Being able to found a company that can operate across Europe within 48 hours, through a digital process, for under €100, and with no required minimum capital - this is the idea behind EU Inc.
In March 2026, the European Commission proposed a pan-European company structure that allows European companies to operate across the Single Market under one set of corporate rules. Harmonizing corporate law has proven politically difficult, so putting forward a new “28th Regime” is highly appealing. This way, Member States can keep their national rules, while the EU Inc. proposal offers an alternative to national frameworks like the German GmbH.
The proposal stems from the realization that Europe is great at creating innovation but bad at translating this into business growth because the Single Market remains fragmented. Theoretically, Europe should work as one market. In practice, businesses - especially startups - struggle to navigate 27 different legal systems as they have insufficient resources to deal with duplicative bureaucracy or pay legal experts across different markets.
Expanding across borders becomes slow, complicated, and risky. Venture capital investors also invest less in European companies because they bet on exponential growth. This means that many highly innovative companies based in Europe often struggle to access sufficient financing - many fail, do not grow, or move outside of Europe, mostly to the US, undermining Europe’s future growth and sovereignty.
An ambitious proposal meets reality
The European Commission’s proposal for the EU Inc. was highly ambitious but is now in danger of being watered down, leaving an EU Inc. that is unattractive to many firms. The EU aims to finish negotiations on the proposal by the end of the year, but this timeline is tight. Discussions on the proposal are ongoing within both the European Parliament and the Council of the EU, with many key elements still the subject of intense debate.
The EU Inc. would make companies significantly more mobile, which can open the door for regulatory arbitrage. While the proposal does not directly change national rules, they could face pressure to either adapt or be replaced in the long term if the EU Inc. becomes widely adopted. Member States are therefore pushing back by calling for safeguards to protect national standards and for the removal of particularly sensitive parts of the proposal.
One element under threat is the simplified insolvency procedure for innovative startups. Insolvency law is highly fragmented across the EU. National insolvency procedures can take several years and are often unpredictable, especially if there is a cross-border dimension. Uncertainty around if and when they would get their money back if something goes wrong remains a significant deterrent for investors.
Analysis by the IMF estimates that a 28th Regime for corporate law could increase GDP in the EU by 3.3% within 10 years, with 1.8% coming from an EU-level insolvency framework that is more likely to preserve struggling companies and could substantially increase investment. Insolvency law is politically sensitive because it can have far-reaching implications for creditor protection and job preservation and in the Council, 17 Member States have pushed to remove insolvency rules from the regulation.
A second area of contention is employee stock options. Startups usually cannot offer competitive salaries to top talent. Instead, they hand out stock options, which allow employees to buy company shares at a set price at a later date. This way, employees benefit when the company grows, which can be an attractive hiring incentive. However, rules on employee stock options are highly fragmented across the EU, making it extremely complicated for companies operating in multiple markets to offer them.
In some EU countries, stock options are taxed before the shares are sold, meaning employees have not yet seen any financial gains, an outcome known as “dry income taxation”. EU Inc. was supposed to include a harmonized framework for stock options that fixes the timing of any taxation but leaves the amount to the discretion of Member States. Member States have nevertheless pushed back over concerns around creating a legislative precedent, as taxation rules can usually only be changed with unanimity in the Council. For the EU Inc., a qualified majority would be sufficient, as it counts as Single Market legislation with Article 114 TFEU as the legal basis.
The most difficult question is how to deal with employee codetermination. In Germany and some Scandinavian countries, employee participation in company boards, for example, is an important part of corporate law, while it does not exist in other Member States. This makes finding a substantive solution complicated.
In the Commission’s original proposal, codetermination rights depend on the national rules in the country of the registered seat of an EU Inc. company, which may differ from its “real seat” and can be chosen freely. This freedom is important to make the EU Inc. attractive to startups but allows companies to circumvent national codetermination standards. A compromise could be to require companies to move their registered seat after reaching a certain number of employees in a country with codetermination rules.
Striking the balance: Placing necessary safeguards while keeping the EU Inc. attractive
The most contentious issues are symptoms of a larger problem. Discussions around single market integration are often framed as technocratic, when many questions concerning companies and investment are deeply political.
Insolvency law decides what is prioritized when a company fails - protecting jobs, preserving companies, or paying out creditors. Employee stock options are related to taxation, which might be the single most sensitive national competence, and employee codetermination is one way of enshrining workers’ interests. This shows that it is complicated to harmonize one area of the law while not affecting others. More importantly, it also demonstrates the difficulty of completing the Single Market without agreeing on socio-economic models, or how to balance different interests and organize work and welfare across the EU.
We need to find the right balance between addressing legitimate concerns while keeping the EU Inc. attractive. On codetermination, caution is warranted: if companies can move freely across the Single Market without any safeguards, this is likely to lead to lower standards, without individual Member States being able to intervene. In other areas, however, Member States need to stop stepping on the brakes.
On employee stock options and insolvency law in particular, they have to swallow the pill and accept a common framework, otherwise the EU Inc. will become obsolete. These elements lie at the heart of what makes the proposed EU Inc. attractive. Finally, implementation will be key. The proper functioning of the EU Inc. can only be ensured in practice if the legal framework is implemented by a network of specialized courts in Member States. Otherwise, the same legal text will be interpreted in 27 different ways.
It took 30 years to get the Societas Europea (SE) from a proposal to a severely watered-down regulation. The EU Inc. must avoid the same fate. If it ends up as another patchwork of national and EU-level rules, this would completely defeat its purpose in reducing complexity for cross-border firms. But if we get it right, it has enormous potential to make Europe a better place for innovation and entrepreneurship.