Yesterday (January 20, 2026), European Commission President Ursula von der Leyen announced EU-INC at the World Economic Forum in Davos.
The headlines were immediate: "One legal entity for all of Europe." "48-hour incorporation." "The end of European fragmentation."
But what does EU-INC actually mean for your startup?
And more importantly—when can you use it?
This guide covers the facts. No speculation, no hype. Just what European founders need to know.
What Is EU-INC?
EU-INC—also called the "28th regime"—is a proposed pan-European legal entity framework.
The name comes from the concept of creating a 28th set of company rules that would exist alongside the 27 national company law systems in the EU.
Here's the core idea: instead of incorporating under German law, French law, or Portuguese law, you would incorporate under EU law.
One registration. One set of rules. Valid across all 27 member states.
The proposal aims to solve a real problem. Today, if you incorporate in Portugal and want to expand to Germany, you face a new legal system. Different corporate governance rules. Different documentation requirements. Different investor expectations.
According to data cited by the EU-INC movement, less than 18% of first-round investments span multiple European countries. The fragmentation creates friction, and that friction costs money and time.
What EU-INC Would Include
Based on the Commission's announcements and European Parliament recommendations, here's what the 28th regime would cover:
Company Formation
- Single registration valid across all EU member states
- Online incorporation within 48 hours
- Central EU registry (called "EU-REGISTRY" in the proposals)
- €1 minimum paid-in capital (as recommended by the European Parliament)
- English as the working language for registration
Corporate Operations
- Standardized governance rules for board structure and decision-making
- Unified capital regime across the EU
- Simplified corporate mobility when moving operations between countries
Investment and Equity
- Standardized investment documentation (referred to as "EU-FAST")
- EU-wide stock options framework (called "EU-ESOP")
- Harmonized treatment of employee equity across borders
What EU-INC Would NOT Cover
This is where founders need to pay attention. EU-INC is narrower than the headlines suggest.
Tax Remains National
If you incorporate under EU-INC and operate in Germany, you pay German taxes. If you have employees in France, French payroll taxes apply. If you sell to customers in Spain, Spanish VAT rules apply.
EU-INC does not create tax harmonization. Your tax obligations remain determined by where you actually do business.
Employment Law Stays Local
EU-INC would not change employment law. If you hire someone in Portugal, Portuguese labor law applies—minimum wage, working hours, termination rules, all of it.
Trade unions have raised concerns about potential "regime shopping," where companies might try to minimize labor obligations. The current proposals explicitly keep employment law with member states.
Insolvency Follows National Rules
If your EU-INC company faces financial difficulties, insolvency procedures follow the rules of the country where you're primarily operating—not a unified EU framework.
Social Security Is Unchanged
Social security contributions, pension obligations, and related requirements remain national.
The Timeline: When Can You Actually Use EU-INC?
Here's the honest answer: not soon.
- July 2024: von der Leyen first presented the concept
- October 2024: EU-INC community campaign launched
- February 2025: Legal proposals submitted to Commission
- May 2025: Commission adopted Start-up and Scale-up Strategy
- September 2025: Stakeholder consultation closed
- January 2026: Official announcement at Davos
- Q1 2026: Legislative proposal expected from Commission
- 2027 (projected): Implementation if approved
The legislative proposal is expected in Q1 2026—likely March. After that, the European Parliament and Council must agree on the details. This process typically takes 18-24 months.
If everything goes smoothly, EU-INC could become available in 2027.
But EU legislative processes rarely go smoothly. Delays are common.
Current Debates and Concerns
EU-INC isn't a done deal. Several issues remain unresolved.
Directive vs. Regulation
In October 2025, 27 startup groups sent a letter to von der Leyen expressing concern about implementation through a directive rather than a regulation.
- Regulation: Directly applicable across all EU states with the same rules everywhere.
- Directive: Sets goals but allows national implementation, potentially creating 27 different versions.
The startup groups argue that a directive would "replace one patchwork with another."
Definition of "Innovative"
The regime targets "innovative" SMEs, but "innovative" lacks a clear legal definition. Some proposals suggest thresholds based on R&D spending or headcount. Critics point out that rigid definitions could exclude exactly the companies that need support most.
What This Means for You Today
If you're a European founder, here's the practical guidance:
1. Don't Wait for EU-INC
The earliest realistic implementation is 2027, and delays are likely. Make your incorporation and expansion decisions based on current rules.
2. Watch the Legislative Process
The Commission proposal in Q1 2026 will clarify many details. If you're planning significant EU expansion in 2027-2028, understanding the specifics will help you plan.
3. Current Alternatives Still Work
European founders have successfully scaled across borders under current rules for decades. Companies like Spotify, Klarna, and Wise navigated multi-jurisdiction complexity before reaching their current scale.
4. Stock Option Planning Matters Now
If EU-ESOP becomes reality, it could simplify employee equity across borders. But until then, work with advisors who understand cross-border equity compensation. See our guide to the option pool shuffle for current best practices.
The Bottom Line
EU-INC represents a genuine attempt to address European fragmentation. A single legal entity valid across 27 countries would reduce friction for startups scaling across borders.
But it's not here yet. The announcement at Davos was a commitment to propose legislation, not the legislation itself. Between the Commission proposal, Parliament deliberation, Council negotiation, and national implementation, years of process remain.
For European founders in 2026, the practical advice is straightforward: understand what EU-INC would offer, watch its progress, but build your company under the rules that exist today. When EU-INC becomes available—if it becomes available in the form proposed—you'll have options. Until then, execution beats waiting.
Related Resources
- Compliance Hub — GDPR, AI Act, and regulatory guides for European startups
- Fundraising Legal Guide — Legal documents for every funding stage
- Due Diligence Checklist — The 10 docs VCs actually check
- Startup Lawyer Costs 2026 — What legal actually costs in Europe
Legal Disclaimer: This content is for informational purposes only and does not constitute legal advice. EU-INC legislation is still in development and details may change. Consult qualified legal counsel for your specific situation.
Last updated: January 2026