Residency, tax residency, and e-Residency.
In today’s world of remote work and global entrepreneurship, it’s easy to confuse terms like residency, tax residency, and e-residency. People often use them as if they mean the same thing — but legally, they don’t.
If you’re thinking about moving to Estonia, starting a business here, or handling your finances across borders, it’s important to understand what each of these terms actually means. In this article, our legal team breaks down the differences and explains what each status involves in practice and under Estonian law.
Legal residency in Estonia
Residency simply means your legal right to live in a country. In Estonia, foreigners can apply for residency for different reasons — work, business, study, or joining a family member.
There are two main types of residence permits:
Temporary residence permit
Usually granted for 1 to 5 years, depending on the purpose.
Permanent residence permit
Available after at least five years of continuous legal stay in Estonia.
With a valid residence permit, you’re allowed to live in Estonia, use public services, and even apply for long-term EU residency in some cases.
Important: Just because you have a residence permit doesn’t mean you’re automatically a tax resident in Estonia.
Tax residency in Estonia
Tax residency is about where you’re legally required to declare and pay taxes on your income.
You’re considered a tax resident in Estonia if:
- You have a permanent place of residence here, or
- You stay in Estonia for 183 days or more within any 12-month period.
As a tax resident, you’re expected to declare your worldwide income to the Estonian tax authorities. That said, Estonia has agreements with many countries to avoid double taxation, which means you won’t usually pay tax twice on the same income.
It’s quite common for foreigners living in Estonia — especially those with work or business permits — to become tax residents without realizing it. That’s why it’s important to review your tax status regularly.
What is e-Residency?
Estonia’s e-Residency program, launched in 2014, gives non-residents a secure digital identity that allows them to do business in Estonia — without physically being here.
However, status of e-resident do not provide:
- A visa or a residence permit;
- A way to get Estonian tax residency or citizenship;
- A right to enter Estonia or the EU.
What it does allow you to do:
- Start and run an Estonian company completely online;
- Sign documents digitally and access Estonian government e-services;
- Use EU-based banking and fintech platforms.
e-residency is a great tool for digital nomads, freelancers, and international entrepreneurs who want access to the EU business environment — but don’t want to move here.
Legal tips from us
- If you’re planning to move to Estonia, make sure your residency and tax residency statuses are properly aligned;
- If you’re starting a business, think about whether it makes more sense to register it through e-Residency or as a resident of Estonia — your decision could affect your taxes and how you operate;
- And above all, always talk to a legal or tax expert before making important decisions about residency, business registration, or managing cross-border income.
Our firm is happy to advise on the best structure for your situation — whether you’re relocating, investing, or just starting your business journey in Estonia.