What is e-residency?
Estonia was the first country to introduce an e-residency program in December 2014. The program allows non-Estonians to have access to a range of services such as company formation, banking, payment processing, and taxation. The program gives the e-resident a smart card which they can use to sign documents.
Thanks to e-residency, it’s possible for a Chinese entrepreneur to establish an Estonian company that can be run from Shanghai and serve their clients based in France, for example. Everything is handled online, remotely, and totally hassle-free.
Why Estonia?
Estonia has become a hub for industrial and logistics activities and is a world leader in IT. The country is uniquely positioned as a scalable location of choice for knowledge and digital business.
Some highlights:
- A member of the EU, eurozone and NATO, Estonia is politically and economically stable and secure.
- Estonia is the world’s most digitally enabled nation. Offering experienced talent, a stable environment, and innovation at its core.
- Estonia is a cashless society with over 99% of financial transactions happening digitally.
- With a highly-qualified workforce, specialising in engineering, electronics and IT, Estonia is at the cutting edge of R&D.
- Estonia developed the X-Road, its proprietary decentralised, distributed system in 2001 and has utilised Blockchain since 2008.
Benefits of Estonian e-residency
The Estonian e-residency program allows you to:
- Establish an EU-based company, 100% online
- Enter Estonia’s digital business environment, one of the most advanced in the world
- Keep your business in the EU
- Declare taxes or open an Estonian bank account
- E-resident status is granted to a foreigner for a period of 5 years
- Pay and receive payments using convenient online banking tools
- Go paperless with secure digital solutions
- Automate or delegate business administration
- Network with like-minded e-resident entrepreneurs
Why Lithuania?
Lithuania is a country with a rich history. It has long been a great place to do business, ever popular due the low costs of accounting and administration, low taxes and good geographical position.
Some highlights:
- It’s also a member of NATO, the EU and the Eurozone.
- Lithuanian, Russian, English, and Polish languages are widely spoken, making it easier to converse.
- The country is ranked 11th globally for Ease of Doing Business and has become a major financial hub.
- The New York Times ranks Vilnius alongside Copenhagen, Barcelona and Capetown as a trendy and well-managed place to live.
Benefits of Lithuanian e-residency
The Lithuanian e-residency program allows you to:
- Establish an EU-based company, 100% online
- E-resident status is granted to a foreigner from the moment of registration in the Register of Foreigners for a period of 3 years
- Declare taxes or open a Lithuanian bank account
- Automate or delegate business administration
Estonia vs. Lithuania — which program is better?
Here are the main differences between the Estonian and Lithuanian e-residency programs.
| Estonia | Lithuania | |
| Online application | Yes | Yes |
| Cost of application | 100-130 EUR | 90 EUR |
| Community size | 81,000+ e-residents to date | None |
| Application time | 30 mins | 10-15 mins |
| Dedicated infrastructure/employees | Yes | No |
| Supported languages | Estonian, English, Russian | Lithuanian, Russian |
| Ease of Doing Business rating (2020) | 18th | 11th |
| Ease of Paying Taxes (2020) | 4th | 6th |
| Cost of starting a business | 190 EUR | 73 EUR |
| Minimum share capital downpayment | 0% | 25% |
| Annual company running costs | Legal address +
contact person 120-730 EUR | Legal address
45-500 EUR
|
| Corporate tax rate | 0% / 14% / 20%* | 5% / 15%** |
* Corporate Tax Rate in Estonia is 0% until dividend distribution, and flat 14% or 20% at corporate profit distribution. Estonia has a deferred corporate tax system.
** Corporate tax rate in Lithuania is 5% if annual income less than €300k & up to 10 employees.
As you can see, there are a number of differences between the programs and it can come down to the scale of your business.
Generally speaking, Lithuania’s fee is cheaper than Estonia’s, but the Estonian program offers significantly more services to its e-residents, e.g. mobile ID, and being able to use Smart-ID to sign documents in state portals.
Applying for Lithuania’s e-residency program is four times faster than Estonia’s, but this is mainly because it is also significantly less comprehensive.
With dedicated infrastructure, a growing community of over 17,000 businesses and a wider range of languages available, the Estonian e-residency program is still the one to beat.
Take your first step with us
If you’re looking to establish a company in Estonia, InCorpora is ready and waiting to help.
Setting up an Estonian entity couldn’t be more straightforward, thanks to our dedicated team. Our tailored package covers all aspects of company establishment in Estonia, including:
- Setting up an IBAN for borderless banking;
- Boosting substance with payroll, leased office, etc.;
- Giving you limited liability;
- VAT registration, if required;
- Producing a tax residence certificate within 2 days;
- Setting up payment gateways.
Company registration takes as little as one week.
If you’re interested in the Estonian e-residency program, take the first step and get in touch with us today to book your free 15-minute consultation.
