If there was a successful founder in Berlin who has built a breakthrough AI diagnostic tool and now wants to expand to neighbouring countries such as France or Austria, it would be rather difficult to do so. In other major economies, such as the United States or China, this would involve a few clicks and a standard contract. In the European Union, however, this means hitting a “legal wall” 27 times. A corporation has to navigate 27 different sets of corporate laws and notary appointments, as well as 27 different labor and tax regimes. For many businesses, the “cost of Europe” was too high, leading to the infamous Delaware flip where Europe’s best companies would move to the United States just to escape EU’s administrative burden. With the tabling of the EU Inc. proposal in March 2026, these long-standing obstacles are expected to dissolve, replaced by a unified path for pan-European scaling. The European Commission has officially tabled the EU Inc. Legislative Proposal to establish what is known as the 28th Regime.

28th Regime 101

The 28th Regime is not a replacement for national laws. Instead, it is a virtual 28th state that exists in the digital cloud of the European Union. It is an optional legal framework. A business owner in Rome can choose to incorporate under Italian law (s.r.l.) or as an EU Inc., technically proposed as the Societas Europaea Unificata. If a company decides to opt in the 28th Regime, they will operate under a single, harmonised rulebook that is recognisd exactly the same way in one part of the continent as it is in the other. It is a legal ID that allows a company to grow across the entire single market without ever having to adapt to the new laws as they enter new member states.

The Practical Mechanics

EU Inc is the flagship product of this regime. Based on the current proposal, there are several provisions that anyone who wants to open a European company should be aware of. First, founders can incorporate an EU Inc. entirely online via a central EU portal. The target is a setup time of under 48 hours and a cost of less than €100 without mandatory minimum share capital – the company can now be started with as little as 1 euro. This is a procedural mitigation for all companies since the minimum capital in some countries can go as high as 25 000 euros, and the incorporation procedure can take months.

Another benefit for the businesses that the proposal suggests is the rule that once a company submits its ID, articles of association, beneficial ownership data and similar basic documents to the EU central interface, there will be no need to repeat the process in case of expanding to another country. That new country is legally barred from requesting the same paperwork. Additionally, the 28th Regime is deemed to be friendly towards venture capital. It supports investment instruments like SAFE (Simple Agreements for Future Equity), which are the standard in Silicon Valley but were often not legally regulated areas across Europe.

Unified Stock Options

The European Employee Stock Option scheme is arguably the most intriguing part of the proposal. Currently, offering an employee in one Member State stock in a startup of another Member State is a complicated process, both legally and tax-wise. Under EU Inc., stock options follow a different model. The employees are not taxed when they are granted the options, nor when they exercise them. They are only subject to taxes when they eventually sell shares for cash. This change might allow European startups to compete with the larger non-EU companies for highly skilled workforce by providing a simplified path to wealth-sharing that is expected to work across borders.

The Impact of the 28th Regime and Next Steps

The 28th Regime is yet another fundamental shift that attempts to address European competitiveness. Scaling costs are likely to decrease significantly. This will particularly affect the mid-sized industrial and service-sector companies, as the regime is projected to reduce approximately 30-40% of legal and administrative burden associated with expansion into the new countries. The benefits are mirrored for investors as well. Investors prefer certainty, and the EU Inc. structure aims to signal to global VC funds that the legal basis of the company is standardised and secure, smoothing the way to close series A and B funding rounds.

Another key consideration is the safety net provided by the Regime. The proposal includes a fast-track liquidation process. That means that if a venture doesn’t succeed in the market, it can be wound up in six months. This reduces the stigma of failure for risk-averse entrepreneurs and allows them to move on to their next idea faster.

In Q2 of 2026, the European Parliament and the Council will begin the negotiations. The main point of contention will likely be employee participation. Some countries, including Germany and France, will most probably want to ensure that their labor board standards are not weakened by the new EU Inc. corporate form.

The second part of the year is likely to be the most critical for making the 28th regime a reality. Ireland will assume the presidency of the Council, and as a country that often serves as a bridge for global (and especially American) companies to Europe, it might prioritise shaping the deal about the regulation during their term. A final political agreement on the Regulation by the end of the year is not guaranteed but seems probable. Once the regulation is adopted, the first EU Inc. entities are expected to be registered in the EU Central Business Registry in mid-2027.

Preparing for EU Inc

For a business that wants to stay up to date with the latest legislation, the current move could be to delay major structural changes while optimising for the new standard. For instance, if a company plans to incorporate new subsidiaries in 2027, it could consider holding off on permanent national structure until the new rules are in place. This might save thousands of euros in notary and translation fees. Alternatively, if a company struggles to attract skilled talent from outside of the Member State, unified stock option rules are something to consider. Likely, it be the first fast-acting change for companies under the new system.

There is an ongoing debate on whether EU Inc. should only be for “innovative startups”, defined as those that prove that their R&D costs have represented at least 10% of the company’s total operating costs over the last three years. In plain language, if a company spends a million annually to run, it is only considered an innovative startup if it spends 100,000 euros on research and development. The opinions are split on the topic of whether the EU Inc. should be open to anyone, or only the startups that meet these standards. The rationale for limiting the scheme to a smaller group of companies is that it will be easier to reach an agreement between Member States, but the risk is that many mid-sized firms will be excluded from the 28th regime. A realistic outcome of this dilemma will be a certain middle ground where the EU Inc. form will be open to everyone with extra features, such as tax breaks or unified stock option schemes, remain reserved for the qualified players.

Regardless of the outcome, the 28th Regime is likely to become one of Europe’s most significant efforts to turn 27 fragmented markets into a single unified market. It is expected to set in motion European scale-up ambitions and could represent a business-friendly regulation, providing market players with more flexibility and opportunities for growth.

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