Estonia’s ‘e-residency’ giving businesses fearing ‘hard Brexit’ upheaval the EU loophole they’ve been looking for
The small Baltic euro zone state became the first country to offer e-residency identification cards to people all over the world in 2014
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As many British brace for the upheaval that Brexit could potentially bring, an increasing number have turned to Estonia’s “e-residency” digital ID programme to continue doing business across the European Union.
The small Baltic euro zone state became the first country to offer e-residency identification cards to people all over the world in 2014.
Touted as a “trans-national government-issued digital identity”, e-residency allows users to open a business in the EU and then run it remotely with the ability to declare taxes and sign documents digitally.
Before that, just three British citizens applied per week, but that increased to more than 50 in its aftermath. There was also a 75 per cent spike in UK traffic on the website after Prime Minister Theresa May triggered the Article 50 EU exit clause in March.
A “soft Brexit” would mean that Britain could retain access to the European single market like non-EU member Norway. But the “hard Brexit” option that has prevailed so far would see Britain leave the European single market and the customs union, creating a nightmare for UK businesses as there would no longer be free movement of goods and services.
“The UK may have chosen to leave the EU, but its entrepreneurs can still choose to remain inside the EU’s business environment” through e-residency, programme director Kaspar Korjus said.
So far most companies established by e-residents are in consultancy services, IT programming, web developing, business support services.
Winners of the Mayor of London’s 2017 Entrepreneur competition said they signed up for e-residency to mitigate the risk Brexit poses for their business, a start-up making environmentally-friendly wet wipes.
Ellenor McIntosh and Alborz Bozorgi both live in London but said they took up e-residency to be able to keep their company, Twipes, inside the EU’s single market.
Billing Twipes as “the future of toilet paper”, its owners said they registered it in the UK and Estonia to boost investor confidence.
“We had discussions with many investors from across Europe, Cyprus and Estonia in particular, and they view the uncertainty of Brexit as a huge risk,” Bozorgi said.
“We had to incorporate in both the UK and EU as a method of hedging risk,” he added.
If Britain loses access to the single market, however, the company would need to source materials and produce Twipes inside the EU to keep duty free access to the bloc.
British writer Will Mawhood, who runs the “Deep Baltic” culture website, said he jumped at the opportunities and flexibility e-residency offers, especially having his company registered in a euro zone member.
“I split my time between the UK and Latvia, but since all my work is online, I often spend prolonged periods of time in other countries,” he said. “People involved in my company are based in a variety of countries, so having to sign documents in person would be unnecessarily time-consuming and complicated.”
An upgrade to the e-residency programme in May saw Finnish fintech company Holvi team up with Estonia to launch borderless digital banking, eliminating the need for e-residents to travel to take care of business banking.
Korjus said that there are signs that this uniquely Estonian digital innovation is catching on abroad.
“We’ve had interest from governments around the world who are keen to understand the programme and even introduce their own versions of e-residency.”
