WIREDGOV

Background

The European Commission published its legislative proposal for EU Inc. on 18 March 2026. The proposal is a response to the Draghi and Letta Reports' diagnosis that legal fragmentation across 27 national corporate systems in the EU acts as an "invisible tariff" on cross-border growth. It seeks to establish a new, harmonised corporate legal regime across the European Union. While initially believed to be reserved for innovative companies and startups, the proposal indicates that this new legal regime will be made available to any founder who considers it suitable.  

This optional, EU-level corporate framework sitting alongside (not replacing) the 27 national systems, aims to make it easier to start, scale, and access capital across the EU Single Market.  

What is the 28th regime: contents of the proposal  

EU Inc. is a new optional corporate form, established by Regulation, open to any company regardless of size or sector. Key features include: 

• Registration and Digital Operations: The legislation proposes incorporation within 48 hours for a maximum of €100 via a new EU Central Interface, with no minimum share capital requirement. All procedures (such as opening another branch, share transfers, dissolution) will be digital by default. One of the most important concepts the legislation seeks to introduce is the “once only” principle. This means that company data, once registered on the EU central interface, would be made available to relevant tax authorities, VAT registries, social security bodies, and beneficial ownership registers without needing to separately apply to all of them. Additionally, upon registration, companies would immediately receive their tax identification number and VAT number.  
• Financing and Capital: The proposal would not seek minimum share capital requirements. It would support multiple share classes, differentiated voting rights, convertible instruments, and warrants. In-kind contributions  (including undertakings to perform work or services) would be permitted as share consideration. Notably, the proposal explicitly enables Simple Agreements for Future Equity (SAFEs) and other standardised financing instruments favoured by the VC community. Distributions would be governed by balance sheet and solvency tests rather than traditional capital maintenance rules. 
• Employee stock options: All EU Inc. companies would be able to opt into a harmonised EU employee stock option (EU-ESO) scheme. Tax on income derived from warrants would be deferred until disposal of the resulting shares. By doing so the proposal seeks to directly address one of the most cited barriers to startup talent retention in Europe. The Commission is also encouraging EU Member States to treat EU-ESO income as capital gains rather than employment income. 
• Insolvency and Closure: The regime would create a simplified digital-first winding-up procedure for any insolvent EU Inc companies that would qualify as innovative startups. It would also provide a framework for electronic auction of assets. By doing so the legislation aims to make it easier for startups to restart faster.  
• Non-Discrimination Safeguards: The legislation also proposes a list of prohibited national practices to ensure EU Inc. companies would be treated no less favourably than other limited liability companies formed in accordance with their national law in any aspect of their activities and operations. Such practices would include things like “criteria that deny eligibility of those EU Inc. companies to public support in view of their place of headquarters in other Member States” or “the requirement to have a local representative or a physical presence in that Member State in order to complete a procedure necessary to take up or exercise an economic activity or to obtain an authorisation”.  

Complementary measures  

The EU Commission is tying this legislative proposal to other suggestions and legislative initiatives. Indeed, part of realising the objectives set out in the proposal would be intertwined with the setting up of EU Business Wallets which would serve as the main way for EU Inc. companies to manage their interactions. An EU Inc. company would use the Business Wallets to take actions such as submitting tax returns, applying for permits, signing and exchanging contracts with public authorities and business partners across the EU 

The proposal also links to ongoing work under the EU’s Savings and Investments Union plans, the European Competitiveness Fund, and the Scaleup Europe Fund. A revision of pension fund investment rules and an upcoming review of the European Venture Capital Funds Regulation which are all intended to deepen capital market access for startups and scaleups. 

On the talent and skills front, a forthcoming Fair Labour Mobility package will explore enabling 100% cross-border teleworking for startups, applying the social security law of the employer's Member State. The European Social Security Pass and Skills Portability Initiative aim to reduce mobility obstacles for workers, while the EU Talent Pool Regulation will facilitate recruitment of non-EU talent. 

Member States are also encouraged (though not required) to designate specialised courts or judicial chambers for EU Inc. company law disputes, improving ruling consistency and investor confidence.  

What’s next 

The proposal is overall a positive development and would be able to provide simplified procedures and processes for non-EU investors seeking to be active and scale up in the EU. techUK will keep a close eye on these developments as they go through the EU legislative process over the coming months to best assess the opportunities that would be made available to members. Should you have any questions do not hesitate to reach out to us.  

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