The senior editor of The Economist magazine, Edward Lucas became the first individual to receive the certificate of virtual residency of Estonia. Introduced by the Estonian government as a measure to boost foreign investment and attract entrepreneurial talent, electronic residency allows individuals to transact with the government and sign documents digitally without having any physical presence in Estonia. The card makes Edward Lucas the first ever electronic resident of a country.
The idea of granting foreigners the right to electronic residency has attracted responses from many countries. However, Estonia became the first nation to actually go ahead and issue electronic residency card. The card, which has an embedded microchip, serves as proof of Lucas’ being an ‘electronic resident’ of Estonia. Electronic transactions executed on the basis of this card will be treated at par with real-world transactions and physical signatures made by the card holder.
Electronic residency assumes importance in nations like Estonia that allows foreigners to establish and run a business without setting up real-world brick-and-mortar offices. In theory, E-residency can help Estonia attract investment from foreigners seeking to invest funds in a country that offers a liberal tax regime and hassle-free regulations and procedures.
Unlike physical residency permits and visa, the electronic residency card does not serve as proof of citizenship or even allow the holder to enter and reside in Estonia. It merely enables the holder to access financial services in Estonia through the Internet. This facility will prove very beneficial if the holder ever decides to establish a business in Estonia.
The move comes as a part of a concentrated effort to promote Estonia as an investor-friendly and pro-business country to foreign investors. The country, after declaring independence from the Soviet Union in 1991, boasts of top-end Internet infrastructure that is at par with some of the most developed countries in the world.
The concept of Electronic residency indicates Estonia’s preference to align itself with the West through better economic ties. Already a member of the EU and NATO, Estonia, considering Russia’s aggression towards Ukraine, is actively trying to boost its economic and culturally affinity with the West.
The concept of e-residency was the result of a contest inviting ideas for attracting foreign businesses to Estonia. Sponsored by the Estonian Development Fund and supported by former Skype head and Estonian citizen, Sten Tamkivi, the idea of using e-residency to create ten million e-Estonians by 2025 won the top price and the full backing of the government. The government has imposed a mandatory criminal check to ensure the program does not lead to any security risks.
Electronic residency apart, businesses may also get attracted by Estonia’s flat tax structure in Estonia and non-taxation of profits reinvested into the business. However, the fact that applicants are required to physically travel to Estonia to apply for and receive the e-residence card may be a dampener. Estonia’s consulates and embassies in foreign nations are expected to participate in the application process in the near future, which will make travel to Estonia unnecessary.
Source: www.cnbc.com