The country insists the setup is not a giant tax-evasion scheme. E-residents and companies are expected to pay tax on earnings in the countries where they are generated, and the Estonian government is committed to sharing all the necessary details with those countries’ tax authorities.
What Estonia hopes to get from all this, apart from a bit of an identity boost, is the banking and advisory business companies often need to administer their affairs. The country will attract companies in the first place “on the basis of the quality of its user interface,” according to Ben Hammersley, writing in Wired. Although ease-of-use was the original pitch for the e-residency program, it may get a big boost as a convenient backdoor for Brits worried about missing out after Brexit.