The Estonian e-Residency program has long been celebrated as a gateway to the European business environment for global entrepreneurs. However, legislative plans are underway to introduce restrictions for first-time applications from citizens of certain countries. It’s important to remember that access to e-Residency is a privilege, not a right—a benefit the Estonian government extends based on risk evaluations by relevant authorities. If the Estonian Parliament approves the draft bill 2024, these restrictions could take effect as early as the first or second quarter of 2025.
New Legislation to Address Risk Management
In September 2024, the Estonian Ministry of the Interior proposed a draft law restricting the eligibility of citizens from specific countries to apply for e-Residency. This proposed legislation would limit new e-residency applications and renewals for citizens of countries with which Estonia lacks sufficient judicial, law enforcement, and security cooperation.
Exceptions are foreseen for specific individuals, including those with a residence permit in the European Economic Area (EEA) who have lived there for at least three years, individuals with an existing business in Estonia, prior e-Residency status, or those with affiliations to Estonian diplomatic missions, including honorary consuls.
Which Citizenships Will Be Affected?
The draft legislation grants the Minister of the Interior discretion to maintain a list of countries whose citizens would require a residence permit in the EEA to apply for e-Residency. This list could be based on risk assessments from the Estonian Financial Intelligence Unit (FIU), which has long managed a list of high-risk countries for money laundering and terrorist financing. In 2022, e-Residency applications were blocked for Russian and Belarusian citizens in response to the Russian war of aggression against Ukraine.
The FIU exercises independent discretion when adding or removing countries from its high-risk list based on Estonia’s specific national risk assessments and referencing international bodies like FATF.
Even if individuals from affected countries obtain e-Residency before the new legislation takes effect, they often face severe restrictions on financial services within the EU, such as bank accounts, payment processors, and access to investment opportunities. This new law aims to formalize these limitations, clarifying that citizens of certain countries will not be eligible for e-Residency under standard conditions except in specific situations outlined in the draft bill.
Our Approach Explained
At Unicount, we fully support global entrepreneurship but recognize the importance of complying with Estonia’s evolving legal framework. We continue to welcome e-residents from various countries worldwide, but these new legislative developments and any updated list of eligible countries may impact who can access our services.
Our internal list of unsupported citizenships and residencies follows our regulator’s (FIU) high-risk country list, with a few exceptions. In 2022, we also blocked services for Russian and Belarusian citizens and residents in alignment with the Estonian government.
Residency alone isn’t the deciding factor; we consider citizenship and residency when accepting new clients. This means that individuals with unsupported citizenship cannot access our services, even if they reside elsewhere. In a globalized world, verifying the residency status of digital nomads is challenging, so we do not rely on utility bills or similar documents to establish residency.
Access to Financial Services
Even before these proposed legislative changes, e-residents from certain non-EU countries faced considerable challenges accessing essential financial services for running their businesses. According to an FIU report titled “Foreign-related Companies: A Year and a Half Later,” many e-resident entrepreneurs from non-EEA countries have been forced to abandon their companies, leading to mass deletions from the Estonian Business Register.
Some of the main obstacles for e-residents from non-EEA countries include:
- Opening bank accounts: EU financial institutions are cautious of potential penalties and often refuse accounts to individuals from non-EEA countries.
- Integrating payment systems: Platforms like Stripe and PayPal may block access based on citizenship or residency in non-EEA countries, limiting the ability to receive online payments.
- Securing funding: Access to investment or loans is frequently unavailable, as lenders apply strict risk assessments that exclude founders from non-EEA countries.
For some, these proposed application restrictions could mitigate the disappointment after being approved for e-Residency, but finding it challenging to leverage it for business purposes. This change may prevent applicants from experiencing frustration with restricted financial access post-approval.
Supporting e-Residents Since 2019
Estonia’s e-Residency program holds immense potential, but the proposed legislation underscores the challenges of balancing national security with fostering a borderless business environment. At Unicount, we remain committed to offering transparent and current information to all potential e-resident founders. Our resources on opening bank accounts, understanding Estonian tax laws, and complying with reporting requirements are crafted to support entrepreneurs navigating Estonia’s regulatory landscape. If you have any questions, feel free to contact us. While we can’t change the legislation, we are here to help you make the most of Estonia’s e-Residency program.
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