The e-resident companies provided Estonia with record tax revenues last year.
In 2022, the state received 48.4 million euros of tax revenues from e-residents, a new record in the e-residency program. Tax revenues from e-resident companies increased by 46 per cent over the year.
Taxes paid by e-resident companies have been growing rapidly in recent years – in 2020 tax revenues amounted to 17.5 million, and in 2021 – already 32.5 million euros. Since its inception, the programme has had an economic impact on the state (tax revenues and state duties) of 157 million euros.
2022 was a successful year for the e-residency program. If we add to the tax revenues paid state duties, e-residents brought to the Estonian treasury a total of almost 51 million euros, which exceeded last year’s figure by as much as 27%. Last spring we approved the government’s further e-residency strategy, which, if successfully implemented, will increase the economic impact of the program to 100 million euros per year by the end of 2025», – said the deputy head of the e-residency program resident Katrijn Alasoo.
While in the early years e-residency attracted more future-interested people who wanted to experience the world-unique experience of a digital state, now the motivation for e-applicants. The desire to conduct business in Estonia without reference to location is becoming more and more frequent.
Every third new e-resident creates a company during the first six months, whereas only a few years ago it was one in five, – said Alasoo. — Since many e-resident companies are still at the start-up stage or on the verge of a rapid growth phase, one can assume that the growth of tax revenues will continue in the coming years».
According to Vice Chancellor of Business and Consumer Environment of the Ministry of Economy and Communications Sandra Syarav, e-residence over the years has proved that this is a very profitable initiative for the state. The e-residency results in 2022 show that Estonia’s business environment is extremely competitive globally. In addition to taxes, i.e., direct economic benefits, e-residency contributes to strengthening Estonia’s global reputation as an innovative digital state, as well as increasing the number of Estonian companies serving e-residents and their investments. The overall positive impact of the program is actually even greater,» added the Vice-Chancellor.
The largest amount of revenue was received last year from e-resident companies working in the information and communications sector (EUR 19.8 million). They are followed by companies in the professional, scientific and technical sector (EUR 7.9 million), as well as administrative and support activities (EUR 6.6 million).
During 2022, 4,467 new e-resident companies were established in Estonia, and by the end of the year the total number of established companies had grown to 24,413. The largest increase in absolute terms compared to a year earlier was seen in the number of companies established by Spanish citizens, which established 544 companies (+61%). Next are companies of citizens of Germany (421, +20%) and Ukraine (358, +8%).
The number of initial e-residency applications in 2022 was 11,835, 7 per cent less than a year earlier. The decrease is mainly due to the cessation of e-residency for citizens of Russia and Belarus immediately after the outbreak of war in Ukraine.
The e-residency programme was established in late 2014 with the aim of providing foreign citizens with safe access to Estonian public electronic services, facilitating foreign business in Estonia and increasing the revenue base of the State. To date, 101,000 e-residents from 176 countries have become Estonian e-residents (not counting repeat applications and revoked identity cards) who have established more than 25,000 Estonian companies. There are currently 63,200 digital e-resident IDs with a 5-year validity.