Britons exploit eurozone loophole by taking Estonian e-residency
As Britons brace for the upheaval that Brexit could bring, some are turning to Estonia’s e-residency digital ID programme to keep doing business across the European Union.
Using its knack for digital innovation to capitalise on the global explosion in e-commerce, the small cyber-savvy Baltic euro-zone state became the first country to offer e-residency identification cards to people worldwide in 2014.
Touted as a “trans-national government-issued digital identity”, e-residency allows users to open a business in the EU and then run it remotely with the ability to declare taxes and sign documents digitally.
It does not provide citizenship, tax residency, physical residency or the right to travel to Estonia. Applications can be made online via the www.howtostayin.eu website and cost €100 (Dh434).
Just over 22,000 people from 138 countries across the globe have become e-residents so far, including around 1,200 Britons. Last year’s Brexit vote triggered a boom in applications from the UK.
Before it, only three British citizens applied per week, but that shot up to over 50 in its aftermath. There was also a 75 per cent spike in UK traffic on the website after the prime minister Theresa May triggered the Article 50 EU exit clause in March.
A “soft Brexit” would mean that
Britain could retain access to the European single market like non-EU member Norway. But the “hard Brexit” that has prevailed so far would involve Britain leaving the single market and the customs union, creating a nightmare scenario for UK businesses as there would no longer be free movement of goods and services.
“The UK may have chosen to leave the EU, but its entrepreneurs can still choose to remain inside the EU’s business environment” through e-residency, says the programme director Kaspar Korjus.
The e-residency spokesman Arnaud Castaignet says that if a British entrepreneur becomes an Estonian e-resident and establishes a company producing goods there they “will have the same access to the EU market as any EU company”.
Winners of the mayor of London’s 2017 Entrepreneur competition say they signed up for e-residency to mitigate the risk Brexit poses for their business, a start-up making environmentally-friendly wet wipes.
Ellenor McIntosh and Alborz Bozorgi both live in London but say they took up e-residency to be able to keep their company, Twipes, inside the EU’s single market.
Billing Twipes as “the future of toilet paper”, its owners say they have registered it both in the UK and Estonia to boost investor confidence.
“We had discussions with many investors from across Europe, Cyprus and Estonia in particular, and they view the uncertainty of Brexit as a huge risk,” says Mr Bozorgi.
Brit Dirk Singer established his Rabbit digital marketing agency six years ago in the UK, but wary of Brexit he digitally relocated it to Estonia last year thanks to e-residency.
“I applied for e-residency shortly before the EU referendum last year. Essentially, I was not so optimistic that we would vote to stay and so I saw this as an insurance policy,” says Mr Singer.
“Two of my five biggest clients are from the EU. I’m concerned that as a small UK service-based business, Brexit could start to make life difficult for me.”