Estonia E-Residency: How to Start an EU Business Online, Costs and Tax Benefits

Estonia isn’t just a Baltic country with medieval charm and digital ambition; it’s quietly become one of the most startup-friendly nations in the world. In 2014, Estonia launched the e-Residency program, allowing non-Estonians to access the country’s digital business environment.

What this means in plain terms: you can set up and manage a fully legal EU-based company online, without ever setting foot in Estonia.

Yes, really.

And it’s already caught the attention of names like Mukesh Ambani, Bill Gates, and Barack Obama, all of whom have reportedly taken Estonia’s e-residency.

What is Estonia’s E-Residency?

The e-residency is a digital identity program that allows non-Estonians to start and manage an EU-based company entirely online. It doesn’t grant citizenship, residency, or the right to live in Estonia. Instead, it provides access to Estonia’s secure digital infrastructure, letting entrepreneurs sign documents, run a business, and access EU markets remotely.

Who Is It For?

This isn’t a visa or a citizenship program. You won’t get the right to live or work in Estonia. But if you’re:

• A freelancer, remote worker, or entrepreneur
• Wanting to sell services or products globally
• Looking for an EU-based business structure without EU-level hassle

Then Estonia’s e-residency is worth a serious look.

What You Get with E-Residency

With your digital ID, you’ll be able to:

• Start and run an Estonian company 100% online
• Sign documents and contracts digitally
• Open a business bank account remotely
• Access EU markets under EU laws
• Enjoy corporate tax benefits (more on that in a minute)

The e-residency card you get isn’t a travel document. It’s a secure digital identity, not a physical residence permit.

How to Apply (and What It Costs)

The whole thing is straightforward.

1: Apply online: Go to e-resident.gov.ee and fill out the application. It takes about 30 minutes.

2: Pay the fee: The application fee is €100–120, depending on where you pick up the card. That’s under ₹11,000.

3: Background check: The Estonian Police and Border Guard Board runs a quick background check, usually within 6–8 weeks.

4: Collect your card: You can collect your e-residency kit from the Estonian Embassy or a designated pickup point in your country. For India, that means Delhi or Mumbai.

Documents You’ll Need

You don’t need a long list, but here’s what’s required:

• A valid passport
• A digital passport-style photo
• A statement of purpose
• Payment for the application fee

No interviews, no travel required.

Setting Up Your Estonian Company

Once you’re an e-resident, you can register an EU company online in a matter of hours. The average cost? About €250–300 (roughly ₹22,000–₹27,000). You’ll also need to pay for:

• A legal address and contact person in Estonia (required by law): ~€200–€400 per year
• Accounting services, depending on your business size

In total, you can be fully set up for under €600 (approx. ₹55,000).

It is worth noting that there are no annual or maintenance fees for Estonia’s e-residency card, which is valid for 5 years

The Tax Angle: Estonia’s 0% Retained Earnings Rule

Here’s where it gets interesting.

Estonia has a 0% corporate tax rate on profits kept within the company. So if you’re reinvesting into the business or holding profits, you pay nothing.

Withdraw profits as dividends? That’s taxed at 20%, but with no double taxation if you’re in a country that has a tax treaty with Estonia (like India).

Also:

• VAT (Value-Added Tax) applies only once your revenue exceeds €40,000/year
• VAT, income tax, and corporate tax all sit at a flat 20%

Real-World Benefits

• Global business legitimacy via an EU-registered company
• Access to European clients and investors
• Eligibility for EU funding and grants
• Simple, online-friendly bureaucracy

Estonia’s digital-first model also means you get stuff like:

• Free public healthcare, education, and transport (for actual residents)
• Government-provided internet as a human right
• A startup scene that’s punched way above its weight, 12 unicorns from a population smaller than a mid-sized Indian city

So, Should You Do It?

If your clients, operations, or ambitions are international, especially targeting the European market, this is one of the easiest, cleanest setups out there.

But here’s the catch: If all your customers are in India, and you’re not planning to expand globally, e-residency won’t add much value. You’ll still be dealing with cross-border payments, tax reporting, and regulatory complexity.

Final Thoughts

Estonia’s e-residency isn’t a magic wand, but it’s close. For freelancers, solo founders, and small teams aiming globally, it’s a shortcut to the EU business scene without the headache of relocation.

And for under €600, that’s not a bad deal.