The European Commission recently unveiled a proposal that could significantly change the rules for starting a business in Europe—the so-called “EU-Inc.” initiative. Its goal is to create a single legal form for companies across the European Union, which would allow businesses to operate across national borders more easily and quickly than ever before.
Today, business expansion in Europe often faces a paradox: although we have a single market, setting up and operating a business in different countries still means dealing with 27 different legal systems, different legal forms, and complex administrative procedures. As a result, even a simple step toward expanding into another EU country can take weeks or even months. The EU–Inc. system proposed by the European Commission aims to simplify this situation.
What does EU–Inc. offer?
Under the proposal, a single European company form would be established, characterized by several key elements:
- a company could be registered within 48 hours for less than 100 euros;
- there would be no requirement for a minimum authorized capital;
- the company could operate in all 27 EU member states under a single legal framework;
- the information would be submitted once, and the data would automatically be transmitted to registries, tax authorities, and VAT systems across the EU;
- provide for the possibility of implementing harmonized employee stock option plans (ESOPs) across the EU.
If the European Parliament and the Council approve this proposal, the initiative could become operational by the end of 2026.
The launch of such an initiative sends an important signal. For some time now, Europe has been looking for ways to help startups and fast-growing companies expand more easily within the single market and compete with technology ecosystems in the U.S. and Asia.
This is a welcome step, as it finally acknowledges a problem that the business community has been discussing for many years—the European single market remains highly fragmented from a legal standpoint.
However, the question arises: will simplifying the registration process alone really address the main obstacles to business growth in Europe?
The problem lies not only in registration
The procedures for establishing a company are often seen as the main challenge, but in practice they are usually just the first—and often the shortest—stage of a business’s journey. Far more complex obstacles arise later on, as the company grows and expands into different jurisdictions.
The biggest obstacles in Europe are usually not related to company registration. They stem from differing tax systems, labor law regulations, inconsistent application of the law, and often rather slow dispute resolution in the courts.
Even if a company could be established within 48 hours, as the business expands, it would still have to deal with:
- different labor law regimes in each country;
- inconsistent taxation of employee stock options;
- under different tax regimes;
- inconsistent administrative and regulatory practices.
In practice, businesses often face another problem—one that may seem technical at first glance but is very real—namely, opening a bank account. Even today, when it is possible to establish a company relatively quickly in most EU countries, banks often take a very cautious approach to clients whose founders are not residents of that country. In such cases, opening an account can become a lengthy and complicated process requiring additional checks and documentation. Therefore, the question remains open as to whether the new EU–Inc. form will truly facilitate relations with banks, or whether this practical obstacle for businesses will persist.
Therefore, the question of whether EU–Inc. will actually operate under a unified system will essentially depend on the extent to which genuine harmonization is achieved in other areas.
ESOP – an important but insufficient step
The unified ESOP model set out in the proposal is one of the strengths of this initiative. Employee stock options are an important incentive tool for startups, particularly in the technology sector.
However, if these options continue to be taxed differently in different countries, their practical application may remain limited.
If taxation remains a national matter, the system will still not be as simple and clear as the one we see today in the United States, for example. And capital and talent often flow to places where the regulatory environment is clearer and more predictable.
Is Europe truly ready for a unified business area?
The EU–Inc. initiative undoubtedly reflects a political ambition to strengthen Europe’s business environment. It could also serve as an important symbolic step—demonstrating that Europe aims to be a place where global businesses can be established and grown without leaving the continent.
However, simplifying the procedures for setting up a business can only be the first step.
If Europe truly wants to create a level playing field for business, a single corporate form will not be enough. Much deeper harmonization will be needed—particularly in the areas of taxation, labor law, and regulatory practices.
Nevertheless, it must be acknowledged that the EU-Inc. initiative sends an important signal that European institutions are beginning to address the problem of single market fragmentation in a more systematic manner. If the proposal is adopted and consistently developed further, it could become the first concrete step toward a truly unified business space in Europe.
However, the true impact of this initiative will depend on whether Europe is willing to address the deeper structural issues that often lead ambitious companies to plan their global expansion outside of Europe.
AVOCAD Partner, Corporate Law Expert, Attorney Jonas Zaronskis