Estonia ‘e-residency’ offers Brexit Brits EU loophole
Estonia ‘e-residency’ offers Brexit Brits EU loophole
Using its knack for digital innovation to capitalize on the global explosion in e-commerce, the small cyber-savvy Baltic eurozone state became the first country to offer e-residency identification cards to people worldwide in 2014.
Touted as a “trans-national government-issued digital identity,” e-residency allows users to open a business in the EU and then run it remotely with the ability to declare taxes and sign documents digitally.
It does not provide citizenship, tax residency, physical residency or the right to travel to Estonia. Applications can be made online via the www.howtostayin.eu website and cost €100 ($112).
Just over 22,000 people from 138 countries across the globe have become e-residents so far, including around 1,200 Brits and last year’s Brexit vote triggered a boom in applications from the UK.
Before it, only three British citizens applied per week, but that shot up to over 50 in its aftermath. There was also a 75 percent spike in UK traffic on the website after Prime Minister Theresa May triggered the Article 50 EU exit clause in March.
A “soft Brexit” would mean that Britain could retain access to the European single market like non-EU member Norway. But the “hard Brexit” option that has prevailed so far would see Britain leave the European single market and the customs union, creating a nightmare scenario for UK businesses as there would no longer be free movement of goods and services.
“The UK may have chosen to leave the EU, but its entrepreneurs can still choose to remain inside the EU’s business environment” through e-residency, said Kaspar Korjus, program director.
E-residency spokesman Arnaud Castaignet explaind that if a British entrepreneur becomes an Estonian e-resident and establishes a company producing goods in Estonia then they “will have the same access to the EU market as any EU company.”
So far the majority of companies established by e-residents are in consultancy services, IT programming, web developing, business support services.
Winners of the Mayor of London’s 2017 Entrepreneur competition say they signed up for e-residency to mitigate the risk Brexit poses for their business, a startup making environmentally-friendly wet wipes.
Ellenor McIntosh and Alborz Bozorgi both live in London but say they took up e-residency in order to be able to keep their company, Twipes, inside the EU’s single market.
Billing Twipes as “the future of toilet paper,” its owners say they have registered it both in the UK and Estonia to boost investor confidence.
“We had discussions with many investors from across Europe, Cyprus and Estonia in particular, and they view the uncertainty of Brexit as a huge risk,” Bozorgi told AFP via e-mail.
“We had to incorporate in both the UK and EU as a method of hedging risk,” he added.
If Britain loses access to the single market, however, the company would need to source materials and produce Twipes inside the EU to keep duty free access to the bloc.
Brit Dirk Singer established his Rabbit digital marketing agency six years ago in the UK, but wary of Brexit he digitally relocated it to Estonia last year thanks to e-residency.
“I applied for e-residency shortly before the EU referendum last year. Essentially, I was not so optimistic that we would vote to stay and so I saw this as an insurance policy,” Singer said.
“Two of my five biggest clients are from the EU. I’m concerned that as a small UK service-based business, Brexit could start to make life difficult for me.”
British writer Will Mawhood who runs the “Deep Baltic” culture website says he jumped at the opportunities and flexibility e-residency offers, especially having his company registered in a eurozone member.
“I split my time between the UK and Latvia, but since all my work is online, I often spend prolonged periods of time in other countries,” he said.
“People involved in my company are based in a variety of countries, so having to sign important documents in person would be unnecessarily time-consuming and complicated,” he added.
An upgrade to the e-residency program in May saw Finnish fintech company Holvi team up with Estonia to launch borderless digital banking, eliminating the need for e-residents to travel to take care of business banking.
Korjus said that there are signs that this uniquely Estonian digital innovation is catching on abroad.
“We’ve had interest from governments around the world who are keen to understand the program and even introduce their own versions of e-residency.”
He insists that safeguards are in place to prevent the program from being abused for tax evasion or money laundering, including police checks of applicants.
Saudi Aramco in talks for stake in world’s no. 4 chemical firm
- Aramco made the invitation for the SABIC deal to the banks last month
- The oil giant is expanding its footprint globally by signing downstream deals and boosting the capacity of its plants
DUBAI: Saudi Aramco said on Thursday it is looking to buy a stake in Saudi petrochemical maker SABIC, a move that could boost the state oil giant’s market valuation ahead of a planned initial public offering.
Aramco said in a statement that it was in “very early-stage discussions” with the Kingdom’s Public Investment Fund to acquire the stake in SABIC via a private transaction. It has no plans to acquire any publicly held shares, it said.
In a separate statement, the PIF also said that talks about a sale were in early stages. “There is a possibility that no agreement will be reached in relation to this potential transaction,” it said.
Reuters reported on Wednesday that Saudi Aramco had invited banks to pitch for an advisory role on the potential acquisition of a strategic stake in Saudi Basic Industries Corp, citing two sources with direct knowledge of the matter.
Aramco wants to develop its downstream business as the government prepares to sell up to 5 percent of the world’s largest oil producer, possibly by next year. Boosting its petrochemicals portfolio further could help attract investors for the IPO.
Riyadh-listed SABIC, the world’s fourth-biggest petrochemicals company, is 70 percent owned by the Public Investment Fund (PIF), Saudi Arabia’s top sovereign wealth fund. It has a market capitalization of 385.2 billion Saudi riyals ($102.7 billion).
The Aramco IPO is the centerpiece of an ambitious plan championed by Crown Prince Mohammed bin Salman to diversify Saudi Arabia’s economy beyond oil.
Aramco made the invitation for the SABIC deal to the banks last month, said the sources, declining to be identified due to commercial sensitivities.
Aramco plans to boost investments in refining and petrochemicals to secure new markets for its crude, and sees growth in chemicals as central to its downstream strategy to lessen the risk of a slowdown in oil demand.
The oil giant is expanding its footprint globally by signing downstream deals and boosting the capacity of its plants.
Aramco’s push into chemicals also includes a mega project it is building at home with SABIC. The $20 billion project would build a complex that converts crude oil into chemicals directly, bypassing the refining stage.