E-Residency Program 2025 : Changes and Beyond

Estonia’s e-Residency program has unveiled a series of planned changes to application fees, tax rates, and eligibility criteria, part of a broader set of economic measures designed to bolster the country’s financial resilience and security infrastructure. These updates, effective as early as January 2025, will impact current and prospective e-residents, as well as Estonian citizens, residents, and businesses.

The new measures introduce adjustments to application fees, corporate and personal tax rates, and stricter background checks for applicants from certain countries. The changes, developed in coordination with Estonian government entities, aim to ensure long-term program sustainability and to protect Estonia’s digital and economic environment.

Key Changes for 2025

Increase in State Fees

Starting January 1, 2025, the state fee for applying for or renewing an e-Residency card will rise to €150. Those who apply by December 31, 2024, will still be eligible for the current rates of €100 (Estonia pickup) or €120 (Estonian embassies).

According to Estonia’s State Fees Act, state fees support essential administrative services and ensure that costs are fairly shared among users. The e-Residency fee increase reflects rising operational costs in areas like application processing, background checks, and ID card issuance, and aligns with broader changes to identity document fees for Estonian citizens.

Tax Changes for e-Residents and Businesses

Estonia is introducing several tax modifications, effective January 2025:

• Corporate Income Tax: The tax on distributed profits will increase to 22/78, with the preferential 14/86 rate phased out.
• Personal Income Tax: The personal income tax rate will rise from 20% to 22% in January 2025, with an additional increase to 24% in January 2026, affecting Estonian residents and board members of e-resident companies operating within Estonia.
• Security Tax Package: Beginning in 2026, a new 2% tax on corporate profit and a 2% VAT increase (to 24%) will come into effect. These temporary measures, active through 2028, will support Estonia’s contributions to European security infrastructure and ensure the resilience of the Estonian economy.

These updates reflect Estonia’s aim to enhance both economic sustainability and security across its business landscape, impacting all tax-paying entities, including e-resident companies.

Application Restrictions for Certain Countries

In a further move to enhance security, Estonia’s Ministry of Interior has proposed restrictions on e-Residency applications from countries without bilateral security and law enforcement agreements. These restrictions, designed to mitigate risks associated with onboarding applicants from high-risk jurisdictions, will include exceptions for individuals who meet specific criteria, such as holding European Economic Area residence permits or actively engaging in Estonian economic activities.

These restrictions are part of ongoing efforts to maintain a safe and transparent platform for e-residents while ensuring that Estonia remains a trusted location for remote business operations.

Looking Ahead: Mobile e-Residency by 2027

Amid these adjustments, Estonia is also taking strides towards innovation within the e-Residency program. By 2027, the government plans to roll out mobile biometric data collection for e-Residency, making it easier for entrepreneurs to apply and renew their e-Residency ID cards remotely. The mobile-based solution, now in its early stages, will integrate secure digital verification, setting the foundation for Estonia’s role in the EU Digital Wallet initiative.

With these developments, Estonia reaffirms its commitment to a secure and accessible business environment for entrepreneurs worldwide. Further updates on these changes and additional insights will be available via the e-Residency newsletter and blog.

For those considering applying or renewing their e-Residency soon, the e-Residency team recommends acting before the new state fee increase takes effect on January 1, 2025.