Estonia as a Magnet for Investors and Entrepreneurs
In a fast-changing world economy, investors and entrepreneurs are always seeking new lands of opportunities for their business adventures. I wanted to take a look at Estonia if it is such a place.
Indrek Pällo, who is currently Head of the Estonian Investment Agency, kindly gave answers to my questions on investment and business opportunities in Estonia. In this short interview via email, we also discussed about e-Residency which many of you might find interesting. Happy reading!
We are familiar to what type of works investment and trade promotion agencies do. However, as every country is unique in their way, I assume that their focus might be different. Estonia is a pretty small market when comparing other European countries. In some ways, this is not an attraction point mostly for international trade people as they might prefer a bigger domestic market, for instance, if they will establish a branch there. So, I wonder what you emphasize on when you promote Estonia to investors and business people. In other words, what kind of business opportunities we can expect to find in Estonia?
Estonia is a member state of EU since 2004 and therefore our domestic market is around 500 million people. As we know EU common market allows goods and services to be freely traded. Neither foreign investors nor local companies in Estonia consider only Estonia as their home market, they always consider EU common market and other export markets in their business plans when setting up.
Estonia is very welcoming and open towards foreign direct investment. As a result, approx. 2/3 of Estonia's GDP is generated by businesses having some sort of foreign investor involved. We also treat foreign and local companies equally and do not prefer one over another, but offer equally lucrative business environment for all.
Foreign investors have pointed out 3 key strengths of Estonia:
- very transparent, easy and efficient business climate and regulation. We work hard to further improve the already efficient business environment. In Estonia we don't punish success by taxing it heavily, but rather incentivize growth by allowing companies to reinvest and tax the reinvested profits with 0%.
- secondly, Estonia has multilingual and well-educated labour pool, which is hard working and always seeking solutions to business issues as well as technical challenges.
- thirdly, we have the most advanced digital infrastructure and e-governance solutions, which enable people to manage their businesses hassle free and online irrespective of their location. One can sign contracts digitally, conduct e-banking or declare taxes anywhere in the world where there is Internet connection. Now this is also available to foreign citizens via e-Residency.
In terms of sector opportunities, we promote ICT, Shared Service Centres, advanced engineering and manufacturing and logistics.
E-residency is an interesting topic. I really admire Estonia for such a great vision. This is a very interesting issue especially for business people, entrepreneurs, startup founders who would like to move or start their businesses in a more supportive ecosystem. What would you like to tell us about Estonia's e-residency, like why to apply (advantages), where to start, prerequisites, procedures, cost, tax conditions, etc.?
Thank you for your kind words. We too believe that e-Residency has huge potential and corresponds to how people want to conduct business today.
Estonian e-Residency is unique as it is the first secure digital identity issued by a government. It allows the card user to access various digital services, ranging from company creation in EU to virtual participation in shareholder meetings in cooperation with Nasdaq.
The main advantage that we see today is the possibility to run your company location independently, for example a German programmer who spends his winters in Thailand and works for multiple start-ups. It doesn't matter where he is physically located, it matters where he keeps his company and Estonia is at the forefront of offering these virtual services and digital infrastructure for that.
Starting from autumn 2016 it will be possible to open up bank accounts online using e-Residency. Estonia has 0% income tax when profits are retained in the company but it is important to denote that tax matters differ by country and should always be consulted by specialists.
The application process is fairly simple, anyone with a passport can apply and everything can be filled in online: http://e-resident.gov.ee. It requires personal information, contact details, profile photo, a photocopy of the passport, the state fee for processing the application is 100€ and depending on the pick-up location it can take up to 2 months. There are currently 39 representation points where the card can be collected, more information about this: https://e-estonia.com/e-residents/apply/
We have recently created a special landing page for companies in UK that seek for opportunities to stay in the EU legislation following Brexit events. More information about this can be found here: http://howtostayin.eu/
Thank you very much.
You are very welcome and thank you for your interest in Estonia and e-Residency.