A 28th Regime to Replace the 27?

Hello! Today is March 15, 2026, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on LinkedIn.

This week’s expert is Thomas Harbor, a Brussels-based attorney. Thomas’s legal practice focuses on competition law, FDI control, and regulatory matters. He is also an adjunct lecturer in economic policy at Sciences Po in Paris and the founding editor of What’s up EU.

On March 18, the European Commission unveiled its proposal for an EU‑wide optional corporate regime, the “28th regime”. It would create a single, optional EU‑wide company form with fully digital procedures, aimed at reducing legal fragmentation for firms operating across borders.

What It Tries To Solve

Companies active in the EU must navigate 27 national company law systems and more than 60 corporate forms. Fragmentation raises transaction costs, discourages scaling and pushes some high‑growth firms to incorporate or relocate outside the EU. Within the single market, they still face substantial barriers to cross‑border trade, which the IMF estimates are equivalent to a 44% tariff for goods and 110% for services.

These frictions hit smaller firms and innovative startups hardest, making it difficult for them to scale, as underlined in detail by the recent Noyer‑Kukies report. Concretely: stock options are still governed by 27 different regimes, making a single, portable equity plan for staff in several Member States difficult; insolvency and restructuring rules differ widely in speed, cost and outcome; and even the definition of an “innovative startup” varies across EU and national schemes, complicating access to targeted support and bespoke financing tools.

By contrast, US companies scale across a vast market under a single federal corporate and insolvency framework, with broadly consistent procedures and case law, which lowers frictions and gives founders and investors clearer expectations when expanding nationwide.

Simplifying this environment may actually require more (common) rules. Both the Draghi and Letta reports called for a 28th regime to tackle regulatory fragmentation in the single market. The EU Inc. proposal seeks to give founders a company form with one set of harmonised rules, to unlock more of the Single Market’s scaling potential.

What’s the Scope

EU Inc. would be an optional new company form, sitting alongside national forms, which remain untouched. It would be identical in all Member States, while allowing founders to choose freely where to incorporate.

The proposal introduces a fully digital, low‑cost (100 euro) company form with 48‑hour registration via a single EU interface and register, making it faster and cheaper to start and run a cross‑border business.

It enables modern financing tools such as multiple‑voting and transfer‑restricted shares, as well as an optional EU‑level employee stock option scheme with deferred taxation, intended to improve growth, employee retention and funding for innovative firms.

It would also create simplified, faster insolvency and winding‑up procedures, particularly for innovative startups, so that business failure is less costly and complex while safeguards and worker protections are maintained.

As Matthias Bauer of ECIPE argued, “these are tangible improvements that reduce administrative burdens, lower legal complexity and make Europe more predictable for investors and entrepreneursé.

The proposal does not alter labour law, taxation or other social protections. National worker‑protection rules continue to apply in full, including on pay, working time, health and safety, non‑discrimination and dismissal. Businesses have the same obligations to their employees whether they use a national form or EU Inc.

For now, EU Inc. essentially creates a new corporate‑law status, while other horizontal fields (labour, taxation, insolvency) remain primarily national, with only limited harmonisation.

As Marlene Schörner of the Jacques Delors Centre noted, “efforts to harmonise company, tax and insolvency law have stalled for years. In some areas – most notably labour law – member states have good reasons to protect national arrangements that are deeply embedded in their socio-economic models. In others, attempts at deeper integration have run up against resistance from national policymakers and regulators reluctant to cede competences.”

Stock options are a good illustration. National regimes differ on who can receive options, how plans must be structured and when tax is triggered, making cross‑border equity compensation complex and often unattractive.

The EU‑level stock option scheme (EU‑ESO) would address this by aligning the timing and basis of taxation: income would be taxed only once, on disposal of the shares, on the gain over the acquisition price. Member States would still decide how to classify that income and what rate to apply, but they would calculate the taxable base in the same way.

Learning From The Past

Designing the 28th regime as a regulation, not a directive, is crucial: it means rules apply directly and identically in all Member States, without national transposition that could recreate 27 versions of the “single” company form.

This is meant to avoid the experience of the Societas Europaea (SE) and Societas Privata Europaea (SPE) in the early 2000s, where directives and national implementing laws produced a patchwork rather than a genuinely uniform pan‑European statute. They saw limited uptake among startups and SMEs.

When the 28th regime was first floated as a directive, founders and commentators cautioned that it risked becoming “a 28th regime with 27 translations”, undermining the very idea of a single, optional EU‑wide form.

Still, some in the startup community see the proposal as only a partial step. As Martin Sandbu has argued in the FT, it does not fully create a “virtual jurisdiction”, but asks Member States to host a harmonised company type in their existing registries.

And national courts, not a single EU‑level judicial authority, will interpret the rules. Allied for Startups, an advocacy group, likewise warned that legal predictability will still depend on national courts, meaning the same rules could receive different interpretations.

What’s Next

The EU Inc. regulation now moves to the European Parliament and the Council, which will negotiate and adopt or amend it under the ordinary legislative procedure. A “narrow” 28th regime confined to corporate law need not be the endpoint.

A robust initial framework could prompt Parliament and Council to go further with targeted follow‑up measures, or open the door to progress through enhanced cooperation (allowing a group of willing Member States to move ahead together) once common rules are in place.

Partner event

On March 18, the Brussels Sustainability Club hosted a conversation on the EU’s industrial strategy with Arthur Corbin, business adviser to commissioner Stéphane Séjourné. The conversation was held just before a crucial meeting of EU leaders in Brussels.

A few interesting thoughts below from Arthur Corbin, on the changing paradigm, job losses in the industrial sector, and the link between energy technology and defence.

“The EU doctrine was based on three pillars: cheap energy from Russia, continued access to the Chinese market without competition, and protection from the US on defence. Since 2019, all three are gone and we need to reinvent our entire economic model.”

“We are losing 100,000 to 200,000 jobs per year in industry. Either we support industries into choosing Europe, or we won’t just have an industrial problem, we’ll have a political one.”

“In 10 to 15 years, 80% of military operations will be done by drones, and those drones will mostly be electric. Mastering battery technology is not just a climate question, it’s a strategic and defence imperative.”

AUSTRALIA FTA • On March 24, the EU and Australia concluded a long‑awaited free trade agreement and a parallel security and defence partnership, aimed at reducing reliance on China and the US while deepening ties on critical minerals, energy and defence.

The FTA cuts most tariffs and boosts access to minerals and agriculture markets, while the security pact opens EU rearmament contracts and closer military, cyber and maritime co‑operation to Australian industry.

It will enable Australia to participate in Horizon Europe, the EU’s flagship research and innovation framework, and to take part in SAFE, the EU scheme that co‑finances joint defence procurement.

Agriculture was one of the toughest files in the EU–Australia talks, with protracted haggling over beef, sheep meat, sugar and dairy quotas and the protection of EU geographical indications.

The draft texts will be published, after which the Commission will ask the Council to authorise signature. Once signed, the deal needs the European Parliament’s consent and a final Council decision, and will then enter into force after ratification by Australia.

TURBNERRY • The US administration is pressing the EU to approve the Turnberry trade accord exactly as negotiated, warning that any changes could jeopardise Europe’s privileged access to US LNG at a time of tight global supply.

The agreement would lock in large EU purchases of US energy in return for predictable tariffs. The European Parliament is due to vote on implementing the Turnberry deal on 26 March, but many MEPs want stronger safeguards against future US trade measures.

ELECTRICITY BILLS • European leaders gathered in Brussels for a meeting of the European Council on March 19. Among other topics, they asked the Commission to present a “toolbox” of temporary measures to curb the impact of soaring imported fossil fuel costs on electricity prices, including options such as tax cuts, grid‑fee reductions and focused state support.

EU leaders have asked the Commission to review the EU Emissions Trading System (ETS) by July 2026 to make carbon prices less volatile and limit their impact on electricity costs, without undermining climate goals.

The ETS is the EU’s carbon market, where companies pay for each tonne of CO₂ they emit. Because power producers pass these carbon costs into wholesale prices, high and unstable ETS prices can amplify spikes in gas and oil triggered by the conflict in Iran.

• “Can the EU lead a new world order in trade?”, asks former trade commissioner Cecilia Malmström in this very interesting piece for the Peterson Institute for International Economics
• Europe must accelerate rearmament through deeper cooperation and innovative governance to counter Russia’s aggression and shifting US policies, argue Guntram B. Wolff, Armin Steinbach and Jeromin Zettelmeyer for Bruegel.