Estonia’s Digital Nomad Bet Pays Off — E-Residents Generate €125M

The country’s pioneering digital residency scheme generated more tax revenue than ever in 2025, cementing Estonia’s status as a global leader in borderless business.

2025 was a record year for Estonia’s e-Residency programme: e-residents established 5,556 companies last year (an increase of 15% compared to 2024). During the year, nearly €125 million in direct revenue was received by the state from e-residents and the Estonian companies they founded (an increase of 87% year over year).

In 2025, the total economic impact of the e-Residency programme on the state amounted to €124.9 million. Of this, €54.5 million came from labour taxes, €66 million from income tax in special cases (primarily dividends), and €4.3 million from state fees related to applying for e-Residency and establishing companies. Even though 17% of companies were in their first year of operation, they paid taxes amounting to nearly €7 million in total.

According to Erkki Keldo, the Minister of Economic Affairs and Communications of Estonia, the continued success of e-Residency shows that Estonia has made the right choices in developing its business environment. “Every euro invested in e-Residency brought more than 12 euros back to Estonia last year – this is a clear signal that investing in digital services works. e-Residency, together with a business-friendly tax system, offers entrepreneurs a simple and modern way to do business globally while also helping to grow the Estonian economy,” Keldo said. “Entrepreneurs face stifling bureaucracy in larger European countries, which is why they are looking for countries where it’s possible to get things done quickly and inexpensively. That’s the main reason why the addition of new e-residents has set new records,” he added.

Estonia gained a total of 13,828 new e-residents last year, which was 20% more than the year before and also the best result in six years. In 2025, the highest number of e-Residency applications came from Germany (1,122, up 49%), France (1,016, up 56%), and Ukraine (921, up 5%). Emerging markets for e-Residency in terms of application numbers also included Italy (713, up 33%), the United Kingdom (526, up 41%), and Latin America (482, up 35%). Estonian e-residents established 5,556 new companies in the country, surpassing the 2024 record result by 15%. The largest number of new Estonian companies were founded by e-residents with Ukrainian, Spanish, Turkish, German, and French citizenship.

According to Liina Vahtras, Managing Director of the e-Residency Programme and member of the Management Board at Enterprise Estonia, the focus of e-Residency is very clear: to bring more companies, more economic activity, and more tax revenue to Estonia. This is also at the core of the programme’s updated strategy for 2026–2029. “Today, the biggest obstacle to the development of e-Residency is the slow and cumbersome process associated with using a physical plastic card. The easier and faster it is for a foreigner to establish a company in Estonia, the sooner they will begin generating revenue here. Our analysis shows that card-free, fully mobile e-Residency would increase company formation by at least 20% and would bring the state an additional €3–9 million in tax revenue each year,” Vahtras said. “The demand for speedy and cost-efficient entrepreneurship is rising, and our goal is to make e-Residency as simple as possible – soon it will be possible to set up a company with nothing more than a smartphone,” she added.

According to Vahtras, achieving card-free e-Residency requires two clear steps to be completed this year and next: “First, a mobile application enabling biometric capture must be developed, which is already underway through a public procurement process. Second, a legislative amendment is needed to allow the issuance of e-Residency to transition to remote biometric identity verification based on the applicant’s travel document – the draft legislation is currently in development.”

Estonia launched its e-Residency programme at the end of 2014 with the aim of providing foreign nationals with secure access to Estonia’s state e-services. Since then, more than 135,000 people (excluding revoked statuses) from 185 countries have become e-residents. About half of e-residents come from European Union countries and currently more than 63,000 e-resident digital ID cards with a five-year validity period are in circulation. Estonian e-residents establish one in every five new Estonian companies each year; to date, e-residents have founded more than 39,000 Estonian companies. The cumulative economic impact of e-Residency has amounted to almost €400 million. In addition, e-resident entrepreneurs spend more than €15 million annually in Estonia by consuming business services offered by local companies. Estonia’s total public expenditure related to the e-Residency programme in 2025 was €10 million. The e-Residency programme is implemented by Enterprise Estonia.

The economic impact of the e-Residency programme is calculated using a government-approved model which factors in labour taxes paid by e-resident companies, along with the special income tax, primarily on dividends and other profit distributions. For the purposes of this model, e-resident companies are those that have either been founded by an e-resident or where the e-resident’s role has been created within 90 days of the company’s formation. In all such cases, the e-resident status of a foreign citizen must be acquired prior to the company’s establishment.

The post Estonia’s Digital Nomad Bet Pays Off — E-Residents Generate €125M appeared first on European Business & Finance Magazine.