E-residency: explaining the functioning of e-residency in Estonia
From December 2014 foreigners are able to apply for the digital identity card of an e-resident of Estonia without Estonian habitual residence. A digital identity card (digital-ID) allows to use Estonian public and private services, digitally sign documents and encrypt files with a chip card similar to the Estonian ID card. In the following article 1Office explains to you matters to do with e-residency and encourages applying for e-residency to run a business in Estonia.
What is e-residency?
According to the Identity Documents Act in force from 1 December 2014 a person who is neither an Estonian citizen nor a foreign resident of Estonia can be given a digital ID. Foreigners need digital identification of their person in public or private e-administration. Peviously for a foreigner living in Estonia on the basis of a residence permit or right of residence it was only possible on proving their Estonian residence. The validity of the digital ID and its certificates is three years. Previously, the digital ID was available to residents as an additional card for parallel use with the ID card.
Why is Estonian e-residency useful for an entrepreneur?
- You can establish Estonian companies online via Company Registration Portal
- You can view your tax accounts and submit online tax returns via e-Tax Board
- You can access all your bank accounts with a single smart card
- You can use Estonian digital signature on any official document, and in other EU member states starting from 2016
- You can use free encrypting service with your smart card
- You can use Estonian public services via the state portal eesti.ee
- You can be part of the digital revolution and become an e-Estonian as an early adaptor
How does the e-resident’s digital ID differ from the Estonian ID card?
The e-resident’s digital ID is a chip card similar to the Estonian ID card, which is usable only in a digital environment for identifying a person and providing a digital signature. With the support of certificates on the chip card it is possible to identify your person and provide a digital signature in an electronic environment. As the document is not usable for visual identification or travelling, a photo of the user will not be put on it.
Why is e-residency useful?
E-residency is useful for entrepreneurs, foreign workers, members of the governing bodies of companies operating in Estonia or people holding an interest in Estonian companies for electronic identification and access to e-services. The purpose of issuing a digital ID to an e-resident is to promote Estonian economic growth by creating an opportunity to use Estonian e-services in a secure way. So far non-residents have had access to certain e-services with banks pin calculators and without the ability of providing a digital signature. From the law coming into force e-residents have been able to use the Estonian commercial register and the eesti.ee state portal for administration in English with the help of the DigiDoc digital signature software. For other environments translating and adjusting is still taking place.
What is the legal position of an e-resident in Estonia?
E-residency is similar to the legal position of a foreigner in its nature. Insofar as the Estonian e-residency gives a foreigner the opportunities for operating in the Estonian judicial area, the same principles, which are applied when deciding giving foreigners a visa or residence permit, are applied when issuing the digital ID of an e-resident.
Is an e-Resident also a tax resident in Estonia?
An individual is a tax resident in Estonia if his or her place of residence is in Estonia or he or she stays in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months. A legal person is a tax resident if it is established pursuant to Estonian law. If these conditions of tax residency are not met, an individual or a legal person is not considered to be an Estonian tax resident, even if the natural person has e-residency in Estonia. If a person is considered to be an Estonian tax resident, it should also be taken into account whether the same person is a tax resident of any other country under the law of the foreign country. In such case the tax residency in Estonia will depend upon the tax treaty between Estonia and the foreign country.
What are the prerequisites of becoming an e-resident?
An e-resident’s digital ID may be issued to a person, who has a connection with the Estonian state or a justified interest to use the Estonian e-services. The issuing of the digital ID is decided by the Estonian Police and Border Guard Board and the refusal to issue does not have to be justified and cannot be challenged in court. On issuing the digital ID the reliability of the e-resident will be checked from all available sources. Follow-up inspections will also be made during the validity of the document. Monitoring of the use of the digital ID of the e-resident will be carried out by the Police and Border Guard Board, Estonian Internal Security Service and the Estonian Tax and Customs Board.
How does applying for e-residency work?
The digital IDs of the e-resident are issued in the Police and Border Guard Board service points and the Estonian embassies worldwide. After completing the online application for a digital ID, to identify their person the applicant must go to the service point or Estonian embassy to receive the document. The applicant will be identified on the basis of a travel document of their country of nationality. In addition the applicant’s face biometrics and fingerprints are collected. Biometric data will prevent the creation of several identities for a person.
How much time does it take to get e-residency?
It takes minimum of ten working days to review an e-resident’s digital ID application. In the course of processing the application an Estonian personal identification code will be issued to the applicant, if they did not have an Estonian personal identification code before. If the applicant complies with the necessary conditions for receiving e-residency and the person passes the background check, the digital ID will be issued to the applicant in the service point together with the instructions and card reader necessary for its use.
Is the e-resident’s access to e-services similar to the resident’s access with an ID card?
A provider of a public or private service may decide the providing of a service to an e-resident on the basis of a digital ID, limit the provision of the service or availability of the extent of the content of the service, extent, as well as the number of people with access or prescribe additional requirements for gaining access to the service, including request the submission of additional data and documents or a personal appearance in the service provider’s location. The main question is whether the requirement of single attendance will be removed for e-residents for VAT registration and bank account opening.
What is an Estonian digital signature?
The Digital Signature Act (DAS) came to force in Estonia on 15 December 2000. In Estonia a digital signature has the same legal consequences as a hand-written signature if those consequences have not been limited by law. Outside the Estonian jurisdiction a digital signature is valid only if the parties are willing to accept it. There are 2 certificates on the digital ID chip, one certificate is meant for identifying the person and the other for providing a digital signature. The certificate is an electronic certificate, which ties the person and the data necessary for certifying the person and the authenticity of the digital signature with the person and confirm the identification of the person.
How is the validity of the digital signatures checked?
A digital signature can only be given with a valid certificate. After giving the certificate the software used for giving the signature will contact the server of the certification centre and check whether the certificate is valid – if it is, the server of the certification centre will issue a special certificate, which will be added to the signature.
Does the digital ID of an e-resident provide access to encrypting services?
The digital ID also allows files to be encrypted. Encryption is mainly meant for sending files over the Internet, not for their long-term storage. For decrypting files a secret key, which exists only on the ID card of the user, corresponding to a public key in the authentication certificate is needed. In case the user loses their ID card or renews the certificates, the decryption of files will no longer be possible.
Can the Estonian digital signature be used in other Member States of the European Union?
The regulation on electronic identity and trust services No. 910/2014 (eIDAS) has been passed in the European Union. On its basis from 2016 all Member States must mutually recognise the digital signatures of other countries and from 2018 the digital identity, allowing access with the digital identity cards of other countries. The possibility to provide a digital signature and securely identify yourself on the internet with an ID card is available in several EU Member States in addition to Estonia, for example in Austria, Belgium, Spain, Latvia, Finland and elsewhere. A problem however is that mostly the countries do not mutually recognise these and in case of cross-border services everything still happens on paper.
How to become an e-resident?
You can find more information and apply online here https://e-estonia.com/e-residents/apply/. You can alternatively turn to the service points of the Police and Border Guard Board or Estonian embassies and consulates general all over the world. To receive additional information and help please turn to the customer service of 1Office Estonia: firstname.lastname@example.org.