Estonia e-Residency generates €125M in 2025, remote biometric IDV could add millions more

Estonia is reporting a record year for its e-Residency program, with the European country raking in 124.9 million euros (US$148.8 million) in direct revenue from e-residents and their companies in 2025, a 87 percent rise year-over-year. A planned transition to remote biometric identity verification for e-Residency could generate an additional 3 to 9 million euros ($3.5 to $10.7 million) in tax revenue each year, according to the government. Critics, however, argue that the initiative could introduce additional identity-related risks to the country.

Estonia’s e-Residency program enables foreign nationals access to services such as company formation, banking, payment processing and taxation. Last year’s record revenue came mostly from labor taxes, income taxes in special cases and state fees related to applying for the e-Residency program and establishing companies, the government announced last Friday.

“Every euro invested in e-Residency brought more than 12 euros back to Estonia last year – this is a clear signal that investing in digital services works,” says Minister of Economic Affairs and Communications Erkki Keldo.

During 2025, Estonia also gained more than 13,800 new e-residents, 20 percent more than the previous year. The majority of e-Residency applications came from Germany, France and Ukraine.

The country is currently implementing its plan to develop remote biometrics capturing technology that will collect facial images and fingerprints from e-Residency applicants through a smartphone. The remote process will eliminate the need for applicants to submit biometrics in person and receive a physical smart card.

The tender for the project was awarded to identity technology company X Infotech in January, while the capability should be ready in 2027.

Work on a mobile app that enables biometric capture is already underway, while the government is working on a draft legislation to allow issuance of e-Residency through a remote biometric verification process based on the applicant’s travel document, according to Liina Vahtras, managing director of the e-Residency program.

“Today, the biggest obstacle to the development of e-Residency is the slow and cumbersome process associated with using a physical plastic card,” says Vahtras. “The easier and faster it is for a foreigner to establish a company in Estonia, the sooner they will begin generating revenue here.”

Currently, there are 63,000 e-resident digital ID cards in circulation.

Cancelling e-Residency cards brings new risks

Since its launch in 2014, over 135,000 people have become Estonia’s e-residents, while the economic impact of the program is estimated at almost 400 million euros ($476.6 million).  But while the program has benefitted the country, digitizing company formation has also brought money-laundering and sanctions-evasion risks, according to Silver Tambur, co-founder and publisher of online magazine Estonian World.

Estonia’s plan to shift from physical ID cards to smartphone-based onboarding with remote identity verification could widen the attack surface.

“The physical card was cumbersome, but it baked in a high-confidence identity step,” Tambur writes in an opinion article. “A mobile-first system will live or die by cybersecurity, fraud controls and the credibility of remote biometrics.”

Tambur also highlights other limitations of the e-Residency program, including the fact that e-resident numbers are still a far cry from the first hopeful estimates of 10 million.

As for the record revenue numbers in 2025, these are a result of a tax deadline and the growth rate is unlikely to repeat.

“Estonia raised its dividend tax regime, removing a previously lower rate for regular pay-outs,” Tambur says. “Predictably, many companies accelerated dividends into early 2025 to lock in the old treatment.”

E-residents have founded more than 39,000 Estonian companies to date. However, only around 2,000 paid any taxes in a recent year and an even smaller minority pays serious tax.

“In other words: e-residency creates a long tail of micro-companies, dormant entities and short-lived experiments, while the state’s revenue is likely carried by a much narrower group of successful businesses,” Tambur notes.

While these facts do not diminish the value of Estonia’s eResidency program, they do bring a more balanced picture, the publisher says.

Article Topics

biometrics  |  digital company ID  |  digital government  |  Estonia  |  remote identity proofing