Estonian E-Residency, Company & Bank Account [My Experience]

In this video, I’ll share my first-hand experience applying for & using the Estonian e-Residency program.

I will talk about what it is, it’s tax-saving benefits as well as how I set up an Estonian company & took a flight to Tallinn to open a bank account.

Toward the end of the video, I’ll answer some frequently asked questions & share with you my thoughts about this program now that I’ve been “using” it for several months.

Needless to say, everything mentioned is based on personal experience – unlike what you’ll see in many other videos where people only talk about what they’ve read or researched.

What Is The Estonian e-Residency?

Simply put, e-Residency is a program which allows you to get a government-issued digital identity (comes with an actual card & card reader) that you can then use to access a number of services that used to be available for Estonian citizens only.

This program has nothing to do with an actual residency, nor does it confer citizenship or tax residency.

In theory, anyone can apply. You DO NOT need to be a citizen of Estonia, or of a member country of the European Union.

In practice this means, the digital identity you obtain via this program, allows you to establish a company online, do e-banking and sign documents that have legal validity. – All without ever leaving the comfort of your home.

You get this card.

Sounds nice, but why would you want this identity card?

The most common reason people participate in this program is to be able to set up an Estonian company, which offers a multitude of benefits.

  • Establishing an Estonian private limited company (OÜ) is very low cost(I paid 190 Euros via Xolo/LeapIn). Thereafter the monthly accounting fee is around 90 Euro per month + 2 Euro per month for the business debit card. (Example: You make 2000 per month in profit = the 92 Euro in monthly fees would only be 4.6% of your total expenses – and that percentage gets even lower the more money you earn!)
  • Liability is limited to the share capital (minimum 2500 Euro), which means liability is limited to 2500 Euro only. That’s another reason to open a company – to limit liability in case you run into legal issues.
  • No income tax on profits. In most other countries, income tax liability arises when a profit is earned. In Estonia, only distributed profits are taxed (at 20%). This means, as long as you keep the money in the company (spend or invest it) – you are not subject to corporate income, nor capital gains tax.
  • Estonia also provides a 100 percent exemption on all foreign earned income. If you make money online (and the source of your income is not in Estonia), you pay no income tax on those earnings.
  • Lastly, you benefit from Estonia’s credibility as a EU member state. Yes, you might be able to set up a low cost, tax-free corporation and a bank account in some offshore haven but it’s not unlikely that you’ll run into several issues down the road – such as not being able to transfer the money from that offshore bank account to a bank account in a Western country, high banking fees, credibility issues when billing clients and/or opening PayPal and Google merchant accounts.

What are the downsides? What else is important to know?

  • In general, anyone can apply for e-Residency (no restrictions in terms of citizenship), but additional legislature based on your country of residency and/or citizenship may apply and make establishing an Estonian company (if that’s your plan) less suitable. – It’s rarely as easy as, “Establish company in Estonia (instead of home country) and simply pay no taxes.
  • You can do accounting yourself, hire an accountant of your choice or work with LeapIN. LeapIN is a very affordable service provider that helps you set up your company, bank account and takes care of all the accounting. If you decide to work with them (highly recommended), every business expense needs a receipt and to qualify as an approved expense directly related to your business. You can’t just use your corporate PayPal (or bank) account for personal use … or withdraw cash (as cash expenses can’t be traced).
  • At the time of writing this article, it is not possible to wire money in USD to your Estonian bank account. If you get paid by Google, Amazon or withdraw from your PayPal account, this is not an issue. Well, in the case of PayPal, you will be subject to their horrendous conversion rates if you withdraw. PayPal has informed me that this legal restriction might change in the future where direct US Dollar withdrawal are possible. Until then, the only work around would be to keep the money in your PayPal account or try to receive payments in EURO in the first place. You would only run into problems if you need your customers to directly wire US Dollar to your bank account, which is not possible but a service called TransferWise (also based in Estonia) can help you here.

Looking at all these benefits & downsides, using such an Estonian private limited company setup is particularly suited for location-independent freelancers & small businesses owners.

It terms of the money required to get started, it’s very affordable & and as such low risk. LeapIN even offers a reduce monthly rate of 49 Euro, I quote “for up to 6 months or until revenue comes in.”

Requirements & Costs

I’m going to tell you exactly what you need – from applying for e-Residency to establishing a company and opening a bank account.

  • Credit Card – The only accepted payment method for the e-Residency online application.
  • Digital picture based on specific criteria (you’ll see the info on their page).
  • e-Resident smart ID card is 100€
  • State fee for registering a private limited company was 190€. This fee will likely go up in the future.
  • Share capital must be a minimum of 2500 EURO. (This doesn’t have to be paid immediately. It has to come from you personally and go into the corporate bank account – you can then use it for your business.)
  • Business e-mail address & Estonian phone number. To get a professional business e-mail address, you simply buy a domain name of your choice ( around 17 Euro per year) and a local phone number you can get via Skype (19.95 Euro per 3 months).

My ACTUAL costs also included a train ticket to the closest Estonian consulate plus a flight to Tallinn to open the bank account. All in all, an additional 400€.

The Steps

1.) Online Application

Visit – It took me about half an hour to fill out the application and pay the fee. After that you’ll have to wait a few weeks to receive an email from the Estonian Police and Border Guard Board that (hopefully) your e-Residency application has been approved.

2.) Pick Up Your e-Residency ID

When you fill out the application, you have to select an Estonian consulate or embassy near your from which you will pick up your ID card. Once my application was approved, I simply emailed the embassy near me and got an appointment 2 days later.

The appointment at the embassy did not take longer than a few minutes. Fingerprints are taken and you need to sign that you received the package (ID card, card reader & PINs).

3.) Activate e-Residency ID

Inside the package that you get are the following items.

  • Digital Identity Card
  • Card Reader (works with USB)
  • PIN & PUK
  • Instructions on how to activate your ID card.

The activation of the card takes less than 5 minutes.

Now you’re done!

You can now use the card … and do so in many ways. You can hire a lawyer to setup or a company or do it yourself … or (just like I did) …

4.) Create Company via LeapIN

LeapIN works with the e-Residency program and I had heard of them from another blogger. I went to their site and applied here:

They will then tell you whether they will work with you. Once I got accepted, I logged on to their site via my smart ID and uploaded the documents necessary to set up my company. (Correspondence with customer support was done via email.)

Setting up the company took only a few days.

Once that was taken care of, I had the necessary documents to open up a PayPal merchant account.

LeapIn offers a 58.80€ “Starter” plan that you can used until you receive or make payments at which point you have to upgrade to a full plan.

5.) Open Business Bank Account

This is also done via LeapIN. You provide them with all the necessary documents (passport copy) – they will then submit the application to the bank.

LeapIN (when I applied for an Estonian bank account) worked with LHV and Swedebank.

Once my application was approved, I booked a flight to Tallinn for 2 weeks later. It was said that at some point in the future, it might be possible to open a bank account remotely.


Can I set up the company, open a bank account and do accounting myself?

Yes, of course! The question is why you would want to.

It’s a lengthy process and many of the documents will be in Estonian only. There’s no scenario that I can think of where I would recommend doing any of the steps on your own – the 90 Euro per month you spend on accounting and the initial company set up fees are incredibly good value!

Can I run this company anonymously?

Yes, but you will need to appoint a trustee which raises operational costs.

Can I pay myself a salary?

Yes, there are several ways of doing this, both of which are subject to taxation of a minimum of 20%.

What can I pay for with company funds?

This is where it gets really interesting. I’ve mentioned already that essentially there’s no income tax if you keep the money in the company.

Of course, you might ask what’s the point of that – at some point one will have to take the money out anyway, so the tax obligation is only delayed, not avoided.

It depends. There are 2 benefits to this system.

Business Expenses

A lot of the expenses you would pay for out of your own pocket (might) qualify as company expenses.

Depends on your business, but generally business-related hardware, services, renting co-working space, flight costs & a daily allowance of up to 50 Euro per day to cover everyday costs (e.g. food) during business trips qualify.

So, right away, the amount of your own money that you need is reduced.

Investing & Timing The Payout

The other benefits will depend on your personal situation, such as where you are a tax resident. Say, you live in the US and as such money you invest is subject to capital gains tax. This taxation of course slows down the effects of compound interest.

With an Estonian company, you can let interest accumulate at 0% taxation.

If you decide to make take money out of the company, you can time it – e.g. during a year in which you are a resident in a country with low/no income tax.

There are more ways to structure all this to your advantage, but it’s highly personal.

Can I buy stocks/funds with company funds?

Yes, you can actually open an investing account within the e-banking platform (LHV) and start investing. Again, you don’t pay capital gains tax as long as you don’t take the money out of the company.

What are the annual operational costs of the business?

It will depend on your business setup. I’ll what I’ll pay. So first, there’s the expenses for the accounting services. I am using LeapIN and pay 95 Euro per month using their “Professional” plan.

Then – as I’ve mentioned – 2 Euro per month for the business debit card.

My business email address (more specifically the domain name) costs 17 Euro per year.

The Estonian Skype number is 19.95 Euro per 3 months.

That means the yearly operational costs of my Estonian company are 1260 Euro. It might seem like a lot, but if you take into account the tax-saving benefits, it’s really a great deal!

I’m a digital nomad. What does selling digital services/products look like with such a company setup?

Well, it’s actually pretty straight-forward. Generally-speaking, there are 2 ways to sell digital products and services online:

  • Via a Marketplace (such as Amazon, Gumroad, Google Play Store, etc.)
  • Directly to the customer – for example via PayPal.

If you sell via a marketplace, no further action is required on your part. The marketplace provider will automatically handle VAT, sales tax, etc.

All you need to do is submit the address of the company from which you received payments to LeapIN. Say, Amazon pays you commission for your Kindle eBook, then you simply let LeapIN (that’s the accounting service) know the address of Amazon and that’s all.

Now, if you decide to sell directly to customers with no middleman – say by sending them a money request via PayPal, then you need to collect the address of the customer and depending on the customers location VAT and/or sales tax applies.

There are service providers that automatically take care of this, so no manual calculations are required. Once again, when the payment is received, you simply submit the customers address info via the LeapIN platform & you are done.

So, if you thought running such an Estonian company all of the accounting can be skipped, that’s of course not the case, but paperwork is reduced to a minimum. I spend less than 30 minutes per months handling the accounting part, which is really nothing.

Where can I get help or questions answered?

One thing to keep in mind: There are a lot of people writing about and offering consulting services related to e-Residency and everything that comes with it.

Before I decided to go through this process, I also did consulting with such a person and later learned that some of the information I received was incorrect (nothing tragic, but a bit inconvenient).

The lesson? Go with someone that can VERIFY that he has practical knowledge of doing this. This was the goal with this video to proof that I actually did all this, obtained my e-Residency, went to Estonia to open a bank account … VS. just writing about it (which anyone can do).