'This is so freaking huge man, it's insane': The plan to let anyone become European – digitally

'This is so freaking huge man, it's insane': The plan to let anyone become European – digitally

Summary: Estonia's government has launched a plan to bring e-resident ID cards to the country — meaning anyone can apply to be an Estonian citizen, whether they've set foot in the country or not.

TOPICS: Security, Government, EU

In the near future, those from outside the country will have an opportunity to apply for an Estonian e-resident ID card — which means that they can use Estonian online services, open bank accounts, and start companies without ever having to physically visit Estonia.

That is, if they pass a background check similar to the visa application process and sign up to identify themselves with biometrics such as their fingerprints or iris scans.

The Estonian Ministry of the Interior's idea to give foreigners their own Estonian ID cards was conceived seven years ago. At the end of April, the Estonian government approved the concept of e-residency and the once seemingly-utopian idea is now finally is coming to life.

If the Estonian parliament makes the relevant changes to legislation without any significant delays, the Ministry will be ready to hand out the first ID cards for e-residents at the end of this year.

To start with, future e-residents will have to apply for their e-residency in Estonia itself, but it looks likely that sometime in 2015 it will also be possible for them to verify their identity, apply for and receive the ID card from Estonian embassies and consulates abroad too.

Under a plan presented by the deputy secretary general for communication and state information systems Taavi Kotka, the head of the Estonian Ministry of the Interior's migration and border policy department Ruth Annus, and ICT policy adviser at the government office of Estonia Siim Sikkut, in 2025 10 million people could already have got Estonian e-identity.

"Ten million e-residents is a bold goal which shows our ambition," Kotka said. "We want to create an infrastructure with our services that would permit companies, and not only Estonian companies, to use that infrastructure and make Estonia bigger. We have 80,000 companies in Estonia right now, if we could double that number with e-residency, it really would be something big."

Annus pointed out that although it is possible for a person to verify their identity with the e-resident ID card online, it doesn't automatically give them and the commercial transactions carried out using their ID card Estonia's legal protection, and instead the legal position of an e-resident is similar to that of a foreigner in the country.

Kotka said that the e-residency is an privilege, not a right, and if a person's business activities don't abide by the country's laws and regulations, that privilege will be taken away by the state.

"If a person has an investment account in Estonia and his or her business activities seem shady to the state, it is possible to invalidate his or her e-resident ID card," Kotka said. "This doesn't mean that the bank account will be frozen or something will happen to the money in it, but it means that it is not possible to access the account with his or her ID card and he or she has to physically come to Estonia to the bank to get access to the money or contact the bank to find alternative possibilities for accessing the money."

In his opinion, Estonia has great potential to attract entrepreneurs needing an investment account in the European Union, bringing more customers to Estonian companies and capital into the country's economy. Future e-residents could be charmed by the opportunity to create a company and bank account in the European Union in just one day, the country's fully online tax system, and its highly developed internet banking infrastructure. Also, any profit reinvested in Estonia is tax-free.

Kotka said that the state's role is to develop a basic platform for businesses, but the success of the e-residency plan will depend on how the private sector runs with the idea.

"The most important thing is to figure out why the foreigners would like to want our e-identity," he said. "The number of the users will depend directly on the question: can we, cooperating with the private sector, create the extra value or not?"

The private sector has already seen the potential in the plan.

"Only recently a medical services company that has a lot of clients in this region turned to me. They proposed that their clients could access their private data and the digital environment with that card," Kotka said.

Besides amending legislation, there are other obstacles that will need to be removed before the full potential of e-residency can be realised. Right now, if you want to open an account in a bank you have to physically visit the bank so that a cashier can perform a face-to-face identity check.

In Kotka's opinion, if a person has already validated their identity at an Estonian embassy or consulate abroad, and passed the background check and been given Estonian e-identity with the e-resident ID card, this second verification step is unnecessary. 

The head of retail banking at local bank LHV Pank Andres Kitter welcomed the idea of giving Estonian non-residents an opportunity to apply for an ID card, and said that although the project is only in its initial stages, its introduction will bring benefits.

"The certified e-identity would make it a lot easier for our non-resident clients to use the bank's services," he said. "It is too early to say if we can make all banking services, account opening among them, fully digital, because it depends on the changes in legislation and regulations, but our hopes are high."

Making e-residency into a reality entails some inevitable risks – criminals will start searching for ways to launder money and hackers will take a greater interest in breaking in Estonian e-systems.

"Criminals are going to be always there," he said. "The question is, are we going to abandon a truly innovative idea because of that? If there are 100,000 companies created and 4,000 of them are scams… that's a problem that we will deal with, but it shouldn't stop us.

"We have to keep in mind that these people are not going to live here [in Estonia], but they use Estonian e-identity to get access to certain services in order to invest and do business in European Union, while living somewhere else."

Sten Tamkivi — the former general manager of Skype, and now an entrepreneur in residence at Andreessen Horowitz — is excited about the idea.

"I sent a description of the plan to some well-known investors in Silicon Valley," he said. "If the startups in their portfolio want to expand their business to Europe then instead driving to San Francisco international airport, they can just walk to Page Mill Road, step into the Estonian honorary consul Richard Horning's office, and become an e-resident of European Union via Estonia.

"[They can] register their companies, open accounts — do everything they need to. The first reaction I got from one legendary investor was just one line — 'This is so freaking huge man, it's insane'."

Read more from Estonia

Topics: Security, Government, EU

Kalev Aasmae

About Kalev Aasmae

Kalev Aasmäe is a technology and economics journalist, who also writes for the oldest and largest quality newspaper in Estonia, Postimees.

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  • That make sense ...

    ... as those in the first wagon get more, as most things in internet. The end of the physical countries as we know today is just one more station in the internet journey we are in.
  • Smaller world

    I wonder if the end of the Nation-State will occur in our lifetimes.
    • I think the opposite is likely

      As the e-resident idea grows, a nation can be defined by a smaller and smaller geographical area, but still utilize economy of scale by association, like Estonia and the EU. So, perhaps the nation-state becomes the city-state, but a defined, independent nation none-the-less. Instead of 160ish nations, the world will have 5,000 independent nations. Welcome to the Republic of Des Moine.
  • Eeeeeeee-ewwwwww

    Can e-taxes be far behind?
    Just wait until Putin’s tanks roll in and you get e-drafted.
    • That's fine

      As long as you get e-drafted for the e-war.
      • e-Bang!

        ePow!! e-Biff! e-boom! e-oww!
        Load the antiviral cannon!
        (We need reinforcements! Send in the C+++ updates!)
        It's down, Bones ...
        Dammit, Jim! I'm an IT, not a programmer!
    • Taxes are a joke in Estonia

      You literally log into the bank one day and there is your tax form. You sign it with your id-card and that's it. I had no return, but I heard those take a day. US taxes... I don't even know where to begin.
  • What about military service?

    Does Estonia have either a draft or a requirement that all citizens must serve in the military for a specified time period as in Israel? If so, this is one way to build an army.
    Rabid Howler Monkey
  • Dual citizenship

    Where and when can I apply?
  • What if dual citizenship is not legal in your country?

    The US Constitution states that citizens must not accept titles of nobility from any foreign prince, and the oath of naturalization includes swearing that you give up all allegiance to any foreign power. Now as a practical matter, you can't help it if you were born in a country that considers you, according to THEIR laws, a citizen for life regardless of whatever oaths you take to become a citizen somewhere else (the War of 1812 started partially because British ships would stop and board US merchant ships and "draft" their crews into the British Navy). And you can't help it if, because of your ancestry, some other nation says that if you travel there, you COULD claim citizenship. But actually APPLYING for citizenship, even electronic citizenship, COULD get your US citizenship revoked even if you are native born. Then you could be deported to your "new" country and lose control of the financial assets (home, car, possibly computer if it is not "export approved") back here at home.

    I am not a lawyer, but I would definitely find one and consult with him/her BEFORE trying something like this.
    • What?

      Ok, first of all, citizenship is not a title of nobility, so take that right off the table.

      And I am a U.S. born citizen, so took no oath.

      3rd, there are thousands upon thousands of people with dual citizenship, with one of them being U.S. I work with several.
    • 8th paragraph

      "it doesn't automatically give them and the commercial transactions carried out using their ID card Estonia's legal protection, and instead the legal position of an e-resident is similar to that of a foreigner in the country."

      So, no. No Double nothing
      Edmundo Oliver
      • Yes!

        I mean, no! Unless you are a criminal yourself. I bet most of us are, by heart. Just think of the endless bounty on the digital streets of Estonia! You could do anything! You could be anything!

        And instead of convincting you (is gonna be hard) they just expell you. Nice.
    • Err

      If that law is on the books it's a pretty funny one. Anyway if it is the U.S. clearly has no interest in enforcing it whatsoever since there are many many people with dual citizenship. Also there are plenty of people who were 'knighted' by the queen of England and they certainly are not getting booted out of the U.S.

      There are plenty of dated unenforced laws out there worth a good chuckle if you look hard.
      Koopa Troopa
    • But wait...

      Douglas Fairbanks Jr , Steven Speilberg and several others hold honorary knighthoods. That is a title of nobility. Those lines have blurred a long time ago.

      Revoking your citizenship? If you were born in the United States of naturalized parentage then you are a citizen period. Otherwise having it revoked would help TREMENDOUSLY insofar as Obamacare, the IRS and the Draft are concerned. Just think, you would no longer be required to pay taxes and could live here illegally indefinately. Because if INS caught you, where would they deport you to?
    • E-Residence (not citizenship) The article is slightly misleading

      They are saying you can get an ID card exactly like a residence permit (like I have). So you would have an e-residence permit. So it's likely a limited set of services for businesses and stuff. Citizenship is a totally different concept.
  • Supranationalism

    This makes sense as some say nationalism creates barriers which can be removed by supranational ideas like these pan e-wallet creation.
    • What next?

      Bitcoin becomes Estonia's national currency?
  • Depends on tax policy, in the final analysis

    Many European countries will tax you as a resident if you regularly spend more than three months a year in their country (you can consult lowtax.net for more specific information, great little online source which sends you emails of the issues, too).

    Estonia won't benefit at all from this if it doesn't tax. But if it overtaxes, then it won't get the draw it wants. Cute country, interesting people, only can make up for so much of the cost. So if its tax policy is sound, and there are cross-credits for income earned in the applicant's home country (i.e., the US), then valid 'citizens' will be added, though remote.

    I personally would love the idea, not to abuse the system, but to actually eventually take up residence there. But show me the tax rules first: gift, income, property, estate, business taxes -- or it's a no-go.
    • Cayman Islands without the beaches

      Assuming Estonia taxes at some level, this will only make sense for people avoiding higher taxation in their current country of residence. Expect a swift response from said current location as tax revenues drop.