The European patchwork
Anyone seeking to scale a company in Europe quickly encounters an invisible yet formidable barrier: the bureaucratic fragmentation of 27 distinct legal systems. While founders in the US or China operate within a single market, European start-ups are confronted with a “complicated labyrinth of company law”, which, according to the European Commission, acts as a significant “distortion factor” for competition.
The current Draghi Report on competitiveness and the Letta Report on the single market have set alarm bells ringing in Brussels: Europe is falling behind. As part of the Competitiveness Compass and the Market Integration Package, the Commission has now presented a proposal for a breakthrough: the "EU Inc.".
This so-called “28th regime” is a harmonised legal form, introduced directly by means of an EU Regulation. In this way, Brussels circumvents the lengthy gold-plating by Member States when transposing Directives and creates a genuine European standard for the next generation of ambitious start-ups.
The 48-hour formation without a notarial deed
The formation of an EU Inc. is intended —in comparison to previous company formations, such as a German GmbH (a limited liability company under German law) , according to the proposal published on 18 March 2026—to be significantly faster, less bureaucratic and more cost-effective. The proposal is based on the "digital-only" principle, where physical presence remains the exception.
- 48-hour guarantee: The registration of an EU Inc. formed using the EU templates for articles of association,including preventive control, which is implemented by Member States, must according to Article 16(2) of the proposal be completed within two days.
- EUR 100 cost cap: For persons who use the EU templates for articles of association, the fee according to Article 16(2) of the proposal may not exceed EUR 100.
- Requirement to have articles of association drawn up and certified in due legal form: A crucial point for the German-speaking market: By using the EU templates for articles of association , according to Article 8(2) of the proposal, the requirement to have articles of association drawn up and certified in due legal form at the time of formation is considered fulfilled.
In the event that the EU templates for articles of association are not used upon formation, Article 17(2) of the proposal provides that the preventive control may not exceed five days. The proposal, however, does not address the costs, nor does it appear to be regulated yet whether, in this case, a notarial deed would be required. It will also be interesting to see whether an amendment to the articles of association—likely necessary upon the admission of investors (for example, to create different classes of shares pursuant to Article 55(2) of the proposal)—will require a notarial deed, despite the envisaged digital acceptance of new shares under Article 67(4) of the proposal.
Financial freedom: No minimum capital and digital transfer of shares
The EU Inc. breaks with certain principles that apply to the German GmbH in order to provide greater flexibility in financing:
- Minimum capital: An EU Inc. should, pursuant to Article 62(1) of the proposal, be capable of being formed with virtually no initial capital.
- Non-par value shares: As a general rule, although deviations are possible, shares in an EU Inc. pursuant to Article 61 of the proposal do not have a fixed nominal value and do not represent a specific fraction of the company's capital. This results, in comparison to a German GmbH, where the nominal value of a share must be at least EUR 1, in greater flexibility, particularly with regard to restructuring measures.
- Digital transfer of shares: Pursuant to Article 59 of the proposal, the requirement for notarial certification of the transfer of shares – in contrast to the German GmbH – is entirely waived. A digitally signed contract (in accordance with the eIDAS standard) shall be sufficient.
The once-only principle: The European Unique Identifier (EUID) as a digital anchor
Previously, founders had to submit the same data redundantly to various authorities, agencies, registers and social security institutions . According to the proposal, the EU Inc. is to benefit from several facilitations through the consistent use of the European Unique Identifier (EUID).
Via the EU central interface and the Business Registers Interconnection System (BRIS) pursuant to Article 20 of the proposal, data are to be exchanged automatically. As soon as the company is entered in the competent register, the tax identification number (TIN) and the VAT identification number are to be assigned automatically. For founders, this would eliminate the need to visit the tax office separately.
For a cross-border operating EU Inc. the formation of a cross-border branch would also be simplified under Articles 36 et seq. of the proposal. Anyone wishing to open a cross-border branch in another Member State should be able to do so via the EU central interface, and the local register receives all necessary and already verified information directly via the Business Registers Interconnection System (BRIS).
War for Talent: The new EU-ESO standard
In order to compete globally for talent, Articles 78 et seq. of the proposal provide for the introduction of the EU Inc.'s "EU Employee Stock Option Plan" (EU-ESO). This is intended to solve the much-feared "dry income" issue, which has previously made many forms of employee participation schemes in Europe unattractive.
Neither upon granting, nor upon vesting or exercise of the options shall, under Article 79(2) of the proposal, taxes be levied. Taxation shall be fully deferred until the time when the employee actually disposes of the shares and thus receives liquid funds.
It remains to be clarified, however, whether such income is to be taxed as salary or as capital gain.
Fail Fast: Simplified winding-up proceedings and fast-track liquidation procedure without stigma
In an optimal environment for startups and founders , the winding-up of a company should function just as smoothly as its formation .
For the EU Inc., Chapter X of the proposal (Articles 88 et seq.) provides for simplified winding-up proceedings for innovative start-ups. For an EU Inc. that remains solvent, Chapter IX of the proposal (Articles 80 et seq.) also foresees a fast-track liquidation procedure.
Conclusion: A new era for "Made in Europe"?
The proposal for the EU Inc. is more than just a proposal for the creation of a new legal form. It represents an attempt at a fresh start for European competitiveness. The planned combination of fast and digital processes, the abolition of notarisation requirements and the tax harmonisation of employee stock options could make it the standard for ambitious European start-ups.
In certain areas, such as the formation without the use of EU templates for articles of association and the amendment of the articles of association as well as the precise taxation of employee shareholdings, the proposal ought to be further refined. It should also be ensured that, through the application of national law pursuant to Article 4 of the proposal, some well-intentioned points are not once again subject to increased complexity.
Moreover, the success of EU Inc. will certainly depend on the extent to which labour law, tax law, and social security hurdles are also reduced for it. If EU Inc. must comply with different labour law requirements when hiring employees in other Member States, submit notifications to various authorities, and declare and pay taxes and social security contributions with a high degree of complexity, then a new legal form alone will not result in enhanced European competitiveness.
