“The 28th Regime” – the EU Inc. takes shape

On March 18th, 2026, the European Commission presented its long-awaited proposal for an EU regulation to introduce a new European legal form – EU Inc. What advantages does this new regime offer, and where do the risks lie?

Why the EU needs a new legal form

Anyone looking to expand in Europe quickly hits limits – and not just economic ones. Currently, companies operating across borders are confronted with 27 different national corporate law systems, resulting in substantial administrative burdens and complex incorporation processes. In practice, many companies therefore opt for foreign legal forms or deliberately relocate their headquarters to non-EU countries.

The Commission aims to address these structural disadvantages with the so-called “28th regime”: an optional European legal form that will coexist alongside the 27 national corporate law systems without replacing them.

What defines the EU Inc.?

The Commission’s proposal takes the form of an EU regulation and would therefore apply directly in all member states without the need for national implementation. At its core, it is a limited liability company that is entirely supranational in nature: Once registered, the EU Inc. is subject to the same legal framework regardless of the member state in which it is headquartered. Its main features are:

• Fast and cost-effective incorporation: Incorporation is intended to be possible in any member state within 48 hours, for less than EUR 100, and without any minimum share capital. It would be carried out entirely digitally via a standardized procedure using an EU-wide interface to national company registers (a central EU register is planned for the future). Therefore, incorporation would not require a notary or the opening of a bank account. The process follows the “Once-Only Principle“: The company data required for incorporation is submitted in a single, bundled transmission, and tax identification and VAT numbers are automatically assigned.
• Digital corporate governance: Beyond incorporation, all other corporate law processes – including shareholder meetings, appointments of corporate bodies, changes in shareholders, amendments to the articles of association, and capital measures – are to be handled entirely digitally.
• Easier financing, flexible ownership structures, and employee participation:
  The proposal envisions a modern framework for growth. In particular, digital financing procedures and simplified share transfers are intended to facilitate raising capital. In addition, companies may create different classes of shares with varying voting rights, enabling founders to bring in new investors more easily without losing control of their company. Venture-capital-typical structures, such as “Simple Agreements for Future Equity” (SAFEs), as well as conversion and option rights, are explicitly regulated. This is complemented by a harmonized ESOP framework (“EU-ESO”), which treats employee share ownership as taxable only upon the sale of shares, creating an attractive tool for talent acquisition across Europe.
• Full access to the single market: Companies are free to choose the EU country in which they wish to be headquartered. The proposal also includes a blacklist of prohibited practices to ensure that EU Inc. companies are treated the same as all other national companies. For example, a company may not be required to maintain a branch or subsidiary in a member state in order to be eligible for state aid or to obtain a license.
• Insolvency and restart: The proposal provides for a simplified insolvency procedure for startups to reduce complexity, costs, and duration. This is intended to enable founders to restart more quickly and at lower cost. Liquidation proceedings are to be handled entirely digitally.
• Employee protection: The EU Inc. is subject to the relevant national labor and social security laws. With regard to employee representation on the supervisory or administrative board, the rules of the member state of incorporation apply.

The EU Inc. is not a further development of the existing Societas Europaea (SE), which has been in place since 2004 and is aimed at large, often publicly listed companies with a minimum capital of EUR 120,000. The new legal form can be established entirely from scratch – without a predecessor company, without minimum capital, and without a notarial requirement. In addition, existing companies with a national legal form are also intended to be able to convert into an EU Inc.

Open issues and weaknesses

• No full harmonization: Although the EU Inc. aims for maximum harmonization, aspects not regulated by either the regulation itself or by the EU Inc.’s articles of association remain subject to national law. This may continue to result in legal fragmentation and uncertainty.
• Forum shopping and employee rights: Critics view the EU Inc. as a potential gateway for regime shopping – potentially at the expense of employee rights. Companies could, for example, establish themselves in member states with low employee participation requirements while conducting their actual business operations in other countries.
• Creditor protection: Critics also argue that the complete absence of a minimum capital requirement – combined with simplified insolvency proceedings without a mandatory insolvency administrator – poses risks for creditors.
• Tax law: While tax relief for cross-border activities has been announced, the details remain unclear – and politically challenging, as tax harmonization in the EU generally requires unanimity in the Council. For the time being, companies must expect fragmented tax obligation structures even with EU Inc.
• Timeline: The Commission has set the ambitious goal of reaching a political agreement between the European Parliament and the Council of the EU by the end of 2026. Whether this timeline can be met remains uncertain.

Who is the EU Inc. relevant for?

For companies with European growth ambitions – particularly startups, scaleups, and corporations with complex group structures – it is worth actively monitoring the progress of this initiative. In the medium term, the EU Inc. could become an attractive alternative to the current practice of establishing a new national subsidiary for each market expansion.

Companies that operate employee stock ownership plans (ESOPs) should also keep an eye on the planned European ESOP regulations, which are being developed as part of the overall package. For creditors and contractual partners, however, special attention is advised: The absence of a minimum capital requirement and the simplified insolvency rules necessitate more thorough creditworthiness assessments on counterparties organized as EU Inc. We would be happy to advise you on whether and when a transition to the EU Inc. would be strategically beneficial for your company and to keep you informed of all key developments in the legislative process.

Disclaimer

This article is for general information only and does not replace legal advice. Haslinger / Nagele Rechtsanwälte GmbH assumes no liability for the content and correctness of this article.

 

28. April 2026

 

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