EU Inc.: Europe's Bold Bet on a Borderless Business Future

Author: Tiago de Oliveira Monteiro

For decades, Europe's single market has been a powerful concept held back by a fragmented reality. A startup founded in Lisbon wishing to expand to Warsaw, Vienna, or Amsterdam does not simply grow — it navigates a labyrinth of 27 distinct national legal systems, each with its own incorporation requirements, governance rules, and company forms. The result: over 60 different types of limited liability companies across the EU, each demanding separate compliance, separate paperwork, and separate costs.

That fragmentation may finally be coming to an end. On March 18, 2026, the European Commission published a landmark legislative proposal to create EU Inc. — a single, optional, harmonized company form that any founder, anywhere in the world, could use to operate seamlessly across all 27 EU member states. The initiative, formally known as the "28th regime" (since it operates as a virtual 28th option alongside the 27 national frameworks), is widely seen as one of the most ambitious reforms to European corporate law.

The Problem EU Inc. Was Designed to Solve

Europe is home to over 40,000 venture capital-backed tech startups — more than any other region in the world. Yet despite this rich pool of entrepreneurial talent, the EU had only 331 unicorn companies (startups valued at over $1 billion) as of 2025, compared to 1,963 in the United States. The gap is not simply a matter of ambition or innovation — it is, in large part, structural.

When a European startup grows beyond its home country, it faces a cascade of compliance obligations. Every new market means a new legal entity, new governance requirements, and new administrative costs. Studies cited by the European Parliament have identified this high variation in laws affecting companies across the EU as a direct barrier to scaling. Making matters worse, 82% of European startups that do manage to scale eventually relocate to the United States to raise capital at the levels required to compete globally — taking their intellectual property, tax contributions, and high-skilled jobs with them.

What Is EU Inc. Exactly?

At its core, EU Inc. is a new optional limited liability company form, available to any founder — whether a natural person or a legal entity, based inside or outside the EU. It does not replace existing national company forms (the German GmbH, the French SAS, the Portuguese Lda still exist and remain unchanged). Rather, it offers a voluntary alternative: a single, uniform legal identity that works the same way in every member state.

1. Fast and fully digital incorporation - An EU Inc. company can be registered entirely online via the Business Registers Interconnection System (BRIS) within 48 hours, at a maximum cost of €100, with no minimum share capital requirement (a symbolic €1 suffices). The company is assigned a Unique European Identifier (EUID) upon registration.

2. Uniform governance rules - EU Inc. companies follow the same rules on board composition, directors' duties, shareholders' meetings, and share structures regardless of where they are incorporated. The board of directors must include at least one director resident in the EU, and bearer shares are prohibited to safeguard against misuse.

3. A digital share register - Companies are required to maintain a digital register of shares from the moment of registration. Shares may be issued, registered, and transferred using distributed ledger technology, bringing the framework into alignment with modern fintech realities.

4. Simplified financing instruments - The proposal supports modern capital structures commonly used by startups and venture-backed companies, including warrants and other equity-linked instruments, which have historically been difficult to implement consistently across EU jurisdictions.

5. A harmonized employee stock option plan (EU-ESO) - Perhaps one of the most practically significant elements for the startup ecosystem, EU Inc., introduces a voluntary, EU-wide employee stock option scheme. Critically, taxation of income from these options would be deferred until the shares are sold — not at the time of grant, vesting, or exercise. This resolves a major pain point for founders trying to attract and retain talent across Europe, where inconsistent national tax treatments have long made equity compensation packages far less competitive than those offered by US counterparts.

6. Streamlined insolvency procedures - For innovative startups specifically, the EU Inc., introduces fully digital, expedited liquidation procedures. A simplified winding-up process can be initiated by the debtor or a creditor without legal representation and must be completed within six months (with one possible six-month extension).

7. Cross-border mobility - An EU Inc. company may transfer its registered seat to another member state without dissolution, preserving its legal identity while moving across borders — something previously unavailable to smaller companies in a straightforward way.

   
   

The Legislative Path Ahead

The proposal now enters the ordinary legislative procedure of the European Union. It will be negotiated between the European Commission, the European Parliament, and the Council of the EU — representing member states — under qualified majority voting, meaning no single member state holds a veto.

The Commission has called on the Parliament and Council to reach agreement by the end of 2026, a timeline described as ambitious but politically feasible. The European Council Conclusions of March 19, 2026 — published just one day after the proposal itself — signalled strong political will to move quickly. If the regulation is adopted on that schedule, the first EU Inc. registrations could be available as early as Q1 2027, given that the regulation is expected to apply twelve months after its entry into force.

Concerns and Criticisms

Tax authorities and policymakers have been reassured by Commission officials that EU Inc. cannot be used to "forum shop" for lower tax regimes — companies will still pay taxes in the jurisdictions where they operate, and existing EU anti-avoidance frameworks remain in force.

It is important to note that the regulation proposed is explicit that it does not affect national labor law. Hiring, firing, social security contributions, and worker protections remain governed by the laws of the country where employees are located.

Final note and used sources

This text is based on the European Commission’s proposal concerning EU Inc. / the 28th regime, complemented by institutional sources, business press coverage, and specialist commentary. For further reading, see in particular the following references: European Commission, GT Law, Bird & Bird, RTÉ News, A&O Shearman, Studio Locatelli Associati, Multiplier, and the official EU.inc. As this remains a legislative initiative under negotiation, the regime may still be amended before its final adoption.

By Tiago de Oliveira Monteiro