EU Inc. — Will the Proposed New EU-Wide Company Form Keep Startups in Europe?

Authors: Samuel Åkerlund, Antti Kuha Read time: 6 min

Despite hosting over 40,000 VC-backed tech startups and creating more of them than any other region globally, the EU had only 331 unicorns, as compared to 1,963 in the US as of 2025. The numbers highlight a structural challenge: European companies have been struggling to scale up and compete globally for some time, and a growing number of European high-growth startups are relocating their headquarters outside the EU, primarily to the US.

Against this background, the European Commission has put forward an initiative for a new harmonised corporate legal regime across the EU, the so-called “28^th regime”. The EU Inc. proposal, published in March 2026, is a starting point and cornerstone of the 28^th regime, and it introduces a new harmonised company form designed to make it simpler and cheaper to build and scale a company across the EU’s entire single market. Especially innovative growth companies with cross-border ambitions should actively monitor the progress of the EU Inc. proposal and assess if the new company form could be a viable option to support their geographic expansion.

Background

The key obstacle for European innovative companies that the Commission seeks to address, which has also been identified in the Letta and Draghi reports, is the fragmentation of corporate rules within the EU. Founders looking to start and grow a business in the EU are currently faced with 27 separate company law systems and more than 60 different limited liability forms, which can act as a significant barrier to cross-border business.

Entrepreneurs have also highlighted that the absence of an EU company brand suitable for smaller companies such as startups presents a major obstacle to attracting investment, forcing startups to adopt a national company form in every Member State to which they expand. The EU Inc. proposal aims to address these challenges by offering a company form with the following benefits.

Key Benefits of the EU Inc. Proposal

The EU Inc. would be an optional company form offered in parallel to national company forms. The key benefits of the EU Inc. proposal are:

• Fast and affordable registration. Using standardised bilingual templates through an EU central interface, companies can be registered within 48 hours at a maximum cost of EUR 100.
• No minimum share capital; flexible share structures. EU Inc. companies can be established without share capital and allow for multiple share classes with differentiated economic and voting rights. Both of these features are already available under Finnish corporate law.
• The “once only” principle. Following the registration of an EU Inc., the EU’s future central register will automatically transmit the company information to the authority in charge of the tax identification number (TIN) and VAT identification number, social security authority, and beneficial ownership register. This eliminates the need to resubmit information to different authorities.
• Digital-by-default. The proposal provides for fully digital procedures throughout an EU Inc.’s lifecycle, including in connection with registering, increasing capital, issuing and transferring shares, and insolvency and closure procedures. Shareholder and board of director meetings can also be held online.
• Modern financing tools. The proposal enables the use of modern early-stage financing instruments like simple agreements for future equity (SAFEs), which are widely used in US venture financing but are currently not available in some EU jurisdictions due to rigid regulation.
• EU-wide employee stock options. All EU Inc. companies will be able to opt into the EU common scheme for employee stock options (EU-ESO). Taxation of income from EU-ESO stock options will be deferred until the shares acquired by exercising the options are sold, rather than at the time of grant, vesting, or exercise of the options. This eliminates the so-called “dry income” problem that makes option schemes economically challenging for employees in jurisdictions where stock options are taxed before any actual monetary income has been received. This would be especially relevant in a Finnish context, where employee stock options are taxed at exercise (though it should be noted that the current Government plans to introduce new legislation that would enable deferring the moment of taxation until the shares are sold).
• Simplified liquidation and insolvency procedures. Liquidation of solvent EU Inc. companies with no assets, debts, or economic activity can be completed in approximately three months through a streamlined digital process. Simplified insolvency procedures conducted within six months will be available for companies meeting the innovative startups criteria.

The EU Inc. Proposal from a Finnish Perspective

For companies operating primarily in the Finnish market, opting for an EU Inc. is unlikely to offer significant advantages. Finnish corporate legislation is not particularly rigid, and there is no minimum share capital requirement for establishing a Finnish private limited liability company. Dealing with Finnish authorities is, in many cases, already digital by default, and there are no mandatory in-person formalities or appointments with notaries driving up the costs of establishing a company. The use of flexible share structures is also allowed in both private and listed companies.

Where the EU Inc. could become genuinely compelling is the cross-border context. Today, an EU company expanding to another EU country must navigate a foreign legal system, engage local legal counsel, and comply with local formalities. The EU Inc. would offer a single familiar framework for expanding outside the Finnish borders, which could also make international fundraising more straightforward. Investors unfamiliar with the Finnish limited liability company would, under the EU Inc. framework, encounter a company form they recognise across the EU, making the due diligence process smoother and the threshold to invest lower. The taxation benefits of the EU-ESO stock option scheme would be useful for attracting and keeping talent regardless of where an EU Inc. operates.

Stakeholder Feedback

As with many ambitious EU initiatives, the EU Inc. proposal has received both praise and critique from different stakeholders. The initiative has received positive feedback from entrepreneurs for simplifying cross-border company formation, financing, and liquidation and for introducing a harmonised stock options scheme that makes attracting talent easier.

The proposal does not, however, address all current issues relating to cross-border business, and matters that are not covered by the regulation will still be governed by national law. This means that an EU Inc. registered in, for example, Finland will remain subject to Finnish labour, tax, and social protection laws. Furthermore, even though the Commission has encouraged Member States to set up specialised judicial chambers or courts with the authority to handle disputes on EU Inc. company law, the starting point is that national courts are responsible for handling disputes, potentially leading to divergent interpretations and undermining harmonisation. Additionally, the proposal has received significant pushback from trade unions claiming that workers’ rights are insufficiently safeguarded and that the new company form will lead to “regime shopping”.

Conclusions and Next Steps

In order for the 28^th regime to effectively tackle the fragmentation and obstacles in the single market, the EU Inc. will likely need to be accompanied by initiatives targeting broader harmonisation of labour and tax regulation. This is easier said than done, however, as these areas fall within the Member States’ competence and are therefore politically more difficult to carry through. The proposal also needs to avoid being watered down in the negotiations with the Parliament and Council, which has proven to be a challenge in the past. Ultimately, however, the success of the EU Inc. will be measured by the extent to which entrepreneurs and investors find it a more attractive alternative than moving their businesses to the US. Only time will tell if the EU Inc. will be enough to keep startups in Europe.

The proposal is currently being considered by the European Parliament and the Council. The Commission has asked the Parliament and Council to proceed swiftly with the discussions, and the goal is to reach an agreement by the end of 2026. If the ambitious timeline becomes reality, the first EU Inc. companies could already be registered in 2027.

Our Corporate Advisory Team is closely following the legislative process of the EU Inc. proposal and will gladly discuss any related questions.