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    Home Proptech Fintech The Baltic Tiger of the Four Unicorns

    The Baltic Tiger of the Four Unicorns

    From Soviet Republic to European leader in digitalization, Estonia has starred in a spectacular economic leap.

    Ashton Kutcher and a ping-pong table welcome to Lyft99, the center for start-ups de Tallin. The star of Holywood "It is Veriff's most famous investor, one of the technology companies that has already left the center and flies alone." Kärt Rääbis community manager Lyft99, explains the outstanding presence of the American actor, with that image in real size next to the honor roll of the companies that started here and have triumphed: Pipedrive, Comodule, Transferwise, Bolt, Veriff herself… A symbol of the global vocation of Estonia, a very small Baltic country with only 1,3 millions of inhabitants that has become a world leader in the technology sector.

    As a good computer scientist, Jose Ernesto Suarez I had no idea who Ashton Kutcher was, but Estonia's digital success has united them. Suárez left a year ago a good job and its Mediterranean Valencia to settle in Tallinn and fulfill his dream of setting up a company. “We were about to stay in Barcelona, but we stopped the price of housing, here instead you find apartments for 500 euros per month, ”he explains. In front of Wedoops, a cloud infrastructure company, Suarez values ​​the facilities Estonia offers to entrepreneurs: “In 18 hours we had the company incorporated, all online. In Spain You have not started yet and they are already demanding you, but here no taxes are paid until the billing reaches 40.000 euros ”. "That push at the beginning helps a lot," he admits.

    From the Soviet republic to the leader in digitalization in Europe, the transformation of Estonia has been radical. "It's a miracle," summarizes the Finnish businessman Juha Rantanen. "That an economy in its day so dependent on the subsidies of the USSR has managed to reinvent itself and take that leap is a milestone," he says.

    Member of the European Union and the NATO from the 2004, Estonia is considered a Baltic tiger, as Lithuania y Latvia, for its rapid growth since the independence of the USSR, in 1991. With a GDP per capita of 20.840 euros in the past year, one of the highest in Eastern Europe, it maintains a balanced budget and a very low public debt, equivalent to 8,4% of GDP. From the 2011, it is part of the eurozone.

    Only weddings, divorces or the purchase of an apartment require physical presence: the rest of the procedures are online

    Public-private collaboration and the firm commitment of the administration have been key in this transformation towards one of the most advanced electronic societies in the world, as a group of entrepreneurs from the Fundació d'Empresaris de Catalunya (FemCAT) who have visited Estonia to see Estonia's economic model firsthand. A transformation that has allowed to create the necessary environment so that no less than four unicorns were born (start-ups technology valued at more than 1.000 million dollars): Skype, a giant now in the hands of Microsoft, Playtech (dedicated to the game), Bolt (before Taxify, urban mobility services company) and Transferwise (currency exchange transfers, now based in London).

    It all started in 1991, the year of Estonia's independence from the Soviet Union. "We inherit absolute chaos," he admits Linnar Viik, founder of the e-Governance Academy and one of the architects of that commitment to digital. “We had to start from scratch, and in a small country like ours and without natural resources, and of course without money for large investments, we decided that the only thing we could afford was to buy computers and connect to the internet,” he recalls. The country started from a really precarious situation, since less than half of the population had a landline and the network was of very poor quality, so they also opted to boost the use of mobile phones.

    This great Estonian commitment to technology crystallized in the 2001, when the decision was made to digitize the entire administration. A year earlier, the government declared internet access a universal right, since the 2002 the main urban areas have free Wi-Fi and the first elections with electronic voting were held at 2005. Today, 98% of citizens process their taxes online and perform more than 99% of bank transactions online.

    Being the first digital country in the world has many advantages, especially seen from the “come back tomorrow” Spain and window-to-window queues. All administrative procedures are carried out here online, in a system based on transparency and trust between State and citizens "Only physical presence is required for three procedures with the Administration: marry, divorce or sign a real estate transaction," explains Tbias Koch, director of business acquisition of e-Estonia Briefing Center. Citizens use their digital identity, a kind of ID, to carry out the rest of the procedures, although the State "does not oblige it, it simply puts the means so that everyone can use them". The idea is that “whoever wants to can continue doing their paperwork, but they will also be digitized later,” explains Koch.

    The different areas of the Administration are interconnected through the system X-Road, underway from 2001, which guarantees the once only (only once), according to which the State can only claim once the personal data of a citizen. It is over to go from one place to another in search of certificates from a department that claims another area of ​​the same Administration. In this way, for example, the birth of a baby is automatically registered, the parental assistance system is activated in the same way and the child is already assigned a daycare center. Likewise, patients can go directly to a pharmacy with their digital identity to acquire the prescribed medications without having to carry a prescription on paper, and doctors can have online the history of a patient who has just entered the hospital. Justice is also digitalized, parents can check their children's grades and speak online with teachers and there is not a paper in the Council of Ministers. Their decisions are published online minutes after the end of the meeting. According to their calculations, the digitalization of the State represents a saving of 2% of GDP.
    As it stands out Elena Massot, president of FemCAT, the great advantage of the system implemented in Estonia is that “it places the citizen and the companies at the center of all the decisions of the Administration”.

    Marten kaevats, digital affairs advisor to the prime minister, flatly denies that the e-Estonia scheme violates citizens' privacy. “We are not a Gran Hermano, here there is no central server that controls all the information, but the system allows the information to be shared, ”he emphasizes. In any case, every time a state agency accesses the data of a citizen leaves a trail, so that he can always know who and for what he has consulted his information. Unjustified access is considered a crime.

    On the other great fear, security in a fully digitized state, Estonia passed its great test in the 2007, when it suffered an allegedly Russian cyber attack (although the Kremlin he denied it) after removing a monument to the fallen Soviet soldiers from World War II during World War II. It was a crisis of gravity, but finally overcome, and since then Estonia is also a reference in cybersecurity: since the 2008 Tallinn houses the Center of Excellence for Cooperation in Cyber ​​Defense from NATO.

    More than 62.000 digital residents

    Estonia offers entrepreneurs from around the world the possibility of establishing their business in the country as a gateway to the European Union, and using its advanced digital infrastructure to manage it from abroad. So far, more than 2014 people have registered as digital residents, mostly in neighboring Finland, Russia, Ukraine, Germany and the United States, although they have also registered near 62.000 in Spain. The system allows obtaining a digital identity, but does not give citizenship or exempt the need for a visa. The goal is to attract talent and that new residents contribute to growth. The country offers a competitive tax system, with a single income tax of 1.600%, VAT of 20% and social contributions of 20%. Corporation tax is between 33% and 14%, but it is not paid if benefits are not distributed.

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