Citizens of the World: A Stoic Podcast for Curious Travelers - How to Become an E-Resident of Estonia

Episode Date: March 2, 2019

Little Estonia, with less than 1.5 million people, has been running itself like a tech company for about two decades now, giving everyone a digital ID and letting them access almost all government services online. Now they’re letting foreigners become e-Residents of their digital nation, and this week, I'll teach you how you can become one (find links to what we talk about on postcardacademy.co)   Last week, you heard some great travel advice from Julia Barrett, an American who moved to Tallinn to help develop e-Residency 2.0. This week, we’re doing a deep dive on how you can become an e-Resident of Estonia, or even a resident in real life.    Even if you’re not interested in becoming an e-Resident, you might be fascinated to learn how Estonia, a former communist state until the Soviet Union collapsed in the 1990s, became the most digital country in the world. I’ll be talking to Julia again, and to her colleague, Alex Wellman, an American, born and raised in Michigan, and who now heads up marketing for e-Residency.    I’m your host, Sarah Mikutel. Ready to travel? Sign up for my newsletter and get your free guide to cheap airfare.    Thank you so much for listening to this show. I know you’re busy and have many listening options, so it means a lot to me that you’re here. You are the best.   This podcast is brought to you by Audible. Not a member yet? Postcard Academy listeners can get a FREE audiobook and a 30-day free trial if you sign up via audibletrial.com/postcard   This podcast is also brought to you by World Nomads. Need simple and flexible travel insurance? Get a cost estimate from World Nomads using their handy calculator at postcardacademy.co/insuranceDo you ever go blank or start rambling when someone puts you on the spot? I created a free Conversation Cheat Sheet with simple formulas you can use so you can respond with clarity, whether you’re in a meeting or just talking with friends.Download it at sarahmikutel.com/blanknomore and start feeling more confident in your conversations today.

Welcome to the Postcard Academy. I'm your host, Sarah Micatel, an American currently living in England. And I would like to share a thought-provoking quote I came across while I was researching how to become an e-resident of Estonia, and this was written by the managing director of Estonia's E-Residency Program. Our concept of nations might seem permanent to us now, but they are relatively new concepts, and they are not immune to disruption. So, Little Estonia, with less than 1.5 million people, has been running itself like a tech company for about two decades now. And they're giving everyone a digital ID as soon as they're born, and letting people access pretty much any government service online. Almost any government service online. We'll talk about which ones they don't include NYV later.

But now they're letting foreigners become e-residents of their digital nation. Last week, you heard some great travel advice from Julia Barrett, an American who moved to Tallinn to help develop E-Residency 2.0. And this week, we are going to do a deep dive on how you can become an E-resident of Estonia, or even a resident in real life. And even if you're not interested in becoming an e-resident, you might be fascinated to learn how Estonia, which was a former communist state until the Soviet Union collapsed in the 1990s, how they became the most digital, digital, country in the world. I will be talking to Julie again and to her colleague Alex, an American born and raised in Michigan. Alex had always wanted to work abroad, and he became really interested in Estonia after visiting there while he was on a business trip. I just started following what Estonia was doing after that. As far as they're a leader in e-government, they're a leader in

digital services, things like that. And I was really impressed when I visited here because I I kind of had some preconceived notions about the country, kind of thought it was cold, Baltic, you know, former Soviet small country. I was just so impressed when I came over here to visit for the first time that I started following what they were doing. And Estonia has a company called Jabatical, and their mission is to help connect companies around the world, including those in Estonia, with talent who wants to move to the country. So they're really targeting people who want to work abroad, but not being an engineer or a computer programmer or, you know, software developer. I really never thought it was possible working in kind of communications and marketing fields. But I saw that they were hiring for someone for their e-residency program. And I just applied online and they interviewed me and they said, why don't you come over to Estonia and work?

So I had to convince my wife first. And then we both packed up and moved over here, and we've been here for two years now. As Alex said, he found his job through Jabbatical, and this is such a great international job resource. It was started by Estonians, but they post job openings all around the world. And the best part is all of these jobs are posted by companies who actually want to work with international talent. And so they will help you with visas and whatever else you need to. to work in their country. And I will share a link to jabatical on postcardacademy.co. So Alex, like Julia, moved to Tallin Estonia to work for e-residency. And this is a governmental

program, but they run a lot more like a tech company, and I mean that in a good way. We'll talk more about what e-residency is in a moment. But first, I want to touch on Estonia's tech culture. It has more unicorns, and if you don't know, those are startups worth more than a billion dollars. They have more unicorns per capita than anywhere in the world. And Tallinn, its capital, is considered Europe's Silicon Valley. You've probably heard of Skype and transfer-wise, and they have many other great tech companies. But how did Estonia get this way? The Republic of Estonia was only founded in 1918,

but then they were soon occupied by the Soviets until the Soviet Union collapsed in 1991. So how was Estonia able to transform itself from a poor country, with no resources into the world's most advanced digital nation in just a few decades. It's truly remarkable what Estonia has been able to accomplish in the last few decades since regaining independence. And it really goes back to those early days right when they did regain independence. And they had a new government, which was being run by people only in their 30s. And there's a great documentary that came out just last year called Rodeo, which kind of

goes through the history of all this. but they made some really good decisions early on from a government level. They decided that since they kind of had a chance to start over, government-wise, that they should just go digital first. And they weren't saddled with all of these legacy technologies and all this paperwork. For example, after we're getting independence, they'd never used paper checks to pay each other, to pay bills, etc. It's just something that they kind of could skip. So they did a lot of things.

They had another program called Tiger Leap, which, went into all of the schools and taught everyone from an early age or taught many people from an early age how to do computer programming and things like that. They decided to make all of their government services as digital as possible right away in order to save time and money because, of course, they were rebuilding their government and they didn't have a lot of resources to do that. And so they decided that, again, they were going to move forward with this digital nation concept and issue all citizens a digital identity. And in doing that, they also created the infrastructure that would connect all services together.

I think they launched, the first real e-services launched in 2000, and that was taxation and parking. And in 2002, the actual ID cards were launched. And so since then, like, everything is done through your digital. ID card. And that's actually what e-residency really enables others to take advantage of. So when you join e-residency, you know, entrepreneurs across the globe are able to get a digital identity card that enables them to leverage some of the e-services that Estonian citizens have been using for, I mean, decades at this point. So that includes setting up a business in Estonia. It's funny. Like, we do not like to use the term blockchain.

especially to describe our government. But it was really like that same concept where there's an underlying layer that connects, that all services connect to. So you have one digital identity. Like all of your information is all in one place. And, you know, they were able to do this, you know, again, from scratch. Whereas like most countries today, there's such like a legacy of paper that, you know, like it's very difficult to kind of transition. into a digital nation. And so they just invested the time

in creating all government services online and minimizing the bureaucracy involved. And like today, almost everything is done online from voting to your taxes to signing contracts. So they've been able to now transition that into being the world leaders in digital government services. For example, over 99% of government services, are available online in Estonia.

It's kind of a joke, but there's only a few things here that you really can't do online. One of them is getting married, one of them is getting divorced, and one of them is buying property. And it's not that the Estonian government thinks that those things shouldn't be online. They just think those are kind of three things where you really should take them more seriously and maybe they don't want you getting married at 3 o'clock in the morning after you've had a couple of drinks or something. And I'm sure your banking system is better as well. It drives me crazy here. Like, I needed to get a new PIN number for my ATM card here in the UK.

And that requires them mailing me like a paper letter that will take 10 days. I'm like, can't you just give me a new number digitally? What is happening here? Yeah, I mean, Estonia does have a very advanced baking system. And I think there are also lots of fintech innovations happening here. One of the biggest companies in Estonia, transfer-wise, which I, I know I use personally to send money back home to the U.S. to pay bills internationally. They're started by two Estonians.

But, yeah, Estonia is also doing very well in developing innovative financial tools. One of the reasons Estonia is so innovative is thanks to the founders of Skype. After they sold their business, instead of spending all of their money on themselves, they invested their money back into Estonia to develop the next crop of digital companies. People there say that it was like a business. school had popped up out of nowhere with all of these startups learning from each other. And with all these e-businesses cropping up, Estonia thought, why not have e-residents as well? About four years ago, they're very entrepreneurial here, even in the government level.

They said, you know, we have, we've developed all these great digital services, but we only have 1.3 million people here. We can serve many more people than that. So they thought, let's actually let foreigners, let's actually let other people around the world apply to become an e-residents, and we'll give them a digital ID card, which they can use to access government digital services here in Estonia. We now have 50,000 e-residents from 160 countries around the world. So we have residents, we have citizens, and we have e-residents. And so e-residents are kind of our digital nation, essentially.

there are virtual citizens and the residency itself is not like a travel document it does not allow you to enter the EU or Estonia even if you don't already have access to those regions so it won't help you like get a visa it won't help you with any of that stuff but it does allow you to create a company online and manage it from anywhere in the world. And so it's particularly good for people who do see themselves as digital nomads or who know that they, over time, will move countries, you know, people who aren't, don't want to commit to creating a company in any one location. These people often face difficulties when they try to run a company and, you know, bureaucratic hurdles, paperwork, signing and posting documents, things like that. So we're finding that lots of people are finding e-residency to be a good option if they just have one company while traveling and living abroad.

So this is kind of what we see as the future. And we're just getting started trying to serve that kind of growing markets. So if you want to set up a business, but you have no idea where you're going to be living in six months and there's a lot of us out there, does it make sense for you to register your business in your home country or become an e-resident of Estonia and base your business there? as an American especially, I would definitely advise you to consider the American corporate tax rules. And that's where it gets a little bit fuzzy for some people. We recently actually launched a new knowledge base. And we do have an article on taxation basics. So I think that'll help guide people. And we're also working with Pricewaterhouse Coopers to put together a little bit more

complete, like, lists of considerations, especially for expats and digital nomads who wants to take advantage of this. Because, you know, it's everybody's case is different. But some of the feedback from our e-residents, especially those in other European countries, which is amazing to me, is that they like it. They prefer to establish their company in Estonia simply because of the, it's just less complex. That and it's a very transparent government. So one of, again, going back to 1991 and the beginnings of this new nation, Estonia kind of committed to being a very transparent society.

You know, if you think of Soviet Union, it's kind of the opposite of transparency. So this was a value that was really, really important to the people of Estonia and the government of Estonia. And so I think that that's kind of, you know, that really, resonates with a lot of other European residents from other countries who maybe, you know, don't trust their governments or, you know, it's so complex and the bureaucracy involved in selling a company is so just a pain. And so they, setting up an online business in Estonia just seems to make sense for them. So we have two groups of people that we see using this. We have people in countries like Turkey, India, Ukraine, who travel a lot also, who want to have a company inside of the European Union.

And that's the big draw for them. But we also see this, as I mentioned before, this growing group of digital nomads and location independent entrepreneurs who really, really value this flexibility and the ability to run a company without signing papers and everything and scanning and things like that. You know, needing to re-register their companies. For example, they move somewhere and they need to re-register. to their company locally, and that can be a hassle. So if they just have one kind of portable company, they can run easily remotely. This solves problems for them. Of course, as we mentioned, the practical things of doing administration.

Estonia also has a very business-friendly environment as far as lower cost to access services here if you need to hire accountants and things like that. So overall, it's just a really good place to run a business. Fun fact, last year, London's Victoria and Albert Museum included the e-residency card in an exhibit of 100 objects shaping the future. Estonia's president, a woman, hooray, has said that governments must learn to provide public services as efficiently as Amazon sales books. No physical presence, no cost of application, no opening hours. So basically, we should all expect that our governments work at least as efficiently as private

companies and to let us access whatever we need 24-7. And she's so right, but e-residency goes even further beyond improving transparency and cutting down on bureaucracy. E-residents who start Estonian-based businesses, they get access to critical business tools, like the ability to get paid, when those options might otherwise be unavailable to them. On last week's episode on traveling in Estonia, Julia mentioned a woman who started a walking tour company. She is actually originally from Turkey, and that's where she originally started her business, giving walking tours in Istanbul. And, you know, when things started to shift in Turkey, unfortunately, PayPal, like, shut down and

stopped working with Turkish businesses. And she was, like, desperate because she was going to lose her business. You know, she had no way of processing payments. And so she came across the residency, and that was her solution. And now she's so committed to Estonia, she's going. going to university in Tallinn and has like applied and gotten her residency, completely separate from e-residency. She just is so grateful and loves Estonia that much. Okay. So how do we become an e-resident?

If you want to apply for e-residency, you can visit our website at e-desresident.gov.e. And we have an online secure application form there. And you will need an identity document, like a passports, and you will need a credit card to pay the 100-year-o state fee that covers the costs. But otherwise, the application form is pretty straightforward. And then after that, the application is actually processed by the Estonian Police and Border Guard Board, because it is a government-issued document. And if you pass all the background checks and everything is okay with that, you will need to pick up the E-Residency ID car at one of Estonia's embassies or consulates around the world,

because it is a government document. The whole process takes between one to two months, and then after that, you can immediately start accessing services in Estonia online. Once you get your digital ID card, everything else can be done online. You get a set of codes to identify and authenticate yourself online, and then as an e-resident, you can set up your business. Over the last four years, e-residents have started more than 6,000 companies in Estonia, and most of these people are setting up limited companies.

You do need a local contact person there and a legal address for your company. And this is a European Union regulation. But it's easy to find a company that you can use and they can be your contact and they can set up an address for you. The e-residency website has a really helpful marketplace page. And this links out to all of these service providers. The person is not a member of your company. They're not a shareholder. But you're just, there needs to be someone here who kind of, if you need to receive,

legal mail that they, you know, that they have a presence here for you. But so that's a pretty affordable service. It starts anywhere from like, you know, 10 euros per month, depending up to 100 euros per month, depending on the level of service you want. Some of them have packages. There's a really popular package that's through one company that's 50 euros per month. And then you get your legal address, you get your local contact person, you get your bookkeeping, your accounting, et cetera.

So it's kind of a company as a service, if you will. So if we set up a business in Estonia, where are we paying our taxes? I should say right now that this is not tax or legal advice, but just some general guidelines. Definitely check with a tax expert if you have questions, especially if you're an American. On a happy note, Alex actually described Estonia's tax board as being a sheer pleasure to work with. And Julia said that e-residency's online list of service providers includes international tax advisors. but in general, you pay your personal taxes where you're living and your corporate taxes where you're generating your income.

Taxes are complicated, though, especially if you're a nomad, so talk to a tax advisor. So if you live in one country, even if your company's in Estonia, you still might pay your taxes in that country, personal and corporate. But if you, for example, travel and you don't spend maybe more than six months in one country, then oftentimes you can pay your corporate taxes in Estonia. And if you do, if you're eligible to pay your corporate taxes in Estonia, then Estonia has a very business-friendly taxation scheme. It has a 20% flat tax when you reinvest the profits into your company. So if you do qualify to pay your taxes in Estonia, then it really offers a good value for an entrepreneur to take advantage of.

So Estonia is doing all this to help global citizens become e-residents. And these people might never even pay taxes to Estonia. So what's in it for them? So they see this as a way to build the business ecosystem in the country. So, of course, they do collect some taxes from people. Actually, over the last first four years of the program, we've collected 10 million euros in taxes from people. So, of course, it has been an economic positively impacting the economy that way.

But of course, just growing the business ecosystem is a big part of it, too. Maybe you need to hire an accountants here. Maybe you want to hire a marketing agency here to design your new logo, or maybe you want to work with a new business partner here in Estonia or something like that. So we see it as a way just of growing the number of people interested in the country, growing the network of friends around the world, and actually just kind of making the country bigger in a way. We call it kind of like exporting Estonia, essentially.

It's a way for Estonians to start working outside the borders. You know, we kind of talk about it as like a, you know, like we want people to be able to live, like, without borders, work beyond our borders. It's also attracted increased investment in Estonia. You know, it is kind of sexy. And it's kind of helped our reputation as a technologically advanced nation. And so there has been an increase in investment in startups in Estonia, in larger businesses in Estonia. it's kind of become a cool place to even think about moving your European headquarters. So it's kind of cool.

And ultimately, I think it's really increasing, it's about increasing the awareness of Estonia. So I think, you know, terms like soft power and, you know, cyber diplomacy kind of come into play where we're a small country, you know, 1.3 million people. We share a border with a very large country that we have a very interesting history with. And I think that it's really great way for a tiny country to make people aware that it exists. Okay. So what if we want to move to Estonia and we're not EU citizens? What are our options to physically live in that country legally? Even though e-residency doesn't help you move to the EU or to Estonia, there's a program called work in Estonia, which has job listings for people.

There's also a jobatical, as I mentioned. They're very open. All the companies on Jabatical are definitely willing to invest in you as a talent to move you here, to help you move here, et cetera. There is something already existing called the startup visa, which is if you have a startup idea and you want to move to Estonia to build a team to build that, you can. You can apply online through the Estonian startup visa,

and they will help you get the proper visa to come to Estonia for, for a year to do that. Of course, you can always extend that. So I think last year was the first year they had that program, and I think, I want to say a thousand people actually came to Estonia through that program. It's being discussed at the government level that Estonia would have sort of the first digital nomad visa. What this means is that oftentimes, you know, people run into trouble because they want to go to a country. They want to work there. But they know that if they go to a country under a tourist visa and they're working, they're breaking the law. So Estonia actually wants to kind of legalize that. They want to say, hey, if you want to come to Estonia and work,

you're allowed to do that. So you're going to be working for your company or for your job that's located abroad. We're okay with that. But, you know, we want you to come here. We want you to stay here, enjoy the country, bring your family, etc. But what other kind of weird, depending on people's interests, one other kind of cool program that, Visit Estonia, which is Estonia's tourism board, Visit Estonia launched a program called Storytellers Nest, which is really kind of cool. You know, if you're an influencer or a blogger or whatever it is,

you can actually apply to come and stay in Tallinn or the south of Estonia or the west, the east, for three to five days, and they'll give you an apartment and a car and set you up with tours and kind of just like give you the Estonian experience. They have another website called Move to Estonia. And that'll actually walk you through, you know, based on your situation, whether you're an EU citizen or a non-EU citizen, kind of walk you through like the steps that would be necessary for you to stay,

you know, long-term or work in Estonia. Thank you, Julia and Alex for breaking down how we can become e-residents and real-life residents of Estonia. Again, I will share links to all this information in the show notes on postcardacademy.com. So what top takeaway from this episode will you share with your friends? For me, in addition to e-residency, which I think is just so cool, I will be telling my friends about the storyteller's nest. I mean, sign me up for an apartment and tours around Estonia, please. and how are your travel plans coming along for the year?

If you are ready to book some summer travel, you can download my free guide to finding the best airfare at postcardacademy.co slash airfare. That's all for now. Thanks for listening and have a beautiful week wherever you are. Do you ever go blank or start rambling when someone puts you on the spot? I created a free conversation sheet sheet with simple formulas that you can use

so you can respond with clarity, whether you're in a meeting or just talking with friends. Download it at sarahmicatel.com slash blank no more.