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Yes, regardless of all the positive stuff we’ve written about e-Residency, there are businesses and situations when e-Residency is not your solution. Let’s take a look at some of them, though there are probably more niche situations that don’t get all the benefits.

Travel document

Some e-residents or future e-residents mistake e-Residency with identification documents. E-residency is not an identification document, it does not grant you the right to travel in Europe (Schengen area) visa-free. If that is the main purpose for you, then e-Residency is not your solution. 

Tax residency

Similarly to the previous point, e-Residency does not create any tax residency for you in Estonia. It does not change your tax residency status or make things more complicated as a tax resident of another country. Just obtaining the e-Residency to optimize your taxation will not serve your goals. 

Local businesses

If you’re a brick-and-mortar store and operate in Milan, then e-Residency won’t provide any benefits for you.  There’s nothing you can do with it. As a local business, you’ll need to do all the reporting in the country where you operate in. 

Companies looking for anonymity

Estonian business registry is very transparent. While shareholders aren’t shown publicly, you can still buy access to this data for less than 10 euros. The board members are shown publicly when you google the name of the company. 

Looking for a tax haven

Estonia is not a tax haven. Yes, Estonia has a great taxation regime, but it’s still not a tax haven, and if tax optimization is the only goal with the Estonian company, then you’ll need to do a proper analysis and have substance. Just e-Residency + Estonian company will not do the trick. 

Legal Arbitrage for licensing

Sometimes we get clients who want to obtain rather complicated financial licenses and they assume Estonia is an easy place to obtain the licenses. It’s not, especially if you’re not willing to set up a local office, fulfil the capital requirements, and don’t have proper industry experience. 

Free services

This might sound a bit odd, but we’ve seen our fair share of e-Residents who think that because e-Residency is a governmental program, everything should be free. Even legal and accounting services should be free – provided by private companies. And if things aren’t free, then the natural conclusion is that it’s a scam. If your goal is to find a platform where there are no business expenses, you won’t find it from e-Residency. You won’t find it anywhere.

Conclusion

There are other non-suitable situations which are obvious, like wish to launder some Russian money through Estonia. That’s been done before in rather big quantities, and Estonian banks are extremely strict because of that. If none of the above is applicable for you, and you do want to start an online business with the least bureaucratic hassle, get in touch with us at [email protected]

Link to the E-residency guide (2020)
Link to Estonian taxation