I had a pretty intense honeymoon with Estonia, even had a relatively popular blog on e-residency, have visited Estonia twice (great experience btw)..
And, after four years, I have reopened my company in UK and trying to liquidate my Estonian one (today I have received a denial letter which says that only Estonian citizen can close my company)..
In short: Vague frequently changing rules, introduction of strange complex regulations over time (e.g. contact person, management board member tax which is kinda avoidable or not at the same time - "Schrodinger tax").. Expensive business services and accountants (yes, US and UK are cheaper!), volatile tax rules interpretations.. Lack of googlable good information overall, and local accountants are not that hi level pros in nomadic IT matters at all. Also totally non-cooperative Estonian banks.
Upon all of that, UK manages doing everything without fragile e-card, which, honestly, adds more anxiety over access loss instead of benefits. Has TONS AND TONS of proper official information with tutorials. Generations of good accountants and stable business and tax regulations.
As an Estonian I thought the e-residency system was pretty much a scam from the start. I didn't think anybody would fall for it, because the moment you ask "So what can I do as an e-resident that I couldn't before?" you realize that the answer is essentially "Nothing". But try saying this to other Estonians, they'll raise a fuss.
Edit: perhaps calling it a scam is inappropriate. It just doesn't seem like the program offers anything new over what other countries offer. I guess the nice thing is that it tries to be a package deal that's easier to market and find information about.
Well, I wouldn't certainly call it a scam from the start, still at some point e-residency PR team have indeed started to disseminate lies, deliberately telling only some better parts of the story or manipulating the narrative etc (which of course some will call marketing, I call BS).
Like with those nasty surprises when in reality you need to "know" some Estonian to start and stop a company.
Similar experience with Estonia. It is way overhyped to what it is in practice. It is quite tiny and poor country, and understandably they try to attract foreign business and investors. However just some e-residency card which is not that useful in practice doesn't solve that. The general operating environment feels like that old fusty soviet union, and that is just not that easy problem to solve.
Not that it really feels like old Soviet (I was born in really "Old Soviet" one), but it surely has a bad PR taste targeted on "influencers", VC media and fellow bureaucrats from other countries (like they constantly trying to win some bureaucratic Oscar or something), instead of entrepreneurs, and all of that have become very irritating in the last couple of years.
> Has TONS AND TONS of proper official information with tutorials.
I'm not too familiar with the e-residence in Estonia but I'm not surprised that a country of 1.3M people that fairly recently escaped from underneath the iron curtain doesn't have the resources of the big EU countries who have had centuries of financial power.
I'll say starting a business in the US was 100x easier than the EU countries I've stayed in.
This is true, still I am, as a, so to say, customer, just making a choice which works better, that was my point.
BTW have started a company in US also - can confirm that was also easy. But one needs to have a bank account in US, and US banks are not remote friendly, after opening an account too (I had an accident with account locking, lots of grey hair from nothing). I know Stripe Atlas makes this easier now.
Also my experience in UK proves it is not exactly a EU - much easier too. And GOV.UK is something extraordinary.
You must appoint someone from Estonia as an official liquidator, effectively paying for that to some accounting firm. Otherwise that would be just filling pretty simple online form.
At they same time they have allowed me to appoint myself first through that form and kept me waiting 5 days.. (The e-resident system is supposed to know who am I, right?) Go figure.
The point about the accountants is interesting - might be a good opportunity to reach out to the professional association for Estonian accountants (if such a thing exists) to give some feedback.
This is just not a mature market. Also I suspect there are separate markets for locals and foreigners..
Just a business address can be easily 5x of what one has to pay in US or EU, and this is given Estonian govt really doesn't send you any letters there, in UK and US does.
BTW just learned company closure takes months and 400-1600 EUR, depending on whom you ask..
Sure, I agree UK is a better option.
Are you a UK resident though?
I'm a EU resident and I have heard there is no way to open a business bank account in the UK without living there (i.e. without NI number + rent contract + utility bills).
If anyone has any info on how to run a UK company with a local bank account (not with an Internet bank) without being a UK resident, I'm all ears.
I'm not a UK resident and running it with Transferwise borderless account, and have opened several accounts in other fintech banks as an experiment as well.
As for Estonia, de facto e-residents have to open accounts in internet and non Estonian banks too.
I've run and invested in businesses in multiple countries (Spain, Germany, US, UAE, Sri Lanka). One of them (Mobile Jazz - a fully remote company) we've moved to Estonia in 2016. One of the best business decisions we've made admin-wise. While there are for sure better alternatives when it comes to "saving on taxes" (I'd say Estonia is in the European average with 20% corporate tax and an interesting taxation model on capital distribution), it is definitely a huge improvement when it comes to dealing with authorities compared to virtually elsewhere in the world, based on what I've experienced myself of heard from others. Estonian people speak really good English. Typically things just work as they should and it something doesn't, they're super fast in responding and very eager to solve the problem for you. While I don't have visibility on everything that happens in the country, in terms of how they handle their bureaucracy, they're certainly a role model for other countries.
Important to note that this 20% corporate tax is applied to the taxable payment (e.g. dividend payouts).
There are no taxes to pay for the yearly profit, which makes it much easier for companies that do plan to reinvest the income over the years or just hold it.
Also, one should probably have employees or customers physically in Estonia, otherwise the company tax residency might change into other jurisdictions.. IANAL.
I'm curious if there are any other EU countries with a similar flexibility (corporate income tax not applied until the "payout event")?
> Also, one should probably have employees or customers physically in Estonia, otherwise the company tax residency might change into other jurisdictions.. IANAL.
You no longer need physical presence with their e-Residency program.
You no longer need physical presence to register your company and do business through the programme but you should still be very careful about taxation, tax residency whether personal or corporate gets very complex very fast and I highly recommend talking to a tax expert
Yes, the country/countries where your physical office(s) is/are located (or rather, where people - founders or employees - are doing the work that is the basis of the revenue on which you're generating a profit) will likely want a piece of the pie.
Certainly, a decade or so ago, it was popular to register a limited company in the UK whose physical presence was on the continent. Invariably, this meant dealing with both tax authorities.
It seems to have lost its attractiveness after laws for GmbH and similar were relaxed in various countries. Brexit has pretty much killed any remaining demand, at least for real companies. (As opposed to shell companies for tax evasion or money laundering purposes, for which the UK remains as popular as ever - and which are a major reason for big money backing Brexit, as the EU has been looking to crack down on the practice.)
Ah, so it's one of these tax-haven states which accelerates the global "race to the bottom" regarding corporations' tax rate? That's not a good thing IMHO.
It's clearly stated that the tax level is 20%, not a tax-haven at all. Estonia in general is very far from the ultra-liberal country it has been depicted in the past (especially by the US Republicans): it has average EU taxation, minimum wage, taxpayer-funded public healthcare, ...
One thing people don't take into account when opening a company is the process and costs involved. I payed to close mine around 800 euros only to dissolve during the course of the following months. Besides paying the corresponding taxes. Another issue with a company abroad is you have to blindly trust your accountant. If I were to do it again I could have incorporated locally.
Estonia (in fact all the 3 Baltic States) under-taxes at present in a way that’s not sustainable. For example there is a significant NATO presence there to protect them from the Russians. At some point someone will want them to make a fair contribution to that, such as purchasing a few tanks and fighter jets...
According to NATO's 2018 report, Estonia was one of only six NATO countries (out of 29) that met the goal of dedicating 2% of their GDP to defense. Not that dedicating 100% would stop Russia if they wanted to invade.
As the current American President has shown, treaties and obligations only go so far. That destruction of trust may be the most lasting damage that he causes.
It barely has a million people. You have to compare it with other countries of similar size and population. Comparing it to Spain, Germany, US, UAE, Sri Lanka is like comparing mice to dogs, cows, elephants and blue whales.
That said, ofcourse there are things that can be learnt and applied to similar sized towns, cities, states etc that want these features.
As for NATO, it’s better for the big countries if they can hold Russia back in the Baltics and let them be the collateral damage. Sounds win-win to me.
And they get access to lots of cheaper labour directly (migration) and indirectly (outsourcing to people that will still buy your stuff).
As I’ve posted, the big banks in the Baltics are primarily not Baltic.
That access has its benefits, but also its price.
I guess I’m a believer that free trade works out well, well enough to create a system to support those left behind. Often the latter is left out however.
> As for NATO, it’s better for the big countries if they can hold Russia back in the Baltics and let them be the collateral damage. Sounds win-win to me.
Indeed.
Before the eastern expansion I had noticed years ago how portions of Niedersachsen bordering East Germany had been designed as a huge tank trap (dams could be blown up to flood the plains), and the bridges and some other civilian infrastructure was dual use as well (e.g. signed/scaled for tank passage). Likewise I discovered in late 1989 that a lot of the non-local roads between villages in the DDR weren't really passable by passenger cars but would still have bridges able to support heavy armour.
It seemed like a deliberate policy of both NATO and the Warsaw Pact that if there was to be yet another large war in Europe it should start in Germany for a change.
Xolo Leap[1], formerly LeapIn, is probably the most popular way of starting a company in Estonia as a foreigner.
As an EU citizen, I see Estonian e-residency oriented more towards the people who are from outside the EU and want to establish their presence in the EU market.
For instance, it's one of the easiest ways to get access to Stripe for people from Russia, Ukraine, Belarus, Serbia, Israel, Turkey, and many countries from other continents.
But it's not such a good option if you operate from other EU country, such as Germany, because your Estonian company will likely be taxed as a local company there.
In any case, I would personally choose Ireland over Estonia because of the absence of language barrier and almost 40% lower corporate tax, or even the UK, where incorporation is not that much harder or more expensive than in Estonia[2], but regulations are much clearer and laws are much more stable.
I'd say Estonia is one of the few places such companies are not required for setting up, having an accountant to consult before and after is sensible however.
It depends on what your alternatives are. My guess is that it's not worth it because you still have to pay the taxes an employer would and what an employee would - social security and income taxes. You can take a look at the calculator: https://www.calkoo.com/en/salary-calculator
The taxation system itself is very simple, if VAT isn't involved. You can just enter your annual income and the calculator will tell you all of the numbers. Just make sure you use the "salary/wage fund" as the income field for a freelancer.
One thing to keep in mind though is that countries where you actually perform the work usually want a piece of the pie. That can complicate things significantly.
Only yesterday that there was an article in the Finnish newspaper Helsingin Sanomat saying that the e-citizenship is getting increasingly questionable.
Until 2 years ago the e-citizenship was good to open a bank account. After major money laundering scandals (probably unrelated to e-citizenship) you cannot only no longer open a bank account as an e-citizen, but even existing ones of e-citizens are getting closed.
A business without a bank account sounds highly limited to me.
I am French living abroad. I had a one person (freelancing) company when I moved to Japan. It was hell interacting remotely with the administration. I am kind of left wing so I believed in not doing tax optimization and paying the taxes I owe at home, I was told this was suspicious.
If I ever do business again within the EU area, I will give Estonia a try. The prospect of an administration set up for working remotely is very attractive to me.
I share your pain. I was just last night on the phone to France because of a wrangle over a French bank account held by an Australian and German (me and my wife) both currently living in the USA.
I also agree with you on the tax front; at least with regards to the French authorities. Luckily Australia and the US are much simpler in this regard.
As a Norwegian I can relate to many things written here. Estonia is clearly ahead of us but this thing of not being the innovator but still using off the shelf technology was something I was forced to reflect upon while living in the US 15 years ago.
It was surprising how the country behind so much technology innovation was so bad at using it. It was noticeable both in the private and public sector.
It was something that I was later reminded of when reading guns, germs and steel. The author Jared Diamond remarked that the technological progress of any society is not primarily decided by your ability to innovate but by your ability to adopt and use the inventions of others. As he remarks, most innovation happens outside your own country, so it is the ability to learn from others which matters most.
A thing I think people should be aware of when obsessing about having the most cutting edge researchers rather than a technology literate population.
America is very backwards in tech for daily life. About 2 years ago I was blown away when I arrived at the San Francisco airport and had to buy a train card with a Visa card; the customer service guy got flustered and pulled an old carbon paper swiper thing out from under the desk, and asked for my signature. In Australia it's all wireless payWave or PayPass. My Chinese GF uses her phone to pay for things and considers me old fashioned for using a card.
> America is very backwards in tech for daily life. About 2 years ago I was blown away when I arrived at the San Francisco airport and had to buy a train card with a Visa card; the customer service guy got flustered and pulled an old carbon paper swiper thing out from under the desk, and asked for my signature.
America is very backwards because of one thing that happened to you that has literally never happened to me in the 21+ years I have been an adult here?
How did you even find a human to pay? I have always used a ticket vending machine at SFO.
Cheques haven't even existed for 15+ years here in Ireland. America is quite slow on the uptake of tech considering they are arguably the most disruptive innovators in the world as a country.
I haven’t used checks routinely for the last 20 years in the states. I’m always really annoyed when some random niche activity requires it and can’t accept an online transfer. Then I have to go to the bank and get a temporary one.
Checks still have lower transaction fees for large amounts than most electronic forms do payment (cost: a postage stamp).
I was looking for electronic ways to send a substantial wad of money domestically once and almost all electronic transfer providers wanted a percentage.
Would be interested to know if there are any online services that can match the transaction fee of a check.
Checks have lived on beyond their useful life, unfortunately. I think the only reason they still exist is the arthritic ACH system and the desire by some receipients to avoid credit card processing fees.
Still, while checks may still be a thing they're pretty rare and rarely required. Mobile and contactless payment is pretty common (outside the food service industry, but I blame the food service industry for that).
I think it depends on who is the customer and where things take place. My mother in law still uses checks, prefers in person banking, and doesn't use technology. She loves getting cash back when she shops. Same with a brother in law of mine, cash is king, technology is a mobile phone to sms his family and friends. He is a successful business owner, btw.
I haven't written a check since the late 90's, when I receive a check, I deposit it directly from my phone. I never carry cash. When I shop its nearly all online. Unless its a restaurant, I've ordered and paid before stepping foot or driving through the place.
The point being, business's accommodate their customers and there is a shocking amount of people who don't care about technology in the US, especially outside of business and tech centers.
Taxes and Additional Costs
1. Government Stamp Duty will be charged to your account for each cheque book issued to you (currently €20 per cheque book of 40 cheques).
...
etc.
I had similar experiences with backwards technology while visiting the US. Buying tickets for the BART or Caltrain is nothing similar to the experience with NS in the Netherlands or even the BVG/MVG in Germany (even if Caltrain nowadays has an app), it feels really antiquated and buggy. Having my card swiped and asking for signatures in receipts at stores, cafés or restaurants is also a thing of the past even in Brazil.
The metro card in NYC is also pretty outdated, the whole metro system looks terrible but talking strictly about technology even the ticket machines are problematic, touch screens that don't work properly and so on; buying bus ticket in PABT is also a quite bad experience.
Except for the actual card technology issues (which are frustrating, though that glacier is slowly moving), those are all matters of how those transit agencies are run, not issues with the payment system.
As for cashless technology, there is significant political backlash to cashless systems. See the efforts by NYC to force businesses to accept cash as payment. I don't think the glacier is going to move much faster until that political resistance is addressed.
Edit: s/cars/cashless/
Android predictive autocorrect is worse than useless these days.
those are all matters of how those transit agencies are run, not issues with the payment system.
I think that was the point of the originator of the thread - the technology is there, it's just not applied properly. It may have improved recently, but when visiting SF for a few weeks in 2013 and 2014 I was left scratching my head about how best to charge my Clipper card for Muni transit. Topping up the credit via the website had a waiting time of 1-2 working days, so if you were trying to catch a tram or bus into the city centre from the outer neighbourhoods, you had to plan ahead for having enough credit, especially when the weekend was coming up. At BART stations it was usually less problematic to charge the cards - assuming the machine worked, which wasn't always the case.
At any rate, the whole thing felt very uncivilised and anachronistic compared to my experiences in much of Europe, Japan, Hong Kong, and Taiwan. (Japan's Pasmo and similar cards require cash for charging and largely don't accept credit cards, but you'd be hard pressed to find anywhere where you'd have to walk more than a block for an opportunity to charge them - or to find an ATM for obtaining the cash you need.)
>As for cashless technology, there is significant political backlash to cashless systems. See the efforts by NYC to force businesses to accept cash as payment. I don't think the glacier is going to move much faster until that political resistance is addressed.
But it's political resistance for valid reasons.
Per the FDIC, 18% of Americans are underbanked
https://www.fdic.gov/householdsurvey/ and 8% are unbanked.
The real problem is 1.) banks are a cancer on society. Most banks these days charge you ridiculous fees if you don't have even a $1500 in the account 2.) the unbanked and underbanked aren't introduced enough to credit unions which are ideally their answer to having savings account that doesnt fuck them 3.) unforunately credit unions cant afford to take risk with offering those with poor credit ratings a credit card
Otherwise, consider yourself lucky to be posting on HackerNews from probably working a tech job to be arguing for non-cash accepting stores. Plenty of people don't have that luxury.
Accepting cashless tech and not accepting cash are unrelated issues. Here I can use my phone alone as the transit ticket, buy a physical ticket with a contactless ATM card or with plain coins and bills.
>The metro card in NYC is also pretty outdated, the whole metro system looks terrible but talking strictly about technology even the ticket machines are problematic, touch screens that don't work properly and so on; buying bus ticket in PABT is also a quite bad experience.
The Metrocard is what one would call a hi-rel product, it hasn't been replaced because it works (baring the annoyance of the turnstile readers which one can eventually master and never have an issue). It is being phased out now in favor of NFC and contactless card payments by 2022. It's only really recently that NFC support has become widespread in private industry anyway and most banks have resisted the same on issuing contactless cards due to cost (and little or no retailer support until recently). They are also adding a buyable in cash payment card for those that dont have a phone or credit card for the poorer folks that don't have the luxury (essentially contactless Metrocard).
Touchscreens are another fun animal. The reason many suck is because they are resistive instead of capacitance touch. They can be made far more resilient against damage/vandalism than a capacitive touchscreen of a phone where the agency would go bankrupt repairing them every day. Downside is, resistive screens do really suck.
I've found Germany is even more backwards for consumer-facing tech. I frequently have to pay with cash at businesses here, and of course make sure to always have a coin on you for the shopping cart at the grocery store! Additionally, websites for German institutions are markedly behind what I was used to in the states (e.g. elementary schools), they all still rely heavily on phone calls and letters, and I still had people giving me photos burned on CD's, or emailing them to me one photo at a time. Software/internet UX in general just seems very behind, too.
That's not to say that Germany is less advanced than the US as a whole, but when it comes to consumer-facing software stuff, it feels substantially behind.
This one, yeah makes sense. Although it has less explanatory power for EC cards than credit cards imo. Aren't EC card payment fees quite low?
Plus IIRC studies show people being more willing to spend more with 'plastic' than cash, so it may actually be a false savings for the business.
And it's not like Germany is collectively taking some principled position against digital payments, they're just slower on the adoption curve; it IS still happening. To me this points more to the general conservatism on digital things that you can see elsewhere as well (e.g. uptake of digital books, downloaded vs physical video games, downloaded/streamed music, etc.) rather than something specific to payments themselves.
America's banking system is the best example. My clients still pay me via ACH that takes 2-3 days to clear. Meanwhile in my local market, I can send/receive money instantly for either zero or a fee capped at less than $0.10/transaction.
We use trains in America? I had a similar experience in Germany with cash. Many of the cafes in Munich did not accept cards. A Finnish student I met shared awkward stories about forgetting to carry cash. I had to walk across the Munich airport to find an ATM to pay my expensive cab with cash. His credit card app could not connect to its services.
How did you not find an automated kiosk to by a train ticket or pass? Many of these even have the same tap to pay that you are familiar with in Australia.
Since moving back to the states from China 3 years ago, I’ve gone to the ATM twice, and I no longer have to fumble with a phone to align QR codes. To each their own, I guess.
I think your experience is a complete outlier. I literally only go the ATM when I need to give cash to a friend or something weird like that. I spend most of my life in NYC / Financial District. I can't recall the last time I even had to use a physical credit card - everything is either Apple Pay or Level Up, i.e. pay with the phone. Even the subway lines I use have been converted to touchless entry. It's pretty marvelous.
The payments system in the US is really creaking at the seams, but overall tech adoption by people and small businesses isn't bad.
In the UK, the payments system works quite well, but what amazes me is how much physical letters are still a thing: for doctors' appointments with the state-run health system (the NHS), for schools communicating with parents, etc, taking personalized plates on and off a car, ...
Same thing in Germany, I've been surprised at how much reluctance there is to use email or websites for things, instead relying on physical mail or phone calls.
Elementary school wants to communicate about some appointment? Do they use the email from us they already have? Haha no, of course they send a letter (that arrives the day of the appointment, natch), and then later call us to complain that we didn't show. And their website looks like it was designed by an intern in 2006, and is virtually never used to communicate useful information throughout the year.
The current elementary school we have does use email...but much of the content they send actually comes in a PDF instead of the email itself, and not the type of with actual text, it's just a bitmap, so to translate we type shit in manually into Deepl (or use OCR for the longer things).
Want to re-up your alditalk account without going to the store? Want to use a credit card, or even Germany-specific debit card? Nope, you tell us your address and we'll send you a letter, which you can then use to authenticate your bank account for transfers. I guess they're worried about...people paying for my phone service on my behalf?
One fascinating difference between Estonia and Norway is that Norway doesn't have a digital ID card - we instead use a government single sign-on platform for vetted private login provider companies.
The vast majority of people use BankID, a login system run by a consortium of most banks.
It used to require a cumbersome 2FA device, but for the last 5 years it has also been available as a Sim Toolkit App, so most use that now.
The way it works is pretty cool, you just type your SSN in a login form and immediately a popup window with a word based 2FA appears on your phone.
Seems like less of a hassle to just use your phone than the Estonian system with a physical card reader.
In addition to the physical ID card, Estonian system also has MobileID, that uses the SIM toolkit. So there is no hassle with the physical card reader.
And also the newest is SmartID(used by banks), also based on mobile devices, but without requiring a special SIM card.
I had a chance to work for the Estonian government for a brief while (headed up business development for e-Residency). While a few things may be overblown about their e-gov initiatives (I'm thinking some of the blockchain hype that foreign journalists didn't really fact check) they really have done an incredible job making their business environment accessible for foreigners. There really is a strong mentality of delivering government services with the end user as the customer mentality rather than the usual bureaucratic nonsense I was used to running businesses in the U.S. and Germany.
As a German, I don't think the issue is with our handling of personal data. The real issue is Kleinstaaterei, a not-quite-translatable word that describes every small administrative entity insisting on doing its own thing and failing to see the bigger picture.
What today is Germany used to be about 100 separate nations until 1871, and a still somewhat loose federation until 1918. I think the mentality from that time is still pervasive today in many areas, particularly in bureaucracy.
Add to that that Germany is large enough to make the other EU countries play by its rules most of the time. That removes incentive to overcome nonsensical idiosyncrasies. Estonia is under a lot more pressure here because they cannot win by weight alone.
This.
On top of the dedication, Estonia has the advantage of being a single entity in comparison to Germanies federal org. (Population wise it's also only slightly bigger than Germanies second smallest Bundesland, the Saarland)
If you want to be intimidated try this, already reduced, chart of the state of implementation of the Onlinezugangsgesetz (OZG).
In my experience Germans love bureaucracy,it makes them feel safe and gives them "trust" for the system even if everyone hates it. Additionally it "empowers" the people (and not in a good way) who are given a tiny amount of power wrt some mundane issue that you need to resolve at some city/state office. (The "soup nazi" gag is spot in Seinfeld).
Seriously here in "DDR" you wait in a line to get a waiting number for starting your real wait. (I'm looking at you zulassungstelle).
I've heard that Germans are very skeptical about sharing data and have lots of fears about privacy.
Here in Estonia our government systems work efficiently because our data is shared between government departments and ministries in a safe way. There is only one place that stores the addresses of people, there is only one place that has knows about the cars or properties I own and so on. There is a law against asking people who interact with the state for data that it already has.
> What today is Germany used to be about 100 separate nations until 1871, and a still somewhat loose federation until 1918. I think the mentality from that time is still pervasive today in many areas, particularly in bureaucracy.
Hmm... France on the contrary comes from an extremely centralised political and cultural model, yet many things (like social security!) and run in a myriad of independent offices compartmented by geographical location (100 départements) and by sub-domain, which do not communicate or share, send the client/citizen to the next one and blame each other for anything.
For a few decades, there has been a move to regionalisation (a pale will to copy German Länder), which make things worse, building another important geographical layer for various things. Depending on the mood of the year, stuff will either depend on departments or regions. Or on the new thing of the 2010's: huge groups of municipalities, almost as large as departments.
But almost all of those get their funding from the state anyway.
If you take minimum welfare for example, it is handled by departments. Why? No idea, it doesn't make any sense. The rules, the amounts are nation-wide. The funding is national: the state gives money to the departments for that task. So you'd think "I should ask the department" for it?". No because the department gives the money it got from the state to the family branch of the social security. Which is nation-wide? Yes, but it is an association of a hundred independent local offices. Each of them being a private law organisation and not public law. While obviously being a public service, which redistributes public funding. Note that in some departments there used to be several different offices for that same role until recently... Of course each department, and each office will develop its own culture of unwritten rules along the years, so the result is you won't be treated equally depending on where you are, whereas the laws are supposed to be the same.
This is all nuts. Sometimes there are historical reasons gone bad. Sometimes it is just some perverse invention.
I mostly gave examples which remain in the same domain. Now just imagine the madness you have to deal with offices from different domains... Also keep in mind while picturing that, that most of the people who work there do not have the smallest interest in having things going smoothly, files closed quickly, job well done and so on; their only happiness comes from bugging customers/citizen or bugging and blaming another service/office; the only way to get something done is to start yelling at them, then miracles happen: in a few minutes (after several months of being bounced here and there for whatever wrong reason) 'lost' files are found, 'necessary' documents are in fact not needed, everything is ready and solved, that's magical. I wish they were corrupted, it would be nicer and easier, but they aren't even. That's just French culture.
No opinion on Estonia and its e-government, but running a country like a tech company sounds like a plot of a comedy set in a dystopia. I certainly hope that Estonia is ran better than most tech company
Tech companies have many problems that I don't want see in a Government:
- Security breaches (and just like every other tech company Bulgaria recently had a dump of the personal data of 5 million citizens)
- Privacy issues, like contractors listening in on sounds recorded by their devices
- tons of intrusive ads
- discrinatory pricing
- products people rely on being killed off for no reason
- hype-, and resume-driven development
- general lack of accountability, masked with trendy but misunderstood methodologies like Agile, Scrum
- move fast and break things works for Facebook, but not for health insurance software
Tech companies fail all the time, but the pieces are picked up by investors, yet governments cannot afford to fail in the same way.
Most countries are ran far worse than a company. If citizens had the option to freely jump between countries, most of them would go bankrupt, that's why they rely on coercion. Very few countries are ran efficiently and they re typically very small like Singapore.
I feel like the only people that can honestly say this are those that are not familiar with just how poorly ran a lot of companies tend to be.
The major difference being that an inept government is generally much more visible than an inept company. But as someone that's worked both commercial and government, I've seen enough to make a definitive statement that a lot of companies are incredibly poorly ran. You just don't see it.
Countries have a different purpose than companies. It hardly makes sense to compare them.
Companies can fire people. Countries cannot. Companies are typically not democratically controlled whereas countries should be. Companies are not obligated to meet the basic needs of their employees, protect their rights even if it isn't profitable, defend against foreign adversaries.
Companies have one, very narrow, purpose and efficiency is one property which is induced by that arrangement. States, on the other hand, are human institutions constituted to much broader purpose and scope. I'd actually argue its deeply inhuman to expect efficiency to be a primary property of a state.
Actually, reading the article, it seems that "like a Tech company" is just a click-bait title.
The point is that Estonia invested in Internet connectivity penetration, computer literacy for children (and adults too probably), and moved or instituted many/most government services on-line.
Wow! Exactly the same I thought about the article. Also it has to do with country's scale as Estonia can afford to take risks given their small population size comparing to, say, UK. By the way, some observations can be just "Hype", because whether your country relies on tech or not, tech adaptation for society welfare and political welfare is more about pragmatics than planning.
If you're thinking about starting a company in Estonia under the "e-residency" program, you should know that Estonian banks have recently become very skeptical about opening bank accounts for foreigners. It's not enough that you have an Estonian corporation, you'll probably be expected to demonstrate that your business has actual ties to Estonia.
The background for this change is a huge money laundering scandal where Estonian banks took in Russian money over decades with very few questions asked... It sucks that "little guy" startup founders are the ones getting excluded, but that's how it goes.
Unfortunately, it isn't a new issue, I left the e-residency programme soon after the banking scandal (unrelated to why I left) but bank accounts have always been a major problem, especially because most of the business banking sector in Estonia is run by foreign firms with local branches rather than Estonian banks.
Startup idea:
Create the globalized equivalent of Silicon Valley Bank in Estonia — a local bank that serves credible startups around the world, with staff that has the competence to evaluate customers’ tech chops.
No need to imitate anything about the actual SVB, just like "Uber for X" doesn't mean you'd necessarily want to follow Uber's business or engineering practices :)
How recently? I opened an account for my Estonian company as an e-resident (from the EU) in Q1 2019 and it took a grand total of ~40 minutes at the bank to get everything working. I had to visit the bank HQ in person but the whole process was really really smooth sailing.
To be clear, I did that because I wanted the convenience of having Leapin to also have access to my accounts so they'd handle my invoicing and expenses without any significant trouble for me (ie. sending them the account movements periodically). Originally I had an electronic payments account in a Finnish bank and for that I didn't have to travel anywhere but I needed a full bank account so I'd be able to pay dividends into it so I went there. If I just wanted to pay myself via salary I wouldn't have needed to travel there at all but I'd rather my income be via dividends than via a salary because of tax purposes in my country of residence.
That said, I could've used a business account opened in other banks (including outside of Estonia) to do that but I'd be missing out on the convenience that is them having access to the account.
The company's details (which was already up and running and registered in Estonia) which were provided by my accounting services and my e-residency ID. Once there I also needed to provide my national ID card (Portuguese), EU citizens from countries that don't have that would have had to provide a passport instead.
Banks are extremely nonfunctional in Baltic countries probably because of how little people live there. I think there is a large potential for good international banks.
Citation needed? My Estonian bank has offered instant payments in the EU for free for more than one year, an app that buzzes my phone at every payment I make with my contactless card, or use the phone directly as bank card... Without using Apple Pay. Something I rekon is still not common in many countries including the UK...
I've heard so much about Estonia's digital economy, but I struggle to see the effect it has on it's own economy. Now, my data might be bad, but a cursory look at Estonia's GDP growth rate shows perfectly normal growth alongside Lithuania and Latvia [0]. Using Latvia and Lithuania to control for a digital economy, Estonia should see greater growth, but it doesn't. If going head-first into a digital economy had a significant pay-off, it should show up in the data. Until it does, I'm still sceptical.
It's interesting how the East of europe seems to have similar aspirations. Growing, poor or former poor countries (Estonia, latvia, Romania, bulgaria, cyprus, malta) are bullish on using the EU status to attract foreign investors and enable entrepreneurship, including lowering their taxes, while the west of EU seems to be doing the exact opposite, sending their entrepreneurs abroad.
Eastern Europe may have advantages in terms of bureaucracy. It's far easier to experiment with the rules when you don't have a huge number of existing businesses/processes that need to be changed, very similar to how it's easier to change an API in a newish products vs, say, Windows.
BUT: Eastern Europe also has huge drawbacks. In countries like Poland, Hungary, or Bulgaria, your risk of abrupt changes in the law (see above) or simply ignorance of the rule of law, is somewhat elevated compared to France, the US, or Germany.
And while these countries want to attract foreign investors, if you actually want to spend significant time in the country, or hire foreigners to work there, you better make sure your neither dark-skinned nor jewish.
We have a business bank account with LHV. For us it was as easy as making an appointment, quickly flying there and walking into their main office in Tallinn. After ~30 minutes everything was set up.
That was 3 years ago, though. Maybe things have changed?
Thing is, we are from Russia. And LHV requires some "proof of our company connection with Estonia economy, like existing contract or utility bills". What proof can there be if the company is just started and not fully operational without bank account (hence, no contracts) and is not physically present in Estonia (hence, no utility bills)?
It sucks being Russian these days because of our warmongering dictator. :-/
That's what we ended up with. So far the experience itself was good, but unfortunately it does not solve all our banking needs: for example, to receive payouts from Google Play you need your bank to be in the same country that a company is incorporated in. Since TransferWise is in Germany, it just doesn't work for Estonian companies.
We didn't yet publish our software in Apple App Store, but I've heard that it could be a problem there, too.
Rememeber: We're talking about a country that had to be bootstrapped after the fall of Soviet Union. They have had very little legacy (as in "old but not old enough to warrant a replacement") tech and legislation to deal with.
My personal favorite is their wireless PSTN: Take existing NMT technology and give people tabletop terminals that will accommodate ordinary analog phones.
I had a friend working in Indonesia in the 90s, on Sumbawa. He mentioned how the locals had DVD players, but they had skipped ever having VCRs. I wonder what it looks for them now. Are they all on streaming services, or do they still use 90s era DVD players. I wonder what Estonia will look like in 20 years.
I find more intriguing/interesting than the whole actual Estonian e-id/whatever technological achievements, that the President of a country writes an article (of course not very critical on the way the governement administration is managed) on qz.com.
Yep, though I wouldn't personally put the Wall Street Journal on the same level as qz.
That they (WSJ) published Erdogan's piece is (to me) perplexing, but for completely different reasons.
This one on qz.com seems, at least to me, nothing different from the several "puff" articles we have read in the last few years about the digital "revolution" in Estonia (and e-residency, etc.), but till now they were all or almost all by either enthusiasts/futurists/thintankers or by people directly or indirectly involved in the program at a much lower level than the President.
Personally I always had the feeling that these pieces are not entirely unlike the good ol' gnome business plan:
1) get digital in Estonia (id, residency, etc.)
2) ?
3) profit
No doubts that there may be a number of non-Estonians that may benefit from the one or the other provisions of the program, but all in all they should be a niche of "digital nomads" and/or "digital only" very small firms.
Love the gnome business plan, I'm a huge South Park fan.
But I do think there is real value in it for some people (especially digital nomads) but things like e-Residency running a company remotely definitely aren't going to benefit everyone, building a solution that solves every person's problem is a crazy undertaking
Would you be as surprised if given equivalent technological achievements the mayor of, say, Oklahoma City or Richmond VA, did some horn tooting on qz.com to try to drum up outside investment and interest? Estonia’s population is between that of those two modestly sized metros.
I don't know, by those metrics, the Mayor of - say - Paris or London has much more relevance than - still say - the King and Prime Minister of Sweden or of Norway.
Or the Mayor of Rome more or less the same relevance as the President of Ireland.
Maybe I am too old fashioned, but I see a president of an independent country, small as it might be, as having a different, higher status than a mayor.
I definitely think there is a different level between the president or PM of an independent country to a Mayor of even a much larger city. However, there's also a difference (depending on the country) of the role of President vs. PM vs. Monarch and whether their duties are more promotional/ceremonial versus legislative
The status you personally ascribe to various positions is obviously up to you.
Estonia is sovereign, but whether it’s “independent” from the Eurozone on which it relies for economic sustenance (they get back 5x what they put into the EU budget) and security guarantees and over whose regulations their influence is commensurate to their population is also in the eye of the beholder.
Taking the govt. services online is generally a good idea, but there are a lot of minefields along the way and is inherently tied to the country in question.
I can only speak from the context of India where many things have indeed moved online, but are not exactly accessible. For one thing, they are essentially restricted to a small class of English speakers - which is expected since the English-speaking elite have a monopoly on education and thus technological literacy. This has meant that all the small shops which are now forced to file GST invoices (3 times a month ?) need to hire touts of some kind to get their work done. There are touts for everything, since very few people have computers or the necessary skills to use them - touts for filling in passport applications, for filling in DL forms etc.... and frankly it's all very frustrating, since you'll have to take a printout of the online application and visit some Indian Babu anyway.
Since "Indians" have been decided by the rulers to be essentially corrupt, it has also meant that there is no escape from the inflexibility of the straightjacket that is the Indian bureaucracy. Classic case of extremely poor people employed as manual labour being denied food rations because their fingerprints don't match that on record, or simply because the cellular data is patchy has quickly been covered by the UIDAI and their cronies in the government.
The language issue also shows up often because, after 70 years of so-called independence, the country has yet to create a unified transliteration scheme to go along with its "destroy all Indian languages" policy... and different transliterations of brahmi (for instance "sri" and "sree" are both the same श्री) often require absurd name-change announcements and numerous "letters" to random officers (and the usual palm greasing) in order to get access to services.
For much of India's "independence" a extractive state run for a handful of elites generally kept away from governance while its elites enjoyed vacations abroad and went to hospitals in Vienna (other than passing insane, unenforceable laws). I'm generally afraid what the deeply rooted colonial mindset will give rise to, now that it has also has access to technology. UIDAI and its sister schemes was and remains a rather scary venture with what appears to be a view of replicating China's draconian policies.
You are forgetting that Estonia comes nowhere close to India in terms of population and literacy. India is now estimated to have 125 million(and increasing) English speakers. Not sure if all of them are part of "elite" that you're talking about.
Anybody got experience in UK vs Estonia? I have lived and run companies in the UK and USA. The UK is light years ahead of the US in terms of all online interactions with the government. It's also been a long time since I have done any paper-based interaction with the government in the UK, the online systems have been really good for years.
I don't have a UK/Estonia company but saw the comparisons a lot when I was working for e-Residency. My understanding is that it's pretty comparable in terms of being all online, solid tax structure, etc. For me the two biggest factors would be - where are my clients and how much do I care about having a company in the EU. If most of your clients/employees/ops are in the UK, I would probably keep it there, if they're in the EU or being part of the EU is important to you, I would consider Estonia (plus the instability of Brexit throws a bit of a wrench into the equation)
Don't know about the UK, but you really don't need to do anything on paper here. There may be some special cases, but almost everything can be done over the internet.
"For some weird and unexplainable reason, people normally expect better services from private companies than from their own governments."
Right or wrong, it's not that unexplainable. People leave their cell phone carrier over bad customer service. They buy their things from a different website because of poor service, or go to a different store. It's cheap to change your allegiance to a different brand. It's a lot more expensive to change your allegiance to a different government. Governments in most places in the world have little incentive to improve.
Governments and private companies are both institutions, they just face different incentive structures. Governments aren't somehow magically protected from the people that run them having incentives.
I would partially agree with that. An elected official has incentive to remain popular, or a challenger will win the next election. But in the US, much (most?) of the "government" is non-elected bureaucracy that doesn't even change with a change in the party in control.
Creating a bank account as a foreigner has become increasingly difficult since a subsidiary of Danske [1], a prior Fortune Global 500, was caught in a major money laundering case which has brought the scrutiny of EU and US regulators into their banking sector.
For those interested in opening an e-business in Estonia, please be mindful that due to the 'Tech Company' way in which the government looks to operate, that there is an increasing rate of change in regulations which can impact your business decisions, although major generic areas such as Corporate and Personal tax rate has trended downwards (around 25% in 2004 and 20% now).
Choosing markets brings prosperity. Like the "German Miracle" after WW2 (not the Marshall Plan), when you abandon bureaucratic regulations and allow the market to take over, vast and quick advancement comes, and everyone does much better. https://fee.org/articles/how-estonia-yes-estonia-became-one-...
My understanding is that Estonia's tech push has some "great PR" but very little substance, and some of my friends' experiences, as well as some other HN commenters on this thread, seem to agree.
I'm biased because I lived in Estonia and worked for their govt but why is Lithuania better positioned? Very rarely did we hear companies compare Estonia to Lithuania when they were making a choice for where to build their business
Impossible! There is insane competition in Lithuania between cities. The ex-Soviets are not able to cooperate being afraid having KGB spy as partner. KGB spies are gone decades ago, but people didn’t learn to work together. Cooperation on state level is impossible. Lithuanians are jealous of Estonian success story and higher wages: https://www.baltictimes.com/estonia_has_highest_gross_wage_i...
I agree, mostly because I think it's just practical for small markets (like ~1 million person countries) to band together but I remember in Estonia everyone always thought of themselves more as a Nordic country rather than a Baltic one
They have similar language to nordic ones, Yes. But the place itself feels and looks totally as Baltic country and there is absolutly nothing wrong with it. (I've been in all 3)
I think the reason is that Estonia and Latvia used to be same country - Livonia but I might be wrong.
Estonian an Livonian are Finno-Ugric. They have a relation to Finnish (but in no way to Scandinavian languages) and Hungarian. This group ist vastly different from any other language in Europe including the Slavic languages. Moreover, Livonian is not to be considered as equivalent to Latvia - Latvian being the official language there.
Same story in Southern Africa (although one couldn't say because of competition). The whole of Southern Africa should be a free trade zone, but isolationist behaviour takes place because of other factors, like for example xenophobia or in the case of Botswana, being pissed off by our (South African) instability vs. their more stable country.
I'd imagine in most developed countries you can do everything online. In New Zealand over the last year I've renewed my passport, setup a company, renewed my drivers license, re-registered my car, opened a business bank account, renewed my mortgage, handled my taxes, etc. All online. The only thing that you can do online in Estonia which I can't do here that I can think of is vote.
Of course NZ is usually ranked as either 1 or 2 on the "ease of doing business" rankings and has low levels of bureaucracy so that might not be typical but I'm also a UK citizen and I renewed my passport from NZ online with no fuss.
So with the expectation that it will either succeed wildly and they'll sell it to google or it will flame the fuck out and take years off of its employee's lives?
I have some questions, if I want to make a free-speech protected project, is Estonia a country that will protect my business over silly demands or anything close like that?
Not directly but I would recommend checking out the e-Residency marketplace where they have vetted service providers (1Office is good) and asking in the E-Residents FB group
But at the same time having everything digital gives much more control on everyone to a State (if the laws permit it to do so... or maybe even if they don't)
also, the per capita income is no higher than in Lithuania which one wouldn't guess given the barrage of articles about Estonia's 'innovative' government.
Relatively sound advice is that whenever someone advertises to run the government 'like a business', the outcome is going to be 90% disappointing and hot air.
This is essentially just a huge PR campaign, the electronic voting is a security disaster, and if you see a government official talk about putting things 'on the blockchain' just run.
The government has been running "on the blockchain" for a while, with projects like the X-road, which are also used by other countries (the other two Balitc countries and Finland).
It is a blockchain in the only way that makes sense: a cryptographically secure ledger run by a central authority (government).
well, that's weird because according to the institute that runs the entire thing (https://www.niis.org/blog/2018/4/26/there-is-no-blockchain-t...), there is no blockchain technology involved, it merely uses some hashes to link data together, as do plenty of age-old protocols.
This is a good example of why these PR campaigns are silly.
It's not journalism. It's clearly indicated that the authour of the is the president of the country. So a nice term might be guest writer, but of course everybody knows that it is as neutral as a paid advertisement.
Ordinary citizens: Even in a US presidential state of the union, the Presidents (Trump included) will quote ordinary citizens about how the country is doing.
Before people start praising Estonia for its e-voting system, which inevitably happens on such stories, let me remind you that the system was indeed open to compromise:
So remember that even with hardware tokens used in electronic voting, which are supposed to be much more secure than using other forms of authentication, you still run the risk of having the election compromised, especially since an election is something important enough that more than one major country could be interested in manipulating at any given time.
It's not like the "well, I'm nobody, so why would the NSA/other spy agency target me?!" situation at all. We're talking about the decision of who gets to run a whole country, and sophisticated adversaries will be very interested in influencing that if it can serve their interests.
We know China hacks tons of countries, we know Russia has been meddling with all sorts of elections lately, and we also know that for the past 70 years the USA has interfered in about one election per year, on average. This is not just theoretical stuff that would never happen. And I'm sure there are many Middle-Eastern and other Asian countries interested in influencing their rivals' elections, too.
Came here to post this, their ID system sounded like the greatest thing ever until...
It's a monoculture, and therefore extra brittle and subject to attacks. If a country is gonna go all in on a single solution, it had better be a tried-and-true one.
The title says nothing, we need KPIs, average life span, mortality rates, unemployment rates, health indices, education indices, overall quality of life indices. Fancy titles are meaningless.
It seems unlikely they would include all of that in one article - if you're interested the statistics agency has most of that data I believe https://www.stat.ee/en
And, after four years, I have reopened my company in UK and trying to liquidate my Estonian one (today I have received a denial letter which says that only Estonian citizen can close my company)..
In short: Vague frequently changing rules, introduction of strange complex regulations over time (e.g. contact person, management board member tax which is kinda avoidable or not at the same time - "Schrodinger tax").. Expensive business services and accountants (yes, US and UK are cheaper!), volatile tax rules interpretations.. Lack of googlable good information overall, and local accountants are not that hi level pros in nomadic IT matters at all. Also totally non-cooperative Estonian banks.
Upon all of that, UK manages doing everything without fragile e-card, which, honestly, adds more anxiety over access loss instead of benefits. Has TONS AND TONS of proper official information with tutorials. Generations of good accountants and stable business and tax regulations.