e-Residency by the Numbers: Record Registrations, Unknown Survivors

Every few months the e-Residency programme publishes a growth record. This month it was more than 4,200 new companies since January, around 600 a month, up 36% on last year and 47% on the year before. A “record” 34% of those who joined in the first two months of the year have already started a business. Estonian public broadcaster ERR ran the numbers; a wire service carried the English release abroad.

I run a licensed company service provider in Tallinn. A large part of what we do is register and maintain companies for exactly these people. So I have every commercial reason to applaud. I would rather do something more useful: read the e-Residency data the way a client should, and point out the one number that is missing.

What the Official e-Residency Statistics Actually Say

The programme’s public dashboard is the primary source for e-Residency statistics, and it deserves credit for existing. As of July it shows 142,332 e-residents and 43,024 companies founded or co-founded by them. Both curves are almost straight lines: roughly 11,000–14,000 new e-residents a year, roughly 4,500–5,500 new companies a year. Its limits are just as visible: it shows only cumulative totals, which by definition never fall; its last refresh predates the press release by two months; and it has no chart on companies deleted, dormant or trading.

Divide one by the other and you get 0.30 companies per e-resident. Two caveats push the real figure lower. The programme counts a company as an e-resident company whenever an e-resident took part in founding it, so a start-up with three e-resident co-founders counts three times among the 142,000 but once among the 43,000. And more than 2,300 e-residents have founded more than one company. Adjust for both and the share of e-residents who have ever set up an Estonian company is somewhere under 30%. Put plainly: around seven out of ten people who obtained the card have not opened a business with it.

The breakdown of e-residents by country makes the picture sharper.

Three clusters fall out of that table. Southern and eastern Europe, plus Turkey, treat the card as what it was designed to be: a way to open a company. Neighbours and the Anglosphere use it for access to e-services, or keep it in a drawer. Applicants from East Asia take the status far more often than they use it to found a company. None of this is a criticism of anyone; it is what the programme’s own numbers show once you read past the headline.

A Record, in Context: the e-Residency Conversion Rate

The release celebrates that 34% of this year’s earliest joiners have already founded a company. But in an earlier annual review the programme’s own blog reported that every third new e-resident founds a company within six months, up from every fifth a couple of years earlier. The programme’s previous strategy document, published by the ministry, was blunter still: 70% of applicants say they intend to open a company, and 30–35% of them eventually do.

So the historical conversion rate from e-resident to founder is about a third. This year it is 34%. The number of e-resident companies is growing because the number of e-residents is growing, not because the programme has become better at turning card-holders into founders. That is a fair achievement in its own right. It is not the story the release tells.

How Many e-Resident Companies Are Still Active? Nobody Publishes It

Here is the question every prospective e-resident should ask, and the one no press release answers: of the 43,000 companies, how many are trading?

The honest answer is that nobody knows. The only serious attempt to find out was an analysis by Statistics Estonia published on the programme’s sixth birthday. At that point e-residents had participated in founding about 14,200 companies. Around 1,000 had already been deleted or were in liquidation. That sounds reassuring until you look for signs of life: declared turnover, labour taxes paid, a board fee or dividend paid out, revenue in an annual report. The analysts found them in roughly 40% of the companies, about 5,900. In any single month, only 18–19% of e-resident companies declared any turnover at all. The true figure might be somewhat higher, the analysts noted, since some activity escapes their sources. But nobody has repeated the exercise since, and the programme’s dashboard has never carried a survival or activity chart.

Take the two numbers we do have, a conversion rate of about 30% and an activity rate of about 40%, and multiply them. The result is that roughly one e-resident in eight is running a company that shows any measurable sign of doing business. Every other number in the programme’s reporting, from “companies founded” to “one in five new Estonian companies”, rests on registrations, not on that one in eight.

This is not a data problem. Every fact needed to calculate a survival rate sits in the Commercial Register and the Tax Board’s systems. The state already links those to e-resident identities to compute the e-Residency tax revenue and economic impact figures it does publish. The programme knows how much labour tax and dividend tax e-resident companies paid in the first seven months of the year, 35.3 million and 19.5 million euros respectively, to the decimal. It could just as easily tell us how many of the companies founded three years ago filed an annual report last year. So far, only the euro figure gets published.

Why the Missing Survival Rate Matters

It matters to the founder, because the marketing promise is a functioning EU business, not a registry entry. A company that never opens a payment account, never registers for VAT, and never files a report is not a business. It is a monthly invoice from a contact-person provider until the founder gives up and lets the register delete it. The gap between “registered” and “operating” is exactly where disappointment and cost accumulate.

It matters to the state, because an e-Residency programme measured on registrations will optimise for registrations. The current tension in Estonian policy is visible from any provider’s inbox. The programme sells 600 companies a month; the Tax Board writes to companies asking them to demonstrate a connection to Estonia and increasingly refuses VAT numbers where it sees no substance. One arm of the state is measured on how many companies come in; another is measured on how many of them turn out to be hollow. A survival metric would force those two arms to talk to each other.

The VAT-number debate deserves an article of its own. For this one, the narrower point is that the state evidently has criteria for telling a real e-resident company from a nominal one, since it applies them case by case, and it has never published the resulting count.

And it matters to my own industry, which is the uncomfortable part. The release quotes a service provider whose turnover grew by 60% because “more e-resident companies are coming”. The programme itself notes that for many marketplace providers, e-residents account for over half of all business, sometimes all of it. Our revenue is, in effect, one of the programme’s published success indicators. A provider that earns on every registration has no incentive to ask how many registrations become businesses. I am asking anyway. A client who registers a company that never trades is not a client for long, and a market that runs on registrations rather than operating companies is not one I want to be in ten years from now.

What a Better e-Residency Dashboard Would Show

None of this requires a new law. It requires four extra charts on a page that already exists:

• Companies founded by e-residents that filed an annual report for the previous financial year.
• Companies with reported turnover above zero, by founding-year cohort.
• Companies registered for VAT and companies with at least one employee on payroll.
• Companies deleted from the register or in liquidation, by cohort.

With those, “4,200 companies this year” would become a leading indicator rather than the whole e-Residency story. Until then, the prudent reading of any e-Residency record is the boring one: more people are registering more companies, faster, and we have no idea how many of them will be there in three years.

Registering an Estonian Company Is the Easy Part

If you are thinking about e-Residency, the statistics above are not an argument against it. Estonia remains one of the simplest places in the EU to set up and run a company remotely, and the tax system on retained profit is a real advantage. The lesson is narrower: the registration is the cheapest and least important step. What decides whether your company ends up in the 40% or the 60% is everything after it: a payment account that actually opens for your citizenship and business model, a VAT registration that survives the Tax Board’s substance questions, bookkeeping that files on time, and a realistic reason for the company to exist in Estonia rather than at home.

That is the work we do at Eesti Firma, from company formation with e-Residency through accounting and VAT registration. If you want an honest assessment of whether an Estonian company would work for you before you register one, rather than after, send us a request and we will tell you what we see.

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