Why your e-resident business needs a virtual office in Estonia

Maya Middlemiss
Written by Maya Middlemiss
on June 05, 2022

Your e-resident business needs to meet certain business requirements, one of which is to have a registered Estonian address — something which is usually provided via a virtual office.

The idea of a “virtual office” might look like something out of a simulation computer game, or the way you describe your attempts to carve out a place to get work done in an overcrowded living space — but it's a real thing! You don’t need a special headset or metaverse portal to get there, and it doesn’t mean attending a business meeting as a cute avatar (though it’s fun to see these new technologies providing extended modes for e-resident business people to collaborate and connect online).

Nor does the word ‘virtual’ in this context suggest anything incomplete or unreal. It’s simply a handy way of distinguishing an important bit of legal compliance, from the place you already do your work.

What is a virtual office in Estonia?

For the typical liberated and fiercely independent Xolopreneur, The Office is a sitcom and cliché, and the world is your workplace — even if you have your base at home, you can probably get things done from just about anywhere, and all your communication is electronic. You may or may not do your work at something resembling a desk, in your home country, or while out on the road, but you don’t need bricks and mortar to define your professional activities.

This is why the Estonian business infrastructure is such a great fit for the way you operate, having moved beyond the idea of work as a place you go to do stuff with other people, wearing special uncomfortable clothes, and surrounded by the whir of printers and office gossip!

What are the legal requirements for an Estonian virtual office?

However, even in Estonia, there are occasional requirements for interactions with specific human beings, and even documents, in a physical location. As such, it is a legal requirement for every Estonian business to have a physical address and a contact person

For e-resident businesses founded by someone who is not Estonian, this contact person needs to be an Estonian national. They have to be appointed before you can proceed to register your e-resident business; this is specified in the Estonian Commercial code. In fact, only residents of Estonia are able to use the online company formation service without subscribing to a virtual office and contact person service — you won’t be able to complete and submit the form, without entering this information at the required point.

Who or what is my designated contact person at my Estonian virtual office?

It’s worth clarifying that we use the designation ‘person’ here in a legal sense, and as such when you appoint a licensed business like Xolo to provide your virtual office, the business entity itself acts as your ‘contact person.’ 

You might well have a regular contact dealing with your day-to-day bookkeeping and customer service queries, and develop a great personal relationship with them, but they’re not your ‘contact person,' the whole of Xolo is. It's various team members will provide different operational services as required. In the same way, your business is a legal entity — a limited company — and in some senses acts with legal personhood.

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So why is it even called a “virtual office” in Estonia?

At this point in reading, you would be forgiven for concluding, this ‘virtual office’ address is therefore really a physical office!  Whereas the place you actually do your work, may well be rather more metaphysically defined…

But the terminology reflects the fact that your appointed virtual office is only virtually connected to your e-resident business, as a legal formality, and indeed you may never set foot on its premises. You don’t work there! Because your work is not a place.

Some virtual offices might literally be a mailbox in any case, so you won’t want to arrange any large meetings there! Others, like Xolo, are substantial business locations in their own right, carrying out a range of activities for clients all over the world. And will be glad to see you in person, anytime you are visiting Tallinn — by prior arrangement, of course.

What does my virtual office in Estonia do for my e-resident business?

The legal minimum requirement is therefore to have a physical address and contact person, where legal papers could be served. This person, or business entity, is appointed as your official contact, and shown on public records in the Estonian Business Register, as part of the transparent business infrastructure for which the country is renowned. 

You should therefore consider the importance of appointing a virtual office provider with a good reputation, in good standing with all authorities and regulatory bodies, as well as having a credible presence and history — because they will be publicly and transparently associated with YOUR business. The cheapest is not always the best, and comparing like with like service is not always straightforward.

Simply existing as an address and entity geographically contained within Estonian borders is sufficient for legal compliance. However, when you appoint a virtual office (for example, as part of your Xolo Leap subscription), your provider will generally provide a range of auxiliary support services, which enable you to carry on operating your business completely virtually, from anywhere on earth. 

 

Using the address of your virtual office in Estonia

Each invoice you raise will carry the address of your virtual office too, as this is part of the requirement for a legally valid invoice. But your clients will doubtless pay you electronically — heaven forbid they would drop round to your virtual office bearing cash or a check! Wherever your clients are doing business, it is highly likely that a geographically distinct address on a supplier invoice is also a legal requirement for them, to account for funds moving out of their business, however they choose to pay you.

In some parts of the world, there is a precedent for paying for ‘vanity addresses,’ suggesting your company is located in a prestigious postal area or business district, implying that you have plush offices which cost a lot per square meter. In our digital-first, work-from-anywhere business culture of today, this is hopefully less important. However, Xolo’s provision of a virtual office address in Estonia’s capital city of Tallinn will add credibility to your business presence, especially within the tech startup space for which the city is world-famous — even if you operate with no fixed physical location for delivery of your business activities. 

Additionally, your business address will be used for banking and credit, although your bank won’t send you physical mail in Estonia, and are very familiar with despatching things like replacement cards to other locations for e-resident customers. Other financial services and gateways like Paypal, Stripe, Wise etc., will also make use of your virtual office address, as the legal location of your Estonian limited company.

You will also find that you use it every time you enter into a contract — for example, if you need to sign an NDA before working with a new client, or even when signing up for a subscription service online, as a business expense. 

Don’t worry, you will soon learn to spell all those unfamiliar Estonian place names in your virtual office address (or your autocompletion apps will!)

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How do you choose a virtual office in Estonia?

Some virtual office service providers listed in the e-Residency marketplace are oriented toward specific kinds of business activities, which have to deal with special licenses, physical goods, or employment payroll, or even provide call handling services. There are also regulated industries which have to deal with a higher volume of paperwork and documentation, in order to stay compliant with specific bodies. 

If you are considering constituting an e-resident business to which this might apply, it is worth giving careful thought to whom is best to support you. Xolo has been operating for 7 years, since the early days of the e-Residency program, but in 2022 there are as many different e-resident business models as there are e-residents, and the diverse range of specialist providers in the e-Residency marketplace will have the one to match any unique requirements, Each one is carefully selected for quality and professionalism before being listed in the marketplace, so this process becomes part of your own required due diligence.

Obviously the costs involved will reflect the level of activity required to provide the contracted service, and if this includes handling lots of mail or answering the phone for you, then you would be looking at a significant cost. In this situation, your virtual office team may become a day-to-day extension of your general business operation. This may prove to be a cost-effective way to scale your team, depending on your business plan — and there are many other ways to grow and develop your business flexibly, such as using networks of contractors through Xolo Teams.

The Xolo virtual office in Estonia provides the legal backend to enable everything the typical solopreneur needs, whether they are a micro-business in their early days or a sole-operator for life — providing the ability to operate in a streamlined and totally compliant fashion, and most of the time you won’t even think about the service in this way. In that sense, your ‘office’ becomes completely virtual.

Your invoices and accounting will all show the correct, valid information, and Xolo will act for you behind the scenes in the highly unlikely event that any paper mail arrives for you in Tallinn. 

Of course part of this overall business service is ensuring you are never in the position to have legal papers served on your company, and within Estonia, very few physical bits of paper get posted from one place to another — which is why e-Residency works so perfectly for entrepreneurs all over the world!

However, ‘snail mail’ is always a possibility. One example of this, which may apply to your totally online business, is the confirmation of address for registration in Google My Business — which requires a code to be physically posted to the registered business addressed, then entered in their online portal, to claim the business page. So of course your service includes opening and relaying the contents of communiqués of this kind.

You will most likely have appointed your virtual office in Estonia without giving it much thought, when you registered your e-resident business in the first place, and it’s worth pointing out that you can change the appointed provider at any time. 

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What do virtual office services cost for my Estonian resident business?

However most of the services in the marketplace, like Xolo, bundle this provision as part of an overall package of services, and as such, it’s the total package you should consider at the outset. Make sure you are not subscribing to services you will never need, like a fax number, or multilingual call handling, if these are simply surplus to requirements. All you officially require is the physical address and contact person, and for many sole traders this will be easily and simply arranged via your preferred business service provider.

The good news for Xolo Leap customers is that this essential legal requirement is an intrinsic part of your monthly subscription — you do not pay any additional fees, to have Xolo fulfil both the operational and legal parts of your virtual office requirement, acting as a licensed service provider and legal person/entity as required, for your Estonian e-resident business.

So all you have to think about are your non-virtual business activities: fulfilling your professional duties to your clients, anywhere in the world, through your EU-based fully compliant limited company, without ever having to handle a single piece of paper!

 

About Maya

Maya Middlemiss is a freelance journalist and author, excited about the future of work, business, money, and technology. She operates her e-resident business through Xolo Leap, so that she can work frictionlessly with brands and publications all over the world, and she is the host of the Future is Freelance podcast. Exploring the social impact of technology on our changing world, and bringing those stories to life in an accessible and inclusive way, is her passion — because all of this is far too exciting to leave it to the geeks. Maya is a 'digital slowmad', originally from London, presently living with her family in Eastern Spain.

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