In March 2026, the European Commission presented its draft for an EU-wide company form. EU Inc. is intended to operate as a so-called 28th regime alongside the 27 national corporate law systems and make cross-border scaling easier for growth-oriented companies. The proposal addresses a long-diagnosed problem. In several areas, however, it falls short of what would be needed to create a truly viable European alternative to Delaware.
The Starting Point: Why Europe Loses Its Best Companies
Europe has a structural problem when it comes to scaling young companies. There are 27 corporate law systems, 27 tax regimes and 27 different approaches to employee participation. A company founded in Vienna that wants to hire its first employee in Berlin quickly runs into local labour, social security and tax obligations. In many cases, this means separate payroll, separate tax advice and, depending on the setup, a local subsidiary.
For a five-person startup, this is not an administrative burden that can be handled on the side. The consequences are measurable: according to Index Ventures, 64 percent of European startups now expand to the United States already at seed stage. Between 2015 and 2019, that figure was 33 percent. A study by the European Commission's Joint Research Centre adds that out of 147 European unicorns founded between 2008 and 2021, 40 moved their headquarters abroad, 32 of them to the United States.
The reason is not the legal form alone. Delaware works because a complete ecosystem has developed there over decades: specialised courts, standardised contract templates and law firms that focus almost exclusively on corporate law. Investors know this system and have built their processes around it. A European legal form that does not provide a comparable ecosystem will struggle.
The Commission Proposal: What It Provides
The draft regulation published on 18 March 2026 provides for digital incorporation within 48 hours, at a cost of no more than EUR 100 and without minimum capital. It introduces the EU Employee Stock Option Plan as a harmonised framework for employee participation, allows digital share transfers without mandatory intermediaries and explicitly recognises SAFEs as permissible early-stage financing instruments.
Chapter 10 includes simplified winding-up procedures with a six-month deadline. Politically, an agreement is targeted by the end of 2026. First registrations are realistically expected from 2028 or 2029.
These are meaningful steps. Yet in four areas, the proposal remains behind what would be necessary for a functioning European alternative to Delaware.
1. Create a Common Tax Framework for Employee Participation
EU Inc. addresses the dry-tax issue over time: taxable income from EU-ESO options arises only when shares are sold, not at grant, vesting or exercise. What remains national are tax rates, income classification, social contributions and employer charges.
As long as rates, tax bases and social security burdens differ across member states, the European talent market remains fragmented. A binding minimum model for the effective total burden of EU-ESO options would be useful. Because tax harmonisation requires unanimity in the Council, a binding decision is politically unlikely. The more realistic path is a Commission recommendation with clear benchmarks that member states can voluntarily align with.
2. Connect the Proposal to Europe's Capital Markets Architecture
The draft regulation addresses fundraising primarily through company law: digital capital measures, simplified share transfers and modern early-stage instruments such as SAFEs. What is largely missing is a systematic link to institutional capital sources, the fund regimes of the Capital Markets Union and exit infrastructure.
European pension funds invest around 0.02 percent of their volume in venture capital, compared with around 1.9 percent in the United States. Without connecting EU Inc. to the instruments of the Capital Markets Union, access to capital remains the central bottleneck. The regulation should clarify how digital EU Inc. shares can practically be invested in through existing regimes such as ELTIF 2.0, EuVECA and AIFMD, including valuation, custody, transferability and liquidity.
3. Establish Specialised Courts and Insolvency Harmonisation
Delaware owes much of its attractiveness to the Court of Chancery, a specialised equity court that has become the key forum for corporate law disputes. EU Inc. does not provide a comparable instrument.
Insolvency is another challenge. Procedure duration and costs vary significantly across the EU. For investors that need to assess risk across several jurisdictions, this is a concrete investment barrier. The regulation contains simplified winding-up procedures, but it does not address restructuring without liquidation or ongoing corporate law disputes.
Three steps are realistic: in the short term, specialised national chambers for EU Inc. disputes; in the medium term, EU-wide minimum standards for duration and costs; and in the long term, a specialised European forum modelled on the Unified Patent Court.
4. Build the Ecosystem: Standard Contracts, Registers and Infrastructure
A legal form alone does not create a market. Delaware works because lawyers, investors and founders use familiar standard documents. The draft regulation builds on the Business Registers Interconnection System and introduces a central digital application interface. However, the data remains in national commercial registers.
A truly central European register, in which shares, ownership structures and transactions are documented uniformly and in an API-compatible way, is not included. BRIS should be developed in a second step into a full central data layer rather than remaining a federated network. For standard contracts, an open repository maintained jointly by law firms, investor associations and the European Investment Bank would be a practical next step.
Assessment
EU Inc. is the right impulse. The Commission is addressing a real and growing problem. Political support is remarkable: more than 22,000 signatories from the startup ecosystem, including Index Ventures, Atomico and Sequoia, back the proposal. The European Council confirmed the 28th regime as a priority in March 2026.
At the same time, a central negotiation conflict is already visible: the European Trade Union Confederation and Arbeiterkammer Europa warn that EU Inc. could become a loophole for bypassing national workers' rights if it lacks clear rules on co-determination, collective bargaining and the country-of-seat principle. This issue is likely to shape the trilogue negotiations more strongly than the tax and capital-market questions, which are comparatively consensual among business associations.
The decisive question is whether the legislative process closes the four gaps outlined above or whether EU Inc. ends up as a simplified incorporation form that does not solve Europe's underlying location problem. The European Private Company and the single-member company proposal failed on similar unresolved issues. Europe cannot afford a third attempt that gets stuck before it becomes operational.
Sources: Index Ventures (2025), European Commission Joint Research Centre, Atomico State of European Tech 2025, European Commission COM(2026) 321 final, CEPS European Capital Markets Institute, Regulation (EU) 2023/606, Regulation (EU) 2020/1503, Mario Draghi competitiveness report 2024, Unified Patent Court, ETUC statement 2026.