On March 18, 2026, the European Commission published a legislative proposal to create “EU Inc.,” an optional, digital-first corporate legal form aimed at simplifying cross-border business operations within the EU. Presented as a cornerstone of the EU’s competitiveness agenda, the package proposes to establish a single, harmonized corporate entity framework operating in parallel with existing national company law systems. This is also termed the “28th regime.” The initiative responds directly to calls from the Draghi and Letta reports, and it aims to address structural barriers that have hindered European startups and scaleups from growing and competing at global scale.
Background
The EU has 27 national legal systems, with over 60 available company forms for limited liability companies. This fragmentation creates legal uncertainty, high compliance costs, and barriers to cross-border expansion within the European market. The International Monetary Fund has estimated that legal fragmentation across EU Member States creates a non-tariff barrier equivalent to a tariff of approximately 44% on average for traded goods.
Several studies cited by the European Commission show that this framework has consequences: approximately 14% of European scaleups operate as “dual companies” with headquarters outside the EU. The same data shows that 82% of these companies relocate to the United States. Another study found that European startups are only half as likely as their U.S. counterparts to raise over $15 million in a financing round. The Commission’s proposal aims to target these identified structural disadvantages.
The Commission proposed EU Inc. as a Regulation, rather than a Directive, to provide a coherent, directly applicable, and uniform framework across Member States. The legal basis for EU Inc. rests on Article 114 of the Treaty on the Functioning of the EU, on the grounds that the approximation of laws is considered necessary to ensure that the internal market for investment functions effectively.
Key Features of EU Inc.
Corporate Form and Eligibility
EU Inc. would be a new limited liability company form available to any founder, natural person, or legal person across the EU, and would be available alongside existing national forms. Existing companies may become eligible to convert into EU Inc. through domestic conversions or cross-border mergers, divisions, or conversions. EU Inc. companies would be able to establish branches in any Member State and set up EU Inc. subsidiaries, which would make the form available to corporate groups.
Registration
A central EU interface, built on the existing Business Registers Interconnection System, would enable registration in any Member State using standardized bilingual (English/national language) templates. The regulation would require founders using the standardized template and registration — including preventive control by administrative, judicial, or notarial authorities — to complete all relevant forms within 48 hours at a maximum cost of €100. The “once-only principle” would apply: company information submitted to the business register would be automatically transferred to tax authorities, social security bodies, and beneficial ownership registers, eliminating the need for duplicate submissions. Founders would receive their tax identification number and value-added tax (VAT) identification number as part of the registration process.
Capital Requirements
If the proposed package is enacted, EU Inc. companies may be incorporated with zero minimum capital, with no requirement to pay up share capital prior to incorporation. Creditor protection would be maintained through harmonized director liability rules, including mandatory balance sheet and solvency tests before distributions to shareholders.
Governance and Financing
A flexible governance system would allow online or hybrid shareholder and board meetings. EU Inc. would require a minimum of one shareholder and one director. If the proposal is enacted, capital increases and share issuances may be carried out fully digitally, with the board of directors authorized to decide on share issuances. The framework would enable the use of modern financing instruments, including Simple Agreements for Future Equity (SAFEs), convertible loan notes, and warrants (instruments that have historically faced legal uncertainty under various national frameworks).
Employee Stock Ownership
EU Inc. companies would be able to establish Employee Stock Ownership Plans (ESOPs) and issue shares with distinct or no voting rights for this purpose. An optional common EU Employee Stock Ownership scheme (EU-ESO) would be introduced, based on stock options with a standardized vesting schedule. Taxation of EU-ESO options would be deferred to the point of disposal of the underlying shares, avoiding a “dry tax charge” on unrealized gains and addressing a competitive disadvantage relative to U.S. incentive stock option schemes.
Share Transfers and Exit
If passed, the Regulation would require that EU Inc. companies enable fully digital share transfers, without mandatory involvement from intermediaries such as notaries or lawyers. The Regulation would give Member States the option to allow EU Inc. companies to access public equity trading venues without mandatory conversion to a national public limited liability form, which would enable companies to retain their EU Inc. designation through the IPO stage.
Closure
The Regulation would introduce a fast-track liquidation procedure for solvent EU Inc. companies with no assets and no liabilities, which would be completed fully online within a harmonised short deadline. The Regulation would simplify insolvency procedures through full digitalisation of communications and the establishment of interconnected electronic auction systems for asset sales.
Key Considerations
Companies and investors considering the EU Inc. should note the following:
- Introduction of EU Inc. would offer additional optionality, without changing national legal forms.
- EU Inc. would apply directly pursuant to the Regulation and would not require any national transposition for the corporate law framework itself. However, ancillary national law adjustments (tax, labour, judicial) may be needed to make the regime fully operational in practice.
- A “blacklist” of prohibited national practices would prevent Member States from treating EU Inc. companies less favourably than nationally incorporated companies — for example, by requiring local presence or a local representative as a condition for economic activity or state aid access.
- In its accompanying Communication, the Commission recommends that Member States designate specialised judicial chambers to handle EU Inc. company law disputes to ensure consistency and investor confidence.
Outlook
The Commission has called on the European Parliament and Council to proceed swiftly, with a stated objective of reaching agreement by end of 2026. Progress will be monitored through the “One Europe, One Market” Roadmap.
For businesses, particularly startups, scaleups, and their investors, EU Inc. represents a potentially transformative shift in the European corporate landscape. The prospect of an EU-wide legal entity with digital registration against low costs, investor-friendly financing instruments, and harmonised employee equity schemes may help to reverse the trend of founders incorporating outside the EU.
Companies and investors with EU operations, cross-border expansion plans, or existing employee equity programs may wish to plan ahead to assess how EU Inc. might affect their corporate structuring decisions, financing arrangements, and talent strategies. Early engagement with the evolving legislative framework may prove important to ensure preparedness if the Regulation enters into force.
