EU Inc.: The EU’s Bet To Rival Delaware

The effect is simple to describe but quite unusual to achieve: a company that is one legal form with twenty-seven registered offices, governed by a core of pan-European rules that do not vary by country, bolted onto a digital infrastructure that already exists (the Business Registers Interconnection System, BRIS) and a digital identity stack that is being rolled out anyway (the eIDAS framework and the forthcoming European Business Wallet).

The target audience is narrower than the legal form’s availability. The Commission openly describes the EU Inc. as a framework designed “in particular for the needs of startups and scaleups”, even though any founder, be it a natural or legal person, may use it for any lawful purpose. The explanatory memorandum is clear that this is an attempt to fix, specifically, the friction that growth-oriented companies experience when they try to operate across borders.

Where the proposal comes from

EU Inc. did not arrive unannounced. As a matter of fact, it is the convergence point of three distinct political streams, each of which produced a landmark document between April 2024 and May 2025:

• The Letta report (“Much More Than a Market”, April 2024), commissioned by the European Council, argued that the Single Market was still structurally fragmented in the areas most important to innovation, namely finance, telecoms and energy, and called specifically for a “Simplified European Company” as one of the concrete tools needed to finish the job. This was the first time a senior-level EU document named the problem this proposal tries to solve: that startups face twenty-seven different corporate-law learning curves when they try to scale across the continent.

• The Draghi report on EU competitiveness (September 2024) sharpened the diagnosis into a political warning. Draghi’s central claim, that the EU is falling behind both the United States and China on productivity growth, research commercialisation, and capital formation, was accompanied by a call for a new EU-wide legal statute for innovative startups, which he labelled an “Innovative European Company”. The Draghi diagnosis has since become the organising principle of the second von der Leyen Commission.

• The 2025 Commission strategies translated those two reports into work programmes. The Competitiveness Compass of 29 January 2025 formally announced a 28th regime as part of a broader competitiveness package. Four months later, on 21 May 2025, the Commission communication on the Single Market (“our European home market in an uncertain world”) confirmed that the 28th regime would be built on digital-by-default solutions. A week after that, the EU Startup and Scaleup Strategy “Choose Europe to start and scale” (28 May 2025) turned EU Inc. from a slogan into a project.

On 20 January 2026, the European Parliament adopted an own-initiative resolution on the 28th regime, a highly unusual step, because own-initiative resolutions under Article 225 TFEU are Parliament’s formal way of asking the Commission to legislate on a specified topic. Among other things, the Parliament called for simplified formation and registration, measures to facilitate employee stock ownership, stronger dispute-resolution mechanisms, and safeguards to protect employee participation rights. The Commission’s proposal, published on 18 March 2026, follows that resolution point by point.

The stakeholder evidence base sits underneath all of this. A public consultation held across 2025 drew 1,467 replies, of which 80% came from EU citizens, predominantly founders and investors, and a further slice from legal professionals, SMEs, trade unions and Member States. 96% of the companies that responded were SMEs. A parallel call for evidence drew another 879 replies. The European Economic and Social Committee published a dedicated own-initiative study in support of the framework. The Commission’s own Informal Expert Group on Company Law (ICLEG), composed of sixteen academics and practitioners from twelve Member States and EFTA countries, was consulted in depth. The Regulatory Scrutiny Board gave a positive opinion on 13 February 2026.

The political ownership of the file is unusually concentrated, as Commissioner Michael McGrath (Justice, Democracy, Rule of Law and Consumer Protection) has carried the file through the High-level Forum on Justice for Growth, while the Danish Presidency used its September 2025 Council Working Party on company law to run a structured exchange on the topic among Member States.

The Path to a Continental Company

The regulation is built around the belief that, if the corporate rules look the same everywhere, and if the paperwork is routed through an EU-level digital front door, then the cost of doing business across borders will collapse far enough to change founders’ and investors’ behaviour. It implements that bet across the full corporate lifecycle, from incorporation to closure.

48 Hours, 100 Euros

The headline number in the proposal is the €100, 48-hour fast-track incorporation. An EU Inc. company can be formed through an “EU central interface”, which is a new front end operated by the Commission on top of BRIS; using standardised, bilingual articles of association. Where founders use that template, and where preventive legal control is completed within the deadline, a Member State cannot charge more than €100 for the whole procedure, and the company must be on the register within forty-eight hours.

Founders can alternatively bring their own tailor-made articles; in that case, the procedure is still fully online, but proceeds directly through the national business register, without the cost ceiling. Either way, the entire flow (identification of founders via an EU Digital Identity Wallet, trademark cross-check against the EUIPO database, preventive legal control, allocation of the EUID) is designed to happen without any founder setting foot in a notary’s office.

The Regulation also implements the once-only principle for the post-incorporation data flow. The business register of registration automatically forwards verified company data to the authorities issuing the tax identification number, the VAT identification number, the beneficial-ownership register and the social-security register, without the founders having to submit the same information a second time. Member States are required to build the internal connections that make this possible, at an estimated one-off cost of around €50,000 per Member State for those that do not yet have them. A small figure for what is, functionally, the end of one of the most universally loathed startup rituals in Europe.

The Company in Operation: Rules that do not vary

Once registered, an EU Inc. is governed by rules on directors, general meetings, minority protections and articles of association that are the same in every Member State. The board may consist of one or more directors, at least one of whom must be EU-resident; directors jointly represent the company unless the articles say otherwise; they owe a harmonised duty of care and a statutory duty to avoid conflicts of interest; and they are protected, when they act in good faith and with reasonable care, by an explicit business-judgment rule, a concept familiar from U.S. corporate law but patchy and judge-made in most European systems.

General meetings can be fully online or hybrid. Written resolutions are permissible. Minority shareholders get a right of withdrawal in exceptional cases of flagrant prejudice, for example, if the company has been stripped of a significant proportion of its assets, or if its activities have substantially changed without consent. Against the backdrop of the European Parliament’s long-standing concern about minority protection in smaller company forms, this is a real concession.

Cross-border branches follow the same pattern: they are opened through the EU central interface, the once-only principle propagates the parent’s data, and Member States that have a reasonable doubt about a document’s authenticity must verify it through BRIS rather than demanding a paper-based apostille.

Financing: Bringing the fight to Delaware

The financing chapter is, in many ways, the proposal’s most politically significant innovation, and it is the clearest signal that the Commission wants EU Inc. to compete with U.S. corporate forms for venture-backed companies.

Three design choices stand out.

First, the minimum capital requirement is zero. An EU Inc. can be incorporated with €0 and can remain at €0 indefinitely. Creditors are protected by a balance-sheet and solvency test that applies whenever the company makes a distribution, acquires its own shares, or redeems shares. Where capital is voluntarily built up, conventional capital-maintenance rules apply to it, but only then.

Second, shares have no par value by default. Par-value rules, the rule that a share has a nominal fraction of the company’s capital, are the main structural reason why European companies cannot easily issue new shares below their previous price. They are why down rounds, which are a routine feature of venture financing during market corrections, are legally awkward in most Member States, and why the standard U.S. convertible instruments (the Y Combinator SAFE, Kindred’s KISS note) have required bespoke legal engineering to work in Europe. The Regulation’s recital 45 is unusually direct about this, as by removing par value, “the EU Inc. is equipped to price its equity dynamically, absorb valuation fluctuations and enter into investment arrangements with terms in accordance with global market standards.”

Third, the Regulation explicitly enables SAFE and KISS instruments, warrants, convertible notes, and multiple share classes with distinct voting and economic rights. An EU Inc. can issue non-voting shares, multi-voting shares, or any combination of economic and control rights. Pre-emptive rights remain the default on new cash issuances, but the general meeting (or, if authorised, the board) can modify or disapply them for new investor rounds.

Impact-assessment figures put some economic weight behind these rules, as the Commission estimates that these simplifications save around €1,100 per financing round in legal and administrative costs, and €1,780 to €2,850 on a growth-stage secondary share transfer of €500,000, which is the kind of transaction where European LLC forms historically impose notarial and in-person requirements that U.S. counterparts do not.

Talent: EU-ESO and why it matters

The proposal introduces a harmonised employee stock option plan, the EU-ESO, that an EU Inc. may opt into. Warrants are issued to employees and board members subject to a minimum vesting period. Taxation is deferred, in every Member State that adopts the EU Inc. form, to the moment the shares obtained by exercising the warrant are disposed of. No taxable income arises at grant, at vesting, or at exercise.

This may read as technical, but it is arguably the single biggest quality-of-life change for scaleup employees in the entire proposal. In several Member States today, stock options are taxed as employment income at exercise, which forces an employee to pay tax on paper gains that they cannot yet monetise, also known as the “dry tax charge” problem. In others, they are taxed at grant. In yet others, the treatment is uncertain. The fragmentation costs scaleups their ability to offer meaningful equity to employees outside their country of incorporation and, in the aggregate, pushes senior European operators to take equity-denominated jobs at U.S. companies instead.

The Regulation does not harmonise the income-tax rate at which the disposal is taxed, which remains a national matter. What it harmonises is the moment at which the tax liability crystallises. That is a narrower intervention than many founders wanted, but it is large enough to put all EU-ESO option holders on the same footing across the Single Market.

Exit and closure: Because failing was never this fast

Two chapters of the Regulation deal with shutting companies down. They are often overlooked in commentary, which focuses on formation, but for startups, whose failure rate is structurally higher than that of mature companies, the cost of exit is a critical variable.

For solvent EU Inc. companies, a new fast-track liquidation procedure allows the business register to strike the company off within approximately three months, provided there are no pending proceedings, no remaining assets of economic use, no debts (or the creditors have consented), and directors have signed a statement confirming the conditions are met. Creditors have thirty days to object; the national tax authority has thirty days (extendable by another thirty) to issue a tax clearance or object, with silent approval as the default.

For insolvent EU Inc. companies that are “innovative startups”, Chapter X introduces a simplified winding-up procedure designed to close within six months. The criterion for opening the procedure is the inability to pay debts as they mature, which is a simpler, more easily ascertainable trigger than the cessation-of-payments and balance-sheet tests used in many national insolvency frameworks. Assets are realised through electronic judicial auctions on platforms that Member States are required to set up and interconnect via the European e-Justice Portal. An insolvency practitioner is involved by default, with derogations available where the debtor’s conduct justifies it.

The Commission estimates Member State set-up costs of €500,000 to €700,000 in total across the EU for the auction platforms, again, a small capital outlay for a piece of infrastructure that many national insolvency systems still lack.

What does it not do?

Brussels proposals are often judged on what they leave out, and EU Inc. is no exception. Three important limits are worth highlighting for non-specialist readers.

• It does not harmonise taxation: Corporate income tax, withholding tax on dividends, personal income tax on capital gains, and the tax rate applied to stock option disposals all remain national matters. The Regulation only harmonises the moment of taxation for EU-ESO warrants, not the rate or the character of the income.

• It does not override national employee-participation rules: Where the Member State in which an EU Inc. has its registered office requires worker representation on the board, as in German Mitbestimmung, those rules apply to the EU Inc. in that Member State, exactly as they would to a national LLC. The Regulation contains explicit anti-circumvention language: EU Inc. cannot be used to evade workers’ board participation rights. Cross-border conversions that would reduce those rights are subject to the negotiation obligations already in Directive 2017/1132.

• It does not harmonise substantive insolvency law generally: The simplified winding-up procedure applies specifically to innovative-startup EU Inc. companies; broader insolvency harmonisation is the subject of a separate proposal tracked in the recitals as Directive 2026/XXX. For EU Inc. companies that are not innovative startups, ordinary national insolvency law continues to apply.

• The Regulation is optional: Founders keep every existing national legal form. A French founder who wants an SARL, a Spanish founder who wants an SL, a German founder who wants a GmbH, all keep those forms, unchanged. The intent is that the 28th regime will win on the merits, not that Member States will be forced to adopt it.

The saved money, and the quiet costs

The Commission’s impact assessment estimates that the measures in the proposal will reduce administrative burden on companies by €328 to €440 million over ten years, distributed across an expected population of about 308,000 EU Inc. companies. These are not large numbers in absolute EU-budget terms; they are large in the micro-economy of startup formation, where legal fees of €1,000 on a financing round can be the difference between closing a seed extension and going home.

On the public side, costs are modest. The Commission calculates a total one-off IT cost of around €2.7 million across all twenty-seven Member States to connect national business registers to the new EU central interface. Member States that do not yet have automatic connections to preventive-control authorities may spend around €50,000 each. Insolvency auction platforms cost a collective €500,000 to €700,000. Against these, the Commission expects revenue losses for national business registers and notaries, because the €100 fast-track cap reduces the fees collected during registration, and the fully digital share transfers reduce mandatory notarial involvement in several Member States.

Trade unions during the consultation “strongly stressed the importance of protecting workers’ rights, in particular as regards employee participation in boards, and called for first amending the European Company (SE) Regulation.” Notaries, who in several Member States are mandatory intermediaries in company formation and share transfers, will see their role shrink in the cross-border segment covered by EU Inc., even as it is preserved for preventive legal control. Several Member States (not publicly named in the explanatory memorandum) expressed scepticism “about addressing issues beyond corporate law, such as tax, labour or insolvency”, preferring a narrower project focused strictly on company law. These are exactly the interests that will show up during the Council negotiations.

How it affects investors, founders and employees

The easiest way to understand EU Inc. is to ask what it changes for the three constituencies the proposal targets.

• For founders, it changes where the default friction sits. Today, a French founder choosing between a French SAS and a German GmbH is picking between two national defaults, each with its own notarial regime, capital requirement, and share-transfer procedure, and hoping the investors they want to work with are familiar with the one they chose. Under EU Inc., the founder picks a Member State for tax and operational reasons, incorporates an EU Inc. through the central interface, and the investor receives a document set whose core features are identical whatever jurisdiction was selected. The cost of getting to first close drops. The cost of changing one’s mind, of re-domiciling the company later, also drops, because the Regulation piggybacks on the harmonised cross-border conversion rules already introduced by Directive 2017/1132.

• For investors, particularly foreign venture capitalists and cross-border angels, it reduces the diligence tax. The Commission’s impact assessment identifies “third-country venture capitalists and cross-border angel investors” as the group most deterred by the current fragmentation, and therefore the group most likely to respond to a harmonised framework. U.S. investors who flip European cap tables to Delaware holding companies today are doing so because the Delaware form is more familiar, not because it is intrinsically superior; an EU Inc. that issues non-voting shares, accepts SAFEs, and runs a digital share register may change that default.

• For employees, the EU-ESO is the material change. It is narrow (single option plan with a single tax-timing rule) but it is wide enough to remove the dry-tax-charge problem that has made stock-option-heavy compensation structurally difficult in Europe. It will not, on its own, close the transatlantic gap on equity compensation. It will probably close some of the intra-European gap.

The detractors

The pushback, as ever in EU legislation, clusters around interests that the proposal unavoidably touches.

• Trade unions support the broad thrust of simplifying the framework for scaleups, but have consistently emphasised the importance of preserving employee participation rights and preventing EU Inc. from becoming a vehicle for circumventing them. The Regulation’s design, which applies the employee-participation rules of the Member State of the registered office, is a compromise that preserves existing national protections without harmonising them upwards. Unions are likely to push, during the legislative process, for stronger anti-circumvention language in connection with cross-border conversions.

• Notaries will lobby to retain preventive-control functions in more of the incorporation pathway than the current proposal contemplates. The Commission’s own consultation indicates that Member States where notaries are involved in share transfers expect revenue losses; at least some national governments will try to preserve domestic notarial roles during the Council phase.

• Some Member States, particularly those with mature national startup ecosystems and modern LLC forms (including the Netherlands, the Czech Republic’s SRO, and France’s SAS, which is already more flexible than most), have questioned whether a new EU-wide form adds enough value to justify the administrative investment. The Regulation’s optional character, its €2.7 million collective IT cost, and its direct applicability as a Regulation (rather than a Directive requiring transposition) are designed to answer those objections.

• Business associations and the startup community are the broadest base of support, alongside EU citizens who participated in the public consultation. European founders’ collectives, including the EU Inc. initiative that publicly campaigned for this proposal from 2024 onwards, have consistently argued that the 28th regime should be broad in scope, not confined to startups, because restricting it to “innovative companies” would introduce exactly the kind of scope-definition complexity that the proposal is trying to eliminate. The Commission has adopted that view: EU Inc. is open to any founder, not just to startups.

Current status

As of the date of this piece (April 2026), EU Inc. is a proposal. It has been adopted by the Commission (18 March 2026) and transmitted to the Parliament and Council, and is now working its way through the ordinary legislative procedure under Article 294 TFEU.

Because this is an ordinary-legislative-procedure file, three outcomes are possible: adoption at first reading (the Parliament and Council reach agreement before Parliament’s first-reading vote), adoption at second reading (after a Council common position), or conciliation. Given the political profile of the file, as a flagship competitiveness deliverable with a Parliament own-initiative report already on the record, a first-reading agreement is plausible, but would require the Council to close its position quickly.

The Regulation, once adopted, applies twelve months after its entry into force. The Commission will review the €100 fast-track cost cap every five years against the harmonised index of consumer prices, and will evaluate the Regulation’s effectiveness no earlier than five years after it applies. That timeline matters for coverage: the first wave of EU Inc. incorporations will not begin arriving in the business registers until roughly 2028 under realistic assumptions, and the first evaluation will not arrive until around 2033.

The file also interacts with several other pieces of live or recently adopted legislation that readers of this publication will recognise: the Digital Identity Framework (Regulation 2024/1183, establishing the EUDIW); the Upgrading Digital Company Law Directive (Directive 2025/25); the European Business Wallets proposal (COM(2025) 838 final); the Savings and Investments Union package; and the Market Integration Package adopted in December 2025. EU Inc. is intended to sit at the intersection of these.