Estonia is the first country in the world to establish a digital ID system where any foreign national can apply for an electronic identity in Estonia. This is a unique solution anywhere in the world and will allow foreigners to use many of Estonia’s e-services anywhere in the world.
On 1 December 2014, amendments to the Identity Documents Act and the State Fees Act entered into force, on the basis of which the digital e-residency cards are issued to all persons who have ties to Estonia or a justified interest in using Estonian e-services.
The purpose of issuing a digital identity document to e-residents is to promote the development of the Estonian economy, research, education and culture, creating the opportunity to use e-services with an Estonian digital document.
Estonian citizens and aliens who have an Estonian residence permit or registered right to reside in Estonia have been able with the Estonian ID card to use various e-services for more than 12 years. The ID card is a chip card with a photo. It serves as an identity document and is obligatory for all Estonian citizens at least 15 years of age. The opportunity to use e-services is guaranteed for all citizens as well as for foreigners who live in Estonia on the basis of a residence permit or registered right to reside in the country.
As of December 2014, there are over 1.2 million active ID cards in use (the Estonian population as of 1 January 2014 was 1.3 million) and today around 190 million digital signatures have been given using the ID card, and ID cards have been used over 300 million times for authentication of identity. Besides digital signing of documents and electronic identification for use of government services and online banking, ID cards can be used to encrypt documents or e-voting.
What is it?
The e-resident’s digital ID is an identity document in digital form that is being issued to foreign citizens by the Estonian state on the basis of an identification document of the country of citizenship.
The e-resident’s digital ID is a chip card analogous to the national ID card, and can be used to authenticate identity and sign digitally in digital environments. The document does not bear a photograph of the cardholder and cannot be used as a visual identity document or travel document.
Who is it for?
All foreign nationals who lack an Estonian residence permit but have an interest in investing in Estonia or some other connection to Estonia can apply for a digital ID starting 1 December 2014. The main beneficiaries will be people who have ties to Estonia through investing or business or they have a need to be active in Estonia.
Thus the main target groups are foreign investors and foreign staff of such companies, foreign nationals who sit on management bodies or have a holding in local firms and foreign specialists and staff, foreign clients and partners of Estonian companies. In addition, foreign researchers, faculty and students, representative of other countries and international organisations in Estonia and people of Estonian ethnicity living abroad and their descendants.
Companies with foreign holdings have a noteworthy economic influence on Estonia, being dominant in Estonian export (59% of total exports), and they also have an important role to play in the Estonian economy, with 36% of employment, 34% of R&D spending, and 44% of the economy’s value-added. 
The digital ID can be used in an electronic environment to authenticate identity. It will allow access to many Estonian public e-services such as digital signing, company registration portal, the electronic tax authority, and the state portal eesti.ee.
Digital signing replaces physical signatures on paper and all Estonian governmental authorities accept documents signed in this way; it is also in widespread use in business, including at banks.
The company registration portal allows companies to be set up and all procedures for managing a company to be conducted (including changing company address, business name, management board members, company capital, articles of association etc.).
Tax returns can be filed through the electronic tax authority, it is also a channel for communicating with the tax authority, and filing refund claims.
Thus the digital ID meant for non-residents is yet another argument for investing in Estonia, alongside the tax exemption on retained earnings. To this point, foreigners have found it complicated to participate in managing Estonian companies. The e-resident’s digital ID provides the needed flexibility. Now it is possible in a single day to start a company and open a bank account, and manage assets through an online bank from afar.
To obtain the e-residency card, i.e. the e-resident’s digital ID, applicants must come to Estonia and apply in person to the Police and Border Guard Board. A state fee of 50 euros must be paid for processing of the application, which will take up to 10 business days. If the application is granted, the Police and Border Guard Board will issue the identity card and PIN codes that can be used for authentication and digital signature.
When applying for the digital ID for the first time, applicants must contact the Police and Border Guard Board twice for authentication: when submitting the application and upon receiving the document. On subsequent applications for the digital ID, the person need only go to a Police and Border Guard service or Estonian foreign representation once, for authentication of the applicant.
Source: Estonia – the business paradise, Technopolis Group, 2013 (2010 data)