EU Inc. is the European Commission's proposed pan-European company form (COM/2026/321), currently being negotiated. The Estonian Osaühing (OÜ) is Estonia's standard private limited company, made internationally famous by the e-Residency programme launched in 2014. Around 30,000 e-Residency companies are active. For the EU Inc. explainer, see What is EU Inc..
Quick verdict
For founders setting up today with a fully remote, location-independent operation and modest revenue, the Estonian OÜ is genuinely strong. It is digital, fast, and the distributed-profits tax structure is unusual in a useful way.
For founders setting up once EU Inc. is law with a real cross-border European operation, EU Inc. is the better choice. The OÜ is still a national entity and the substance question becomes hard once you have employees and customers in countries other than Estonia.
The most common e-Residency mistake: assuming an OÜ in Tallinn means you are taxed in Estonia regardless of where you actually operate. It does not. EU Inc. does not change this either, but EU Inc.'s framing avoids the marketing confusion.
Side-by-side
| Dimension | EU Inc. (proposed) | Estonian OÜ |
|---|---|---|
| Cost to incorporate | Target under €100, no notary fee | €265 state fee, plus e-Residency card €100–€120 if required |
| Speed | Target under 48 hours | Same day digital with e-Residency |
| Minimum share capital | Zero | €0.01 since 2023 reforms (was €2,500 before) |
| Notary required | No, fully digital | No for digital incorporation. Required for some amendment scenarios |
| Governance | EU regulation defines the framework | Estonian Commercial Code. Single management board, very flexible |
| Cross-border recognition | Recognised by regulation in all 27 EU member states | Recognised under TFEU. Substance and tax-residency tests apply for activity in other EU states |
| Digital incorporation | Digital-by-default, end-to-end | Fully digital via e-Residency portal |
| Stock options | EU-ESO with tax deferred to disposal event | Estonian options plan, broadly tax-deferred since the 3-year holding rule |
| Tax layer | No EU-specific tax. Taxed where management actually sits | 0% on retained profits, 22% only on distributions. Distinctive but not a free lunch |
| Status today | Proposal published 18 March 2026, not yet law | Available, ~30,000 e-Residency companies, longstanding default for digital nomads |
When the Estonian OÜ still wins
Genuinely location-independent operations. Founder operates from anywhere. No employees. Revenue from international clients. The OÜ's distributed-profits tax structure works well here: profits accumulate without immediate tax, and tax falls due only when you take money out.
Profit retention with delayed dividends. If your business model is to retain earnings inside the company for several years before distribution (for example, a profitable SaaS being scaled toward acquisition), the Estonian distributed-profits tax is mathematically attractive compared to systems that tax annual profits.
Existing e-Residency setups. If your OÜ is already running and you have substance in Estonia or your operation genuinely floats, conversion is not obviously beneficial. EU Inc. registration is simpler than incorporation in most other member states, but it is not simpler than running an OÜ you already have.
When EU Inc. would win, once it's law
- You have or expect employees in EU member states other than Estonia.
- You're using an OÜ as a "digital nomad" entity but actually operate from one specific country, and the substance question is overdue.
- You want a stock-option scheme that works across 27 member states without local-law analysis.
- Your investors are uncomfortable with Estonian governance (some are).
Bottom line
The Estonian OÜ is the closest existing approximation of what EU Inc. is trying to be: digital-first, cheap, founder-friendly. It remains a national Estonian entity, which is the structural ceiling EU Inc. is designed to break through. For genuinely location-independent operations, the OÜ is fine. For real cross-border activity, EU Inc. is the cleaner answer.
To get the launch email when EU Inc. opens for registration and conversion, join the waitlist.
Sources
- EU Inc. proposal: COM/2026/321.
- Estonian Commercial Code: Riigi Teataja.
- e-Residency programme: e-resident.gov.ee.
- Estonian Tax Board: emta.ee.
- Full source list on Sources.