e-Estonia: Could the digital powerhouse of Tallinn be your next European business hub?

Laura Mullan
- Leadership - Nov 01, 2018

Frequently hailed as one of the most digitally advanced societies in Europe, Estonia is carving its own unique path in today’s digital landscape. But could it be the right location for your European venture?

At the heart of Estonia’s business sphere lies the country’s capital, Tallinn. The burgeoning city is also making waves in the wider European business scene too - and for good reason. Between free public Wi-Fi, a well-educated population, and business-friendly tax policies, Tallinn has quickly become a force to be reckoned with amongst professional circles. In 2016, the country’s gross domestic product (GDP) was EU€20.9 billion 53% of which was comprised of Tallinn’s GDP. Recognising the country’s potential, more and more businesses, startups and employees are also flocking to the Eastern European capital. In 2015, there were 13,462 companies in Tallinn with turnovers of more than EU€100,000 and 29 companies with turnovers of more than EU€1mn. Boasting a population of around 1.32mn people, the country has been ranked as the 14th easiest place to start and operate a business, according to the World Bank Group’s rankings. But should you head there for work or consider operating a business in this Baltic business hub? Business Chief investigates

e-Estonia: The most advanced digital society in Europe

With the nation commonly dubbed as ‘e-Estonia’, Tallinn prides itself on being a digital stalwart. In 2000, the country passed a law declaring internet access as a human right and from that, it has put forward a campaign to bring the internet to rural areas. Over the past few decades, the country’s digital transformation has been in hyperdrive: when Estonia gained independence in 1991, only half of the country had a phone line yet, by 1997, 97% of Estonian schools were online. Fast forward a few years later, and Estonia would continue to make history, becoming the first nation in history to offer e-residency. Useful for businesses, this government-issued ID is available to anyone in the world, granting them the freedom to easily start and manage a global business in the EU. This technological ethos hasn’t gone unnoticed by the business community either. In 2015, Estonia came 22nd among 143 countries in the World Economic Forum’s International Technology Index. Thanks to its digitally-driven approach, Tallinn has become a home to tech behemoths such as Skype, and it has also helped to create Tehnopol, the biggest science park and startup incubator in the Baltic region. Foreign investors like Microsoft, CGI, Fujitsu, Keuhne+Nagel and Arvato haves established long-lasting operations in the country and the Baltic capital is also known for being a beacon for up-and-coming startups like taxi-hailing startup Taxify or tech firm Nortal.

This digital outlook has also enabled Tallinn to become a global heavyweight in cybersecurity. In 2017, the country faced cyber-attacks that were widely regarded as the world’s first ‘cyber war’. But, by learning and gaining from the experience, Tallinn has now emerged as a powerhouse in cybersecurity-related knowledge. Home to NATO CCDCOE, Guardtime and Malwarebytes, the country seized the top spot in Europe and fifth position globally in the Global Cybersecurity Index this year. Not only is the capital technologically-savvy, but it also has the talent and expertise to support it.  The Estonian labour market is highly skilled, with 86% of adults speaking at least one foreign language. According to the Human Capital Report, the Baltic nation is a success story when it comes to successful human capital potential maximisation, ranking 15th globally.

Situated on the north coast of the country, Tallinn ties together the Nordic, Baltic and northwest Russian regions, making it a strategic location for any business. Estonia’s long-lasting system of low, flat-rate taxes, like the 20% income tax, is simple and has also been favourable to businesses. There is also no tax on retained and reinvested in profits and as a result, the country topped the OECD Tax Competitiveness Index in 2017. Since gaining its independence, Tallinn’s economy has grown rapidly. The service industry dominates the Tallinn economy, with seven out of ten residents employed in the service sector, according to the Tallinn Business Administration.

Big business in Tallinn:

Renowned industry giants, Eesti Energia and AS Tallink Group have both chosen to position their headquarters in the bustling city of Tallinn.

Eesti Energia

The international energy company, Eesti Energia, has chosen the Estonian capital as the site of its headquarters. Operating in the Baltic and Polish regions, the company is present in the electricity and gas markets as well as the international liquid fuels market. Eesti Energia produces electricity from oil shale as well as wind, water, municipal waste and biomass and in 2017, it passed a new milestone and added solar energy to its portfolio. Now, the company is one of the largest producers of renewable energy in Estonia. In May, the company revealed that it had signed a shares purchase agreement to acquire renewable energy firm Nelja Energia.

AS Tallink Group

Boasting 15 vessels, AS Tallink Grupp is a mini-cruise and ferry company headquartered in Tallinn. The Estonian company also owns Silja Line and a part of SeaRail. Additionally, the group also operates four hotels in Tallinn and one in Riga. The Baltic ferry and cruise operator named Paavo Nõgene as its new Chief Executive Officer in March. Tallink recently acquired the right to operate international fashion brand Esprit’s franchise stores in Estonia.

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