A lot of hype, a lot of half-knowledge: For whom is it really worth starting a business in Estonia?
Digitalization as a state principle – that's Estonia. Estonia introduced e-residency back in 2014, establishing a reputation as a digital model . Estonia was the first European country to introduce a digital ID card.
Particularly interesting for founders: Estonia is the first country in Europe to allow foreign entrepreneurs to found a startup entirely online, without ever having to be on-site. Success stories can also be found on LinkedIn. One founder reports "starting a business in his underwear." According to e-government Estonia, the digital nation now boasts over 120,000 e-residents from more than 170 countries, who have collectively founded over 33,000 startups.
These low hurdles, tax incentives, and the ability to manage everything digitally are what e-residency is promoting and aiming to attract international founders. Because it's worthwhile for Estonia. In 2024, e-residencies contributed 0.4% to state revenue —approximately €67 million out of €16.8 billion. In 2024 alone, around 20 percent of all new startups in the country were initiated by e-residents—a new record. Interest is also growing from Germany: 299 startups were founded there last year.
Estonia, once a Soviet periphery, has developed into Europe's digital flagship democracy since its independence in 1991. The Baltic EU and NATO state, with close ties to Finland, has pursued a clear strategy since the late 1990s: digitalization as a state principle.
The country invested early on in IT infrastructure. For example, in schools and government offices: In Estonia, children learn programming from the first grade onward, and all administrative procedures can be completed online . Since December 2024, couples have even been able to get divorced online .
The Estonian government's most ambitious project: e-Residency, a digital identity program designed to attract global entrepreneurs without ever requiring them to set foot on Estonian soil. But this digital pioneering spirit also has its downsides:At the end of 2022, the Council of Europe warned of security gaps and (residual) risks of money laundering and terrorist financing in the country, especially among non-EU e-residency users. However , according to a January 2025 report by Moneyval , the Council of Europe's Committee of Experts on Money Laundering and Terrorist Financing, the situation has improved significantly.
But despite all the enthusiasm, starting a business in Estonia isn't a panacea, nor is it the best solution for everyone. It's important to ask yourself critically: What specific advantages does e-residency offer, who is it attractive for—and who is it not suitable for ?
We provide answers to 6 crucial questions :
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