Comprehensive E-Residency Glossary: All Terms and Definitions for 2025

Estonia’s e-Residency program, launched in 2014, has revolutionized how entrepreneurs, freelancers, and digital nomads can establish and manage businesses in the European Union. By providing a government-issued digital identity, e-Residency enables non-residents to access Estonia’s advanced digital infrastructure, start an EU-based company online, and operate it from anywhere in the world. As of 2025, over 120,000 e-residents from 170+ countries have joined, creating more than 33,000 companies. This glossary provides a super extensive dictionary of all e-Residency-related terms, offering clear definitions and practical insights to help you navigate the program. Whether you’re applying for e-Residency, registering a company, or managing taxes, this guide covers every key term in detail.

Why This Glossary Matters

The e-Residency program involves a range of technical, legal, and financial terms that can be overwhelming for newcomers. This glossary organizes these terms into categories—application process, company formation, taxes and compliance, banking and finance, digital tools and security, legal and regulatory, and use cases and benefits—to make them easy to understand. Each definition is written for clarity, ensuring that both beginners and experienced entrepreneurs can use this resource to make informed decisions. By mastering these terms, you’ll be better equipped to leverage Estonia’s digital ecosystem for your business.

Glossary of E-Residency Terms

Application Process

• Activation of the Card: The process of enabling the digital ID card online after collection from a pickup location. Activation typically takes up to 24 hours and is required to access e-services. Instructions are provided in the e-Residency kit 
• Application Fee: A €150 fee (as of 2025) paid when submitting the e-Residency application. It covers the cost of processing and issuing the digital ID card 
• Background Check: A verification process conducted by the Estonian Police and Border Guard Board (PBGB) to ensure applicants have no criminal record and meet eligibility criteria. It typically takes 10 business days.
• Digital ID Card: A smart card issued to e-residents for secure digital authentication and signing of documents. It enables access to e-services like the E-Business Register and is valid for five years 
• DigiDoc4 Software: A software application used to manage digital signatures and access e-services with the digital ID card. It’s essential for signing documents and authenticating online transactions
• E-Residency: A government-issued digital identity for non-residents, allowing access to Estonia’s digital services and the ability to start and manage an EU-based company online. It does not confer physical residency or citizenship
• Eligibility: Applicants must be at least 18 years old, have no criminal record, and not be Estonian citizens or residents. A clear motivation for applying (e.g., starting a business) is required 
• Fingerprinting: A mandatory step during e-Residency kit collection, where applicants provide fingerprints for identity verification at the pickup location 
• Motivation Statement: A brief explanation submitted during the e-Residency application, outlining why the applicant wants to become an e-resident and how they plan to use the digital identity (e.g., to start a business)
• Passport Photo: A recent digital photo (1-5 MB, .jpg/.jpeg format) required for the e-Residency application to verify the applicant’s identity
• Pickup Location: Designated sites, such as Estonian embassies or consulates in 36 countries, where e-residents collect their e-Residency kit. Applicants select a location during the application process

Company Formation

• Articles of Association: A document outlining the company’s structure, objectives, and operational rules. It must be submitted during the company registration process via the E-Business Register
• Company Registration Fee: A €265 state fee for registering a private limited company (OÜ) in Estonia. Some service providers may charge an additional API fee (e.g., €25 with Unicount).
• Contact Person: A licensed individual or entity in Estonia who serves as the company’s point of contact with local authorities. They ensure compliance but have no decision-making authority.
• E-Business Register: An online platform where e-residents register their companies. It enables fast registration, often completed in 15 minutes, with approval within 1-3 business days.
• Management Board: The body responsible for managing the company’s operations. It can consist of one or more members, who may be shareholders or external individuals.
• Private Limited Company (OÜ): The most common business structure for e-residents, offering limited liability and no minimum share capital requirement (only €0.01 per share pledged within 10 years)
• Share Capital: The capital invested by shareholders in a company. For OÜ companies, there is no minimum requirement, but shareholders must pledge at least €0.01 per share within 10 years
• Supervisory Board: An optional body that oversees the management board and represents shareholders’ interests. It is not required for small companies.
• Virtual Office: A service providing a legal business address and contact person in Estonia, required for all companies as they must have a physical address in the country

Taxes and Compliance

• Accounting Services: Outsourced services for tax reporting, bookkeeping, and filing annual accounts to ensure compliance with Estonian regulations. Providers like Unicount offer plans starting at €99/month (excluding VAT) 
• Annual Reporting: The requirement to file annual accounts with the Commercial Register within six months of the financial year-end. Even inactive companies must submit a nil return 
• Corporate Income Tax: 0% on undistributed profits (reinvested in the company) and 24% on distributed profits (e.g., dividends) as of 2025. This encourages business growth 
• Defense Tax: A 2% tax on personal income and company profits, introduced in January 2026 to fund national defense
• Personal Income Tax: A flat rate of 24% on all personal income, including employment, business activities, and investments
• Tax-Exempt Benefits: Allowances for business-related expenses, including €0.50/km for car use (up to €550/month), €75/day for the first 15 days of international travel, and €400/year for health promotion expenses
• VAT (Value Added Tax): A 24% standard rate applied to most goods and services. Companies must register for VAT if their annual turnover exceeds €40,000, requiring monthly or quarterly filings
• VAT Reporting: The process of filing monthly or quarterly VAT returns for VAT-registered companies, reporting VAT collected on sales and paid on purchases

Banking and Finance

• Banking: E-residents can open business bank accounts with fintech providers like Revolut Business or Wise, offering EU IBANs and multi-currency support, or with traditional banks like Swedbank, which may require additional documentation Nomad Capitalist.
• Crypto-Assets: As of 2025, e-residents can invest in regulated crypto-assets and crowdfunding instruments through Estonian platforms, expanding financial opportunities.
• EU Market Access: The ability to trade goods and services within the EU’s single market, a key benefit of an Estonian company, enabling seamless cross-border trade e-Estonia.

Digital Tools and Security

• Digital Signatures: Legally binding electronic signatures equivalent to handwritten signatures in Estonia. They enable secure online document signing and are recognized globally with agreement e-Estonia.
• Identity Wallets: Secure mobile apps under the EU’s eIDAS 2 regulation for storing digital identities, signing documents, and accessing services across Europe.
• Mobile-ID and Smart-ID: Alternative digital identification methods using smartphones or other devices, providing secure access to e-services without the physical digital ID card.
• Split-Key Technology: A security method that divides cryptographic keys between the user’s device and a secure server, enhancing the safety of digital transactions e-Estonia.

Legal and Regulatory

• Commercial Register: The official register listing all Estonian companies, providing public access to information like ownership, management, and financial statements
• Double Taxation Agreements: Agreements between Estonia and other countries to prevent income from being taxed twice. E-residents should check these for tax obligations in multiple jurisdictions.
• Liquidation: The process of winding up a company, distributing its assets, and settling liabilities when it ceases operations.
• Tax Residency: E-residents are not automatically tax residents of Estonia. Tax residency depends on where the individual lives and works, but Estonian companies are subject to Estonian corporate tax on worldwide income

Use Cases and Benefits

• Cross-Border Trade: Facilitated by e-Residency’s access to the EU single market, allowing companies to trade goods and services across borders with minimal barriers e-Residency
• Digital Nomad: Remote workers who use e-Residency to establish a stable business base while traveling, benefiting from a professional EU presence Planet Nomad.
• Freelancer: Self-employed individuals who leverage e-Residency to create a professional EU presence, manage invoicing, and handle taxes efficiently
• Startup: New businesses, particularly in tech or innovation, that use e-Residency to access EU markets, funding opportunities, and a transparent business environment e-Estonia.

Additional Terms

• Annual General Meeting (AGM): A yearly meeting of shareholders to discuss company performance, approve financial statements, and make key decisions Baltic Legal.
• Audit: An independent examination of financial statements to ensure accuracy and compliance. Not mandatory for all companies but may be required for larger businesses Eesti.ee.
• e-Residency Kit: Includes the digital ID card, USB card reader, and PIN codes. It must be collected in person from a designated pickup location e-Residency Application Guide.
• Financial Statements: Reports summarizing a company’s financial performance, including the balance sheet, income statement, and cash flow statement, required for annual reporting E-Business Register.

Practical Applications

This glossary is a vital resource for anyone exploring e-Residency. For example:

• Entrepreneurs can use terms like “E-Business Register” and “Private Limited Company (OÜ)” to understand the company formation process.
• Freelancers benefit from knowing “Digital Signatures” and “Banking” to manage contracts and payments efficiently.
• Tax Professionals can refer to “Corporate Income Tax” and “VAT Reporting” to ensure compliance.

FAQs

1. What is the cost of applying for e-Residency?
   The application fee is €150 as of 2025, covering processing and issuance of the digital ID card 
2. How long does it take to register a company?
   Registration takes about 15 minutes via the E-Business Register, with approval typically within 1-3 business days
3. Do I need to visit Estonia?
   You must collect your e-Residency kit in person at a pickup location, but no further visits are required for company management
4. What taxes apply to e-resident companies?
   Companies pay 0% corporate tax on undistributed profits and 24% on distributed profits. A 2% defense tax applies from 2026
5. Can I start any type of business?
   Yes, but regulated industries like finance or crypto may require additional licenses Baltic Legal.

Conclusion

Estonia’s e-Residency program offers a powerful opportunity for global entrepreneurs to establish and manage an EU-based business with minimal bureaucracy. This glossary provides a comprehensive understanding of all related terms, from application to compliance, empowering you to navigate the program confidently. Whether you’re a digital nomad, freelancer, or startup founder, these definitions will guide you through the process. Start your e-Residency journey at e-resident.gov.ee or explore service providers like Unicount for support.