EU Inc.: a new European corporate form in the works

What exactly is EU Inc.?

Under the Commission’s proposal, EU Inc. would become a new European corporate form offering entrepreneurs a genuine choice: those who wish could operate across all 27 Member States through a single legal form, without having to comply each time with local company-law rules.

The main features:

• Fast digital incorporation: registration in under 48 hours, for less than €100, with no minimum share capital.
• One-time submission of information: company details are submitted only once via a central EU platform.
• Fully digital: all procedures are carried out digitally throughout the company’s entire life cycle.
• Investor-friendly: physical formalities for share transfers disappear; financing processes would henceforth take place fully digitally.
• Share flexibility: the possibility to issue different classes of shares, to which different economic and/or voting rights may be attached. This option is already embedded in Belgian company law for the BV, CV and NV.
• Simplified insolvency procedures: EU Inc. companies would have access to fully digital liquidation procedures, enabling innovative start-ups to test different ideas more easily and, if necessary, restart.

From fragmentation to a single European framework

The rationale behind EU Inc. is that cross-border expansion within the European Union currently entails significant legal complexity. With 27 national legal systems and more than 60 corporate forms, entering another Member State requires fresh local legal advice each time and the establishment of a separate entity. The IMF calculates that this legal fragmentation amounts to a trade barrier equivalent to an average tariff of 44%.

EU Inc. is the Commission’s core response to these challenges. A regulation would provide a single harmonised regulatory framework, so companies would no longer have to navigate a multitude of national regimes.

Equal treatment in every Member State

The proposal includes a “black list” of prohibited national practices: an EU Inc. company must receive exactly the same treatment in every Member State as a locally incorporated company. Member States may not impose additional requirements merely because of the supranational nature of EU Inc.

A second chance for the European corporate form

The idea of a European corporate form is not new. The Societas Europaea (SE), introduced in 2001 and also incorporated into Belgian company law, never really gained traction. For many issues it referred back to the national law of the Member State where the registered office is located, which largely hollowed out the promised uniformity. In addition, incorporation required minimum share capital of €120,000 and an existing company in at least two Member States—thresholds that were immediately too high for starters and SMEs.

Points of attention: tax and social aspects

EU Inc. aims to harmonise company law, without prejudice to tax law and national labour and social security legislation. The choice of the country of incorporation remains tax-relevant: issues relating to permanent establishment, transfer pricing, withholding taxes, individual employment contracts, pay and working conditions, and social security contributions remain subject to the law of the Member State of incorporation.

What does this mean for you in practice?

EU Inc. is not yet a reality today. The proposal will now be examined by the European Parliament and the Council, with the express aim of reaching an agreement by the end of 2026. If the proposal is adopted in its current form, it offers tangible opportunities: faster market entry in new Member States, lower (incorporation) costs, and a simplified story for (international) investors.

We are monitoring this proposal and will keep you informed of further developments.

Do you have questions about what EU Inc. could mean for your company? Feel free to get in touch.

Author: Azeddine El Bastani