EU Inc.: new pan-European company structure on horizon
The European Commission has presented a proposal for a new legal form of a European company referred to as EU Inc. It is part of a “28th regime”, which would exist alongside the current 27 national regimes of the EU member states and would allow companies to be incorporated and operated under a single and harmonised set of EU rules.
The main objectives of the proposal are to simplify cross-border business and company formation within the EU single market, reduce administrative burden, and through a single legal framework, eliminate fragmentation of the legal environment across the EU. This should ultimately strengthen the competitiveness of European businesses.
What are the key features of EU Inc.?
Founder: Under the draft regulation, EU Inc. may be founded by one or more persons, including by converting an existing company into this form.
Articles of association: The use of templates for incorporation documents is intended to replace requirements for formal authentication / legalisation under national rules. The EU Inc. regime would also expand the range of documents for which an apostille should not be required within the EU and would, at the same time, reduce translation requirements.
Fast-track registration: Company formation would take place fully online. Where the EU templates for the standard articles of association are used, a fast-track procedure would be available, enabling incorporation within 48 hours, with costs not exceeding EUR 100 and without any minimum registered capital requirement.
Registered office and place of registration: Entrepreneurs would be able to choose the member state whose commercial register will record the EU Inc. The company would then be entitled to operate throughout the EU without the need to establish additional entities.
Digitisation and cross-border connectivity: A key element is the digitisation of the entire corporate lifecycle, including potential liquidation. The proposal envisages a simplified liquidation regime enabling companies with no liabilities to be removed from the commercial register, typically within three months, without the need to appoint a liquidator. The proposal also anticipates cross-border information exchange. It likewise promises a straightforward procedure for transferring shares between shareholders and to new shareholders.
Protection of founding shareholders: Companies would be able to hold multiple classes of shares with different voting rights and/or different rights to profit distributions. The purpose of this arrangement is to distinguish founders’ shares from investor shares.
Safeguards against abuse: The proposal assumes that EU Inc. would be governed by EU corporate law rules, while certain sensitive areas would remain within the competence of member states. These include, in particular, employment law, social security and public health insurance contributions, and taxation. Companies using the EU legal form would therefore have to comply with the local rules of the member state in which they are registered.
Attracting and retaining talent: The proposal also includes harmonisation of a pan-European employee stock option plan (EU-ESO) for employees and members of the corporate bodies of EU Inc., including employees of subsidiaries. The Commission expects that EU Inc. companies (likely suitable for innovative start-ups) would therefore become more attractive to talent.
Employee stock option plans in EU Inc.
The introduction of an option plan would be subject to a decision of the company’s general meeting. The regime would not apply to persons who, directly or indirectly, hold shares in the company corresponding to more than 25 per cent of the voting rights or rights in the proceeds of the company. At EU level, the rules would specify, in particular, when taxable income arises: income from such plans should be taxed only at the moment the acquired shares are sold.
For national tax purposes, income would be defined as the difference between the market value of the shares on the date of sale and their acquisition cost. Member states would have to ensure that option plans issued under the EU-ESO regime are subject to a tax treatment that is no less favourable than the treatment applied under national law to other employee stock option plans or similar instruments, provided all statutory requirements are met.
When can we expect the new rules?
The proposal is expected to take the form of an EU regulation, meaning it would be directly applicable in all member states once it enters into force. The Commission aims to reach a political agreement by the end of 2026. The regulation should then take effect 12 months after its publication in the Official Journal of the EU. The practical impacts will depend on the final wording adopted and on the extent to which businesses choose this legal form instead of national alternatives.