In the current year, 2025, Estonia’s Electronic Residency program, which recently turned ten years old 🎂, is gaining a “new lease on life.” It is expected that the plastic e-resident ID cards will be phased out and replaced by mobile digital identification based on biometrics. This will enhance security and allow e-residents to start their businesses more quickly. The Estonian authorities anticipate a roughly 25% increase in the number of companies and firms founded by e-residents.
The e-Residency program was launched in Estonia on December 1, 2014, to provide foreigners with secure access to Estonia’s electronic government services. Since the start of the program, more than 📈 117,000 individuals from 185 countries have obtained e-resident status. Currently, around 59,500 valid e-resident digital ID cards are in circulation. This status enables e-residents to quickly establish a company in Estonia, sign documents digitally, and manage their business from anywhere in the world.
e-Residency: Every Fifth Estonian Company
Over the years, e-residents have created or become co-founders of more than 33,800 Estonian enterprises. This means that roughly every fifth new legal entity is registered as part of the e-Residency program. Additionally, 38% of Estonian startups are connected to e-residents. The total direct economic contribution to the country’s economy since the start of the program has reached 📣 244 million euros.
A special government methodology is used to calculate the program’s impact, taking into account both labor taxes and a special income tax (most frequently paid on dividends). A “company of an e-resident” is defined as one in which a foreigner obtained e-resident status prior to the company’s establishment and became a founder or joined the business within 90 days of the company’s registration.
Spain, Ukraine, and Turkey Lead in Number of New e-Residents
In 2024, e-residents founded 4,818 new companies—about 400 new legal entities per month. Last year, another 11,484 e-residents 📊 joined the program, a 3% increase compared to the previous year. The highest number of new enterprises was established by citizens of Spain (711), Ukraine (387), Turkey (305), and Germany (299). These same countries also lead in the number of new participants in the program.
According to Liina Vahtras, who heads the e-Residency program, “Every fifth company created in Estonia last year had an e-resident among its founders, and the total number of such companies has reached a record high. At the same time, we must also focus on quality: that is, supporting the development of those firms that will make an increasingly large contribution to Estonia’s economy through tax revenue in the future.”
e-Residency Strategy: Attracting Business and Simplifying Bureaucracy
The strategy for the period 2026–2029 aims to attract companies to Estonia that already have an active business and are ready to employ people locally. Plans include further simplifying the company registration process and improving the business services ecosystem.
Estonia’s Minister of Economic Affairs and Industry, Erkki Keldo, stated that, “For every euro invested in the success of e-Residency, Estonia earns at least eight euros. In the ten years of its existence, e-Residency has helped Estonia gain a reputation as a digital state. Now, we intend to strengthen our competitive edge to attract even more international companies and new taxpayers.”
e-Residents Lead in IT and Scientific-Technical Activities
Most companies established by e-residents are in the information technology and communications sector, followed by professional, scientific, and technical activities, as well as wholesale and retail trade. This explains why a significant portion of new startups in Estonia operate in the IT sector, including software development and various SaaS projects—many of which now leverage artificial intelligence.
Balance Between Growth and Security
In 2024, taxes from e-resident companies contributed 63.6 million euros to Estonia’s budget. Of that amount, 71% (45 million euros) came from labor taxes, while the remaining 29%—mainly dividend taxes—amounted to 18 million euros. Meanwhile, total government spending on implementing the e-Residency program in 2024 stood at 7.5 million euros.
e-Residency: Over 121,600 Participants from 185 Countries
Launched at the end of 2014, the e-Residency program has enabled more than 121,600 foreign citizens from 185 countries to access Estonia’s electronic services securely. Currently, there are over 59,000 valid e-resident digital ID cards with a five-year period of validity.
Until February 1922, citizens of Russia and Belarus constituted about 12% of new e-residents. In March 2022, the Estonian government suspended issuing e-resident status to citizens of Russia and Belarus, fearing that access to European and global economies could be exploited for the interests of the Russian Federation or Belarus. Additionally, according to the Estonian Security Police (Kapo), since the program’s inception, 26 individuals have been identified—linked either to Islamic extremism or terrorism—who attempted to obtain or already held e-resident status. Among them were persons with potential ties to al-Qaeda, Hezbollah, the Taliban, and the Muslim Brotherhood.
Mobile Digital Identification
Despite its significant economic benefits, the e-Residency program must balance openness of digital services with national security concerns. Nonetheless, even an impartial observer can see that this model of electronic interaction with foreign nationals continues to cultivate a favorable business environment in Estonia—while observing important security measures.
Program Expansion Requires Strengthened Control and Security
According to the program’s risk manager, Oskar Õun, the main goal of e-Residency is to maintain Estonia’s competitiveness as a business environment while mitigating risks. Since e-Residency’s launch, more than 32,500 companies have been established, contributing about 250 million euros to Estonia’s economy through taxes and fees. However, the program’s expansion increases the need for oversight: e-Residency does not grant citizenship, tax residency, or the right of residence in the EU, and some try to use it to circumvent the law.
As a result of inspections, around a thousand e-resident statuses—out of more than 100,000—have been revoked, often due to non-compliance with the program’s objectives, which include contributing to Estonia’s economy, science, and culture.
A key development priority is to eliminate the plastic ID card in favor of mobile digital identification based on biometrics. This will strengthen security and enable e-residents to start operating their businesses even more quickly. The head of e-Residency, Liina Vahtras, believes that this shift will enhance Estonia’s competitive advantages in the coming years. According to her estimates, it could shorten the paperwork processing time from two months to two weeks and increase the number of e-resident companies by 25%.
New EU Rules May Impact the Appeal of e-Residency
In the coming years, the eIDAS 2.0, or European Digital Identity (EUDI) Regulation, will come into force, allowing citizens of EU countries to open companies in Estonia without the traditional e-Residency card. Such applicants may not be subject to the same stringent oversight, which could alter the ratio of foreign entrepreneurs and raise the significance of e-Residency as a “mark of quality.”
Stricter selection measures are already in place: since March 2022, e-Residency has been unavailable to citizens of Russia and Belarus. In the first half of 2025, a law is expected to be passed that will allow the government to refuse applicants from countries lacking proper law enforcement and security cooperation with Estonia. Thus, e-Residency remains a privilege—one that helps Estonia develop at a rapid digital pace, while also requiring prudent risk management.
