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