The European Commission is preparing a new initiative that could significantly reshape the way companies operate across the European Union: the introduction of a new legal entity known as EU–INC. This proposal forms part of a broader ambition to reduce fragmentation within the single market and create a more unified business environment for European startups and scale-ups.
Although the proposal has not yet been formally submitted to the European Parliament or the Council, it is already gaining attention within EU institutions and among industry stakeholders. Many see it as a potential cornerstone of what is being referred to in Brussels as the “28th regime”, a single, EU-wide framework that operates alongside existing national systems.
What is EU–INC?
EU–INC is a proposed pan-European company form that businesses can choose instead of incorporating under national laws. It would function as a private limited liability company with shareholder liability limited to their investment.
Its main feature is EU-level standardisation. Companies would operate under one unified framework for governance, capital structure, and investor relations, rather than navigating 27 national systems.
Key elements include:
On the other hand, companies would remain subject to local tax and employment laws.
Why is EU–INC Being Introduced?
As highlighted by Commission President Ursula von der Leyen, European companies still encounter “too many national barriers” compared to their counterparts in more integrated markets such as the United States. Differences in company law, taxation, and administrative processes across borders create complexity and cost, particularly for startups looking to upscale.
If implemented successfully, EU–INC could:
Altogether, these elements could strengthen Europe’s competitiveness and support the growth of a more integrated innovation ecosystem.
Potential Drawbacks and Challenges
While the proposal is ambitious, it is not without risks. One key concern is that similar initiatives have struggled in the past.
The Societas Europaea (SE) was introduced to provide a European company form, but its adoption has been limited. Many companies found it complex and not sufficiently advantageous compared to national structures. There is a risk that EU–INC could face similar challenges if it does not offer clear and practical benefits.
In addition, while corporate rules may be harmonised, taxation and employment law remain national, which may still create complexity. Most importantly, the success of EU–INC will depend heavily on political alignment and implementation. Without strong support from Member States, the initiative may face delays or dilution.
Current Status and Outlook
At this stage, EU–INC remains a proposal under development. Both the European Council and the European Parliament have expressed interest in the concept of a “28th regime,” indicating political momentum behind the initiative. However, the formal legislative process has not yet begun.
The success of the initiative will depend on careful design and strong political support. As developments continue, EU–INC is certainly a proposal worth following closely.
More questions on international developments across the EU?
Contact us today at info@kreston-vdn.com
