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EU Inc., explained without the lawyer vocabulary.

A new pan-European company form, proposed by the European Commission on 18 March 2026 and currently being negotiated. This is the plain-English version: what it does, what it does not, where the file stands.

EU Inc. is the working name for a new pan-European company form that the European Commission proposed on 18 March 2026. It is not yet law. If adopted, it will sit alongside national company forms (your GmbH, BV, SAS, OÜ or Ltd) as a 28th option, available in every EU member state under the same rules.

This page is the plain-English version. It tells you why the Commission proposed it, what the regulation actually contains, what changes for founders, what does not change, and where the file stands today. Every factual claim is sourced. If you want the live legislative status, see the Timeline.

Why the Commission proposed it

The short answer: scaling a European startup across borders is unreasonably expensive, and Brussels has finally noticed.

A founder building in Berlin who wants to serve customers in France, hire engineers in Poland, and raise a round from a US fund currently has to navigate four different company-law systems, three different tax regimes, two different employee-share-option frameworks, and an incorporation procedure that takes weeks in some member states. The Letta and Draghi reports, both published in 2024, called this the "invisible tariff" on European competitiveness. The Commission's response is EU Inc.

Three policy goals sit behind the proposal:

  1. End the country-by-country redo. A single legal entity recognised across all 27 member states, established by EU regulation rather than directive, so member states can't reshape it through national transposition.
  2. Make incorporation digital and cheap. The proposal targets registration in under 48 hours, fees under €100, and zero minimum share capital, fully online, with no required notary visit.
  3. Fix stock options. The proposal includes EU-ESO, a harmonised employee stock option scheme that defers tax until the underlying shares are actually sold rather than at the moment of exercise. This is the issue every European founder bumps into at hire number five.

The Commission has been blunt about why this matters. Companies in the EU that scale beyond their home market often relocate to the United States. Once they leave, they don't tend to come back. EU Inc. is a structural attempt to make staying in Europe less expensive. It is not a tax incentive or a subsidy, and the Commission has been careful to keep those words out of the text.

The four mechanics, at a glance.

The headline benefits the regulation actually delivers. Each one is detailed below and sourced to the text.

One entity

Recognised in all 27 EU markets.

One legal form, one set of share classes, one EU-ESO scheme. No more cross-border patchwork at the next round.

Under 48 hours to register.

Digital end-to-end. The same registration target the regulation sets for itself.

Under €100 in fees.

Zero minimum share capital. No notary fee, no chamber fee, no opening deposit.

Optional. Alongside your GmbH, BV, or SAS.

You opt in. Existing entities are unaffected unless you choose to convert.

What it actually is

EU Inc. is, technically, a regulation. That matters. Regulations apply directly in every member state without needing national legislation to translate them. A directive, by contrast, would have given each country room to add its own conditions. The Commission chose regulation deliberately, and that choice is one of the few things every member state has already agreed on.

The instrument creates a new category of company. Founders opt in. There is no requirement to switch existing entities. The new form runs alongside existing national company law, and the proposal explicitly says it does not affect any national company form.

Confirmed in COM/2026/321 vs. still being negotiated.

Some clauses are settled, others are still being argued in the Council and Parliament.

Confirmed in COM/2026/321

Published 18 March 2026

  • Optional pan-European company form, set up by regulation.
  • Under 48 hours to register, under €100 in fees, no minimum capital.
  • Digital end-to-end: formation, governance, winding-up.
  • Share classes with different votes and dividends.
  • EU-ESO stock options, tax deferred until shares are sold.

Still being negotiated

Council and Parliament, 2026

  • Registration through national registers (BRIS) or a new central EU register.
  • Whether a tax layer gets added (Parliament's FISC subcommittee opened the question in February 2026).
  • Whether specialised commercial courts are mandatory, not optional.
  • Adoption date and entry into force.

What it changes for founders

The simplest way to describe the change: one entity covers the EU, instead of one entity per country.

Today, a founder building cross-border has three realistic options. They can incorporate in one country and operate from there, accepting the friction when they hire or sell into other member states. They can incorporate a holding entity in a friendly jurisdiction (Estonia and the Netherlands are popular) and run subsidiaries elsewhere, accepting the legal and tax complexity of a multi-entity structure. Or they can incorporate as a US Delaware C-corp and run a European subsidiary, accepting the disconnect between where the company sits and where the work actually happens.

EU Inc. removes the trade-off. One entity, recognised everywhere in the EU, registered in days, governed by EU rules rather than national ones for the company-law parts that matter cross-border (share classes, voting rights, governance, winding-up).

Conversion of existing companies

For founders who already have a national entity, the proposal allows conversion. A GmbH or BV can transform into an EU Inc. without dissolving and re-incorporating. The detailed mechanics for the cross-border conversion procedure are written into the regulation, not left to national law, which removes the worst of the friction. The cap table, the share register, the existing share classes, all transferred into the EU Inc. framework as part of the same procedure.

Conversion is not free, and it is not always the right call. Some founders are better off staying with their national entity, especially where most of the team and revenue sit in one country. EU Inc. vs Dutch BV, vs German GmbH, and the other comparison pages walk through the trade-offs.

Stock options that work across borders

Stock options change too. Today, granting options to a developer in Spain and another in Germany requires two different tax analyses, two different vesting structures, and a fair amount of "we'll figure it out at exit" thinking. EU-ESO replaces all of that with a single framework. Tax on the option income is deferred to the disposal event, which is when the employee actually sells the shares, which is when there is cash to pay tax with. That fixes the long-running complaint that exercising options in Europe creates a tax bill before any liquidity exists.

The full details of how EU-ESO works, and how it compares to US ISOs and existing national schemes, sit on the EU-ESO page.

What it does not change

Three things are explicitly outside the scope of the regulation, and any service provider claiming otherwise has not read the text.

  1. National employment law. Contracts of employment, working time, dismissal protection, collective bargaining, and works councils continue to apply based on where the employee actually works. EU Inc. does not let you avoid German co-determination by registering in Estonia.
  2. Social security. The country where the employee is physically working determines the social security regime, full stop.
  3. Tax residency for the company itself. The proposal does not create a new tax regime. The company is taxed where its place of effective management sits, under existing OECD and EU tax law. If your team and your decisions are in France, your EU Inc. is taxed in France.

The regulation is about company law and stock-option harmonisation. It is not about tax avoidance, labour-cost arbitrage, or jurisdiction shopping. The text is explicit on this, partly because that's what the Commission actually intends, and partly because anything less explicit would not survive the Council.

For founders, the practical implication is straightforward: EU Inc. simplifies the legal structure of cross-border operations. It does not change where you pay tax or how you employ people. The substantive substance test still applies.

Where it stands today

The Commission proposal was published on 18 March 2026 and is now being negotiated by the European Parliament and the Council of the EU. As of April 2026, the file is in the Council working-party phase, with the Working Party on Company Law and the Internal Market Working Party reviewing the text and producing redlines.

The realistic timeline:

  • Q2 2026. Council working parties finish their review. Member states agree internal positions.
  • Q3 2026. Parliament's JURI committee adopts its report. Possibly the Parliament plenary vote on its position.
  • Q4 2026. Trilogue between Commission, Parliament, and Council to reconcile their texts. Targeted political agreement before the end of 2026.
  • 2027. Final formal adoption. Entry into force after a transition period that runs into late 2027.

Adoption by end of 2026 is the political target, not a guarantee. Trilogue can run long, and it has. We track the file across six EU sources and email subscribers when something genuinely moves. See the Timeline page for the live state, with a date stamp on every event and a link to the primary document.

Sources

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