The Estonian government has approved the concept of issuing digital IDs to non-residents. From the end of 2014, foreigners will be able to receive a secure Estonian e-identity. This creates a unique opportunity to create a new set of remotely usable global services.
The development of the appropriate infrastructure and the range of services require the coordination and stimulation of the public and private sectors. The aim is to make Estonia great: make sure that at least 10 million people around the world choose to associate with Estonia via e-identities.
Estonian citizens are able to perform nearly every public and private sector transaction in digital form, including signing any document. Until now, this ability has not extended to foreigners who are permanent residents of countries other than Estonia. Therefore, on April 24th, 2014, the Government of the Republic decided to approve the concept of issuing digital IDs to non-residents. This forms a basis for the growth of the international competitiveness of the Estonian state in the fields of economy, science, education, healthcare, etc.
For example, the adoption of non-resident ID cards is an additional argument in favor of investing in Estonia. Today, it is difficult for a foreign investor to actively participate in the executive management of a company (that is, to fulfill the tasks of a Member of the Board). The non-resident ID card and digital signature would provide the necessary flexibility.
Here is another example. There are entrepreneurs and investors both within and outside the European Union who are looking for opportunities to create their own company or investment vehicle in the EU. The ability to incorporate and open a bank account (not just in Estonia, but in the EU!) within a single day is only one of the services that Estonia can offer to holders of non-resident ID cards. Not to mention the simple, fully digital tax system, flexibility in attracting highly qualified (digital) labor, etc.
In addition, reinvested profit is tax-free in Estonia, and the highly developed e-banking environment gives you immediate control of your assets from a distance. This means that Estonia has the potential to be attractive to entrepreneurs who need an investment account (vehicle), and this would result in additional customers and capital for Estonian businesses.
E-residence provides a unique opportunity to create a globally innovative suite of public and private services that are usable irrespective of location: convenient incorporation, bank transactions, tax reporting, medical counseling, etc. This can be based on existing Estonian e-services, developing them further and adding new ones.
The state intends to create a fundamental platform for new business opportunities in this area. However, the development of the necessary infrastructure and range of services requires the coordination and joint effort of the public and private sectors. The aim must be ambitious: currently there is 1,3 million estonians, but at least 10 million people around the world should connect themselves to Estonia via the digital identity. E-residence can make Estonia truly great!
Implementation and time frame
The plan is to start issuing non-resident ID cards as of the end of 2014. Therefore, both the public and private sectors ought to begin preparing in advance for the opening up of existing services, and the creation of new ones.
Broader use of non-resident ID cards can be expected if their owners are able to remotely incorporate a legal entity in Estonia, open a bank account, and use automated tax reports. These functions should be available in the first half of 2015.
Idea’s Presumed Impact
The primary target groups of the e-residence are:
• Foreign investors and the foreign employees of their companies;
• Foreigners who serve on the Boards of companies (Management Board or Board of Directors), or hold a stake in the corporation;
• Foreign specialists and employees of Estonian companies, their foreign customers and partners;
• Foreign scientists, educators and students;
• Representatives of other countries and international institutions (e.g. the European IT Agency) in the Republic of Estonia;
• Estonian nationals and their heirs who have emigrated from Estonia;
• The family members of the persons listed above.
These target groups have a remarkable economic impact on Estonia. For example, companies with foreign ownership stakes are a key part of the Estonian economy: they account for 60% of all exports, 36% of employment, 35% of T&A ads, and 45% of the value added in the economy. Partially foreign-owned companies form around 10% of all companies doing business in Estonia, and 24% of companies that employ more than 20 people. E-residence will make it easier for companies important to Estonia to operate, and will attract them to the Estonian economic environment.
At the same time, the target group includes all current and future e-service users in Estonia – from those looking for investment management to consumers of cross-border medical services, etc. This depends on what kind of services, and aimed at whom, we can come up with and provide.
It should also be noticed that the European Union has passed an Electronic Identification and Trusted Services Directive (eIDAS). Soon, EU member states will be required to recognize the digital identity providers of all other EU states, and allow them access to local digital services. But for most EU countries, a sufficiently secure e-ID is far away. Therefore, Estonian e-residence provides a good alternative for accessing the digital services of both the EU and Estonia, even for EU citizens.
Note: the co-authors of this idea are Ruth Annus and Siim Sikkut.