France Digitale’s analysis of the EU Inc. proposal

The concept of a « 28th regime », a harmonised EU corporate legal form to operate alongside the 27 national company law frameworks, emerged from advocacy by Europe’s startup community, legal practitioners and policymakers, including Enrico Letta’s « Much more than a market » report in 2024. Fragmented company law has been identified as a critical barrier to cross-border growth and competitiveness for a long time now. 

France Digitale has championed this initiative for many years through multiple position papers and stakeholder engagement including our Manifesto for the 2024 European elections, our call for a 28th Regime in October 2024, our partnership with the EU-Inc movement, our answer to the Commission’s public consultation in September 2025.

In March 2026, the European Commission delivered on this commitment through three complementary instruments: 

1. a Regulation proposal (binding legislation requiring Parliament and Council approval) establishing « EU Inc. », a new optional corporate legal form with harmonised rules governing company formation, operations and closure.
2. a non-binding Recommendation defining « innovative enterprise, » « innovative startup, » and « innovative scaleup » across the EU and European Economic Area, providing possible criteria for Member State policies, State Aid and EU funding programmes.
3. an accompanying non-binding Communication outlining the broader 28th regime framework and complementary measures necessary for its success, including digitalisation initiatives (the European Business Wallet, AI-powered translation services), access to finance reforms, cross-border talent mobility rules and harmonised taxation schemes (Head Office Tax system and BEFIT initiative). The Communication also recommends that Member States establish specialised courts to handle EU Inc. disputes, ensuring predictable legal interpretation across the Union.

Executive summary:
France Digitale’s position on the EU Inc. proposal

We warmly welcome the Commission’s proposal as it fulfils long-standing demands from Europe’s startup ecosystem, which we have been championing throughout the years. The EU Inc. proposal represents a breakthrough for European entrepreneurs. For the first time, founders can incorporate a company in just 48 hours, entirely online, at a cost below EUR 100, removing the bureaucratic barriers that have fragmented the European market. By applying the once-only principle and eliminating minimum capital requirements, the proposal reduces administrative friction at the critical stage of business creation.

The EU Inc. framework is open to all non-listed companies, whether formed from scratch or through domestic conversions, mergers or divisions. This broad applicability ensures maximum impact across the entire European entrepreneurial landscape and we welcome it.

We fully support the fast-track formation procedure and will actively engage with the European Parliament and the Council to strengthen enforcement provisions and resist dilution of the 48-hour timeline and EUR 100 cost cap. The abolition of in-person formalities and mandatory intermediary involvement in share transfers constitute genuine advances in operational efficiency, reducing both time and cost for capital operations essential for cross-border fundraising. We strongly advocate for robust enforcement of the once-only principle and cross-border consultation duty, ensuring these are binding Member State obligations with explicit consequences for non-compliance.

Regarding the harmonised EU Employee Stock Option Plan, we warmly welcome taxation timing harmonisation at share disposal. While we would ideally have sought full capital gains harmonisation, we accept this limitation at this stage, given the legal basis chosen. This legal basis allows for the text to be a Regulation, thus ensuring full harmonisation and faster adoption, while avoiding unanimity in the Council. However, the scheme’s practical utility remains limited without characterising EU-ESO income uniformly as capital gains across Member States. We support the EU-ESO as a necessary foundation and call for the Commission to propose a separate binding instrument in parallel with EU Inc. adoption to address the employment income versus capital gains distinction, leveraging momentum from the EU Inc. adoption and building on the BEFIT corporate taxation initiative.

The proposed name « EU Inc. » has generated debate, with some stakeholders preferring a Latin denomination to reflect European heritage and distance the framework from perceived American corporate culture. France Digitale’s position is clear: the nomenclature must function as a recognisable European brand enabling entrepreneurs and investors to immediately identify the legal form and its harmonised features. The nomenclature debate must not become a vehicle for prolonged negotiation. We call for rapid agreement on the name to preserve political momentum and redirect negotiation resources towards substantive issues and swift adoption of a functional framework.

Some Member States have voiced legitimate concerns that the EU Inc. framework could encourage « forum shopping« , meaning companies relocating to Member States with the least stringent rules, or trigger a « race to the bottom » as jurisdictions compete by weakening protections. The reality is that forum shopping on tax and labour law will persist regardless of the EU Inc. legal form because these issues reflect genuine divergences in Member State policy choices. However, the EU Inc. does not worsen this situation. Startups and scaleups typically establish physical presence across multiple Member States based on market opportunity and talent availability rather than incorporation jurisdiction. A company registered in Luxembourg for tax reasons will still need operational entities in France, Germany and other Member States to serve those markets and comply with local employment law. The EU Inc.’s cross-border flexibility actually supports this multi-jurisdictional operational reality, making it easier to manage rather than incentivising artificial relocation. The genuine forum shopping risks stem from unharmonised tax and labour law itself, issues requiring separate and parallel solutions. We strongly support accelerated progress on BEFIT (corporate taxation harmonisation) and the Fair Labour Mobility package to address these root causes. However, we argue that delaying the EU Inc. to resolve tax and labour divergences is counterproductive. The EU Inc. should advance rapidly, while simultaneously tackling tax and employment law harmonisation through dedicated instruments.

Beyond the EU Inc. framework, complementary measures remain essential. The fragmentation of employment and tax law creates unsustainable compliance burdens for cross-border expansion. We call for a one-stop-shop in each Member State, a single point of contact for employment, tax and legal formalities designed especially for EU Inc. companies. We support the Commission’s BEFIT and Head Office Tax System initiatives and call for rapid implementation. 

A critical barrier to EU Inc. effectiveness is « gold-plating »: the additional requirements Member States impose when transposing EU legislation. We recommend expanding the passporting principle: companies meeting EU requirements in their Member State of establishment should operate elsewhere in the EU without resubmission, following the GDPR country-of-origin logic.

Finally, legal clarity is fundamental to success. The Commission should establish a multilingual platform listing national procedures and resources relevant to the EU Inc. companies (example of local contracts, information on taxes, etc.), with Member States responsible for providing this information. 

While the EU Inc. is a pivotal step forward, complementary measures remain essential, including a public procurement reform that enable startups to participate and prioritise European actors, a genuine Savings and Investment Union and competition rules that account for global competitive dynamics and reward innovation, ensuring European companies can scale to compete globally.