New Legal Form in the EU: EU Inc. A Game Changer for Startups and SMEs?
On March 18, the European Commission presented a proposal for a new, EU-wide legal form for businesses: the EU Inc. (European Innovation Company). This project is a direct response to the appeals of the innovative business community, aiming to make it easier to scale operations rapidly across the European Union markets.
End of Regulatory Red Tape? What is the EU Inc.
According to official Commission documents, entrepreneurs in the European Union currently have to navigate 27 different legal systems and as many as 60 forms of doing business. The EU Inc. aims to solve this problem as a unified company type (the so-called “28th regime”). Conceptually, the new company resembles the Polish Simple Joint-Stock Company (P.S.A.), but its scope and recognition will span the entire Europe.
Key Features of the EU Inc.
According to the European Commission’s proposal, this new business form will offer entrepreneurs several major advantages:
- Express online registration: the incorporation process is expected to take a maximum of 48 hours and be 100% digital, from anywhere in the EU.
- No barriers to entry (low costs): no minimum share capital requirement (or merely a symbolic one) and low, fixed registration fees (the estimated cost of incorporation is around EUR 100).
- Full digitalization: digital procedures will apply at every stage of the company’s life cycle—from registration and board changes to its potential liquidation.
- Favorable Employee Stock Ownership Plans (ESOP): a standardized mechanism for granting stock options to employees with deferred taxation (taxes are paid only when the shares are sold, not upon their granting or vesting).
- Protection against hostile takeovers: founders will have the flexibility to issue dual-class shares (shares with multiple voting rights). This allows them to retain control over the company even after bringing in external investors.
- Access to capital markets: EU Inc. companies will ultimately be eligible for listing on stock exchanges across Member States.
When will the EU Inc. come into force?
The European Commission’s proposal is a potential milestone and a response to the loud appeals of the European innovation ecosystem. However, it is important to remember that the March 18 document is currently just a legislative draft. It faces a long path through the European Parliament and the Council of the EU.
From a legal practice perspective, the biggest challenge in this process will be pushing through unified and favorable tax changes (especially regarding ESOPs). It should be noted that EU tax regulations require the unanimous agreement of all Member States, which often prolongs the legislative process.
We will continue to monitor the legislative progress on EU Inc. and report on further developments. If you have any questions about choosing the right legal form for your business, please do not hesitate to get in touch with our firm.
Frequently Asked Questions (FAQ)
Can I already set up an EU Inc.?
No. EU Inc. is currently a legislative proposal published by the European Commission on 18 March 2025. The regulation must first be adopted by the European Parliament and the Council of the EU before the new company form becomes available.
Will EU Inc. replace national company forms?
No. EU Inc. is intended to function as an additional, pan-European legal form alongside the existing national company types in each Member State.
How much will it cost to register an EU Inc.?
The Commission proposes capping the registration fee at €100. The entire incorporation process should take no more than 48 hours and would be completed fully online.
Who is EU Inc. designed for?
EU Inc. is aimed primarily at startups, innovative companies, and businesses looking to scale their operations across multiple EU Member States.
Can an EU Inc. move its registered office to another country?
Yes. Under the proposal, an EU Inc. would be able to transfer its registered office from one Member State to another without having to dissolve the company and re-incorporate in the new jurisdiction.