Brussels is betting bigger than expected on the EU Inc. proposal. A leaked Commission draft opts for a regulation—not a directive—promising a single EU-wide corporate rulebook and company registration within 48 hours. Startup advocates are cheering, but the fine print reveals some significant gaps.
The EU Inc. draft—Brussels’ long-awaited 28th regime proposal—outlines a framework under which any company, regardless of size or age, could opt into a single EU-wide corporate rulebook instead of operating under national law. Key provisions include a standardised approach to employee stock option taxation, ending the patchwork that currently sees workers taxed on shares they cannot yet sell.
The choice of regulation marks a stark reversal from a previous leaked version that opted for a directive—one that had alarmed experts and the startup community alike. “A directive would result in 27 different transpositions with goldplating, derogations, options, and national discretion,” Judith Arnal, Associate Senior Research Fellow at the Centre for European Policy Studies, told EU Perspectives last month.
Another coalition of the willing
To pursue the more ambitious path while avoiding the unanimity requirement that a conventional regulation would trigger, the Commission has turned to Article 114 of the Treaty on the Functioning of the European Union (TFEU), under which only a qualified majority of member states need to agree.
“Going for a directive is a political compromise that would simply lead us back to previous exercises—failed attempts to have a 28th regime.” said Judith Arnal.
Crucially, this route also limits member states’ ability to goldplate the rules with additional national requirements—something they could do freely under a directive. The approach reflects a broader shift in Brussels away from whole-of-27 solutions toward smaller groups of member states willing to move faster.
Fragmentation through the back door
The draft does fall short on some fronts. Rather than an EU-wide company registry, it proposes a centralised interface through which founders submit information that is then passed to existing national registers.
Startup advocates had argued that without a true EU-wide registry, the regime risked replicating the very fragmentation it set out to fix.
You might be interested
Fragmentation concerns extend beyond the registry. Disputes would be handled by national courts rather than a dedicated EU system, meaning an EU Inc entity could in practice function differently depending on where in the bloc it is based.
Worker rights have also raised concerns. Employees would receive the level of codetermination guaranteed in the country where an EU Inc is registered, not where it actually operates—leaving the door open to forum-shopping for weaker labour protections.
With the final proposal imminent, the real question is whether this becomes a genuine competitiveness game-changer—or another watered-down deal sacrificed to political compromise.
