What the 28th Regime Actually Is
27 countries. 27 company law systems. 27 ways to incorporate, transfer shares, and structure equity.
American founders don't think about this. They incorporate in Delaware, hire anywhere in the US, and scale without touching their corporate structure. European founders? Every new market means a new subsidiary, new local counsel, new compliance requirements. The friction is real — and it's measurable.
The 28th Regime is an optional, EU-wide legal framework that creates a single set of rules for innovative companies. It sits alongside (not replacing) the 27 national systems. One more option. One unified rulebook.
The name "28th" refers to adding this single framework to the existing 27. For founders, the promise is straightforward: incorporate once under EU rules, operate across borders without navigating each country's requirements.
The concept emerged from the EU's Startup and Scale-up Strategy adopted in May 2025, responding to a persistent problem: European startups face significant "hassle costs" when expanding across borders. Different incorporation rules, varying capital requirements, incompatible share structures, and fragmented compliance create barriers that simply don't exist in the US market.
Timeline
| Date | Milestone |
|---|---|
| May 2025 | EU Commission adopts Startup and Scale-up Strategy |
| September 2025 | Stakeholder consultation closes |
| December 2025 | European Parliament JURI Committee approves recommendations |
| January 2026 | Expected Parliament plenary vote |
| Q1 2026 | Commission legislative proposal scheduled |
| 2026–2027 | Expected negotiation and adoption period |
S.EU: The Unified European Company
The S.EU (Societas Europaea Unius — Unified European Company) is the centerpiece of the 28th Regime: a new limited liability company form designed specifically for startups and innovative businesses.
Key Features
| Feature | S.EU | Typical National Forms |
|---|---|---|
| Registration time | 48 hours (digital) | ~14 days (varies) |
| Minimum capital | €1 | €25,000+ (varies) |
| Registration process | Single digital portal | National registers |
| Cross-border seat transfer | Yes, without dissolution | Usually requires liquidation |
| Language | Multilingual portal | National language |
| Dispute resolution | Accelerated, specialized | National courts |
How It Works
Incorporation: You register through a single EU digital portal, available in all EU languages. The process completes within 48 hours, creating a company that's recognized across all 27 member states.
Operations: Your S.EU has its legal seat in one member state but operates under unified EU rules. You don't need to re-incorporate or create subsidiaries to do business in other EU countries.
Mobility: If you want to move your company's seat — say, from Portugal to Germany — you transfer directly without dissolving the company and re-establishing it. This addresses one of the biggest frustrations for scaling startups.
Why This Should Be on Your Radar
The 28th Regime directly addresses the friction that makes cross-border growth harder in Europe than in the US.
Here's what European founders currently face:
- Incorporation complexity: Germany looks different from France looks different from Portugal. Different forms, different capital requirements, different timelines.
- Cross-border expansion: Operating in another EU country usually means creating a local subsidiary — with all the incorporation costs, accounting requirements, and administrative burden that entails.
- Seat transfer: Moving your company from one country to another typically means dissolving it and starting fresh. Losing your history. Losing contract continuity. Sometimes creating tax events.
- Employee equity: Stock option plans that work in one country create tax problems in another. Cross-border hiring with competitive equity is currently a nightmare.
- Fundraising friction: Investors familiar with US structures get confused by 27 different share class systems and local investment instruments.
What S.EU Solves
| Pain Point | Current Situation | With S.EU |
|---|---|---|
| Initial setup | Choose one jurisdiction, hope it's right | Single EU form works everywhere |
| Expanding to new markets | Create subsidiaries in each country | Operate directly with existing S.EU |
| Relocating HQ | Dissolve and re-incorporate | Transfer seat without dissolution |
| Hiring across EU | Different equity structures per country | Harmonized EU-ESOP |
| Raising capital | Multiple local instruments | Standardized EU-FAST |
The EU-ESOP: Employee Stock Ownership Simplified
Try offering equity to employees across four EU countries. You'll discover that options taxed at exercise in Portugal get taxed at grant in another country. That what's a simple equity grant in Estonia requires works council approval in Germany. That your securities filing in France looks nothing like your securities filing in Spain.
One compensation plan. Four legal frameworks. Four tax treatments. Four compliance headaches.
This is why European startups lose engineering talent to US companies offering simple, standardized equity packages. Not because European founders are less generous — because the system makes generosity expensive and complicated.
The EU-ESOP aims to fix this. The Parliament recommends more harmonized rules for employee stock ownership plans and options, designed to:
- Create coordinated or aligned tax-deferred treatment at the EU level
- Simplify compliance across jurisdictions
- Make EU startups competitive with US companies offering standard equity packages
The details are still being negotiated, but the direction is clear: make it easier to offer meaningful equity to employees regardless of where they're located in the EU.
📖 Related: Employee Equity 101: ESOPs vs Virtual Shares in Europe
The EU-FAST: Standardized Investment Instruments
Every US founder raising a pre-seed round uses the same document. It's called a SAFE. Two pages. Standard terms. Done.
European founders raising money? Pick your adventure:
- UK: Advanced Subscription Agreements (ASAs) for SEIS/EIS eligibility
- France: BSA-AIR (Bon de Souscription d'Actions — Accord d'Investissement Rapide)
- Germany: Convertible Loan Agreements (Wandeldarlehen) — required by law
- US investors: Expect Y Combinator SAFE terms they're familiar with
Different conversion mechanics. Different tax implications. Different investor expectations. Cross-border rounds become exercises in legal complexity rather than capital allocation.
The EU-FAST (European Union Fast Advanced Subscription Template) aims to do for European fundraising what the SAFE did for the US — create a standardized, founder-friendly investment instrument that can be used across member states.
What EU-FAST Proposes:
- A standardized investment template that works consistently across all EU member states
- Legal certainty for both founders and investors
- Reduced negotiation time and legal costs
- Making EU startups more attractive to international investors
Think of it as the SAFE for Europe — but actually designed for European corporate law from the start, rather than adapted from US templates.
📖 Related: SAFE Notes in Europe: Key Legal Differences from US SAFEs
Digital Infrastructure: The EU Registry
The 28th Regime isn't just new rules — it's new infrastructure. Central to the proposal is a single digital company register for the entire EU.
Proposed Features
| Component | Purpose |
|---|---|
| EU Registry | Single point of registration for S.EU companies |
| Digital Portal | Multilingual interface for all filings |
| eIDAS Integration | Electronic identification across borders |
| EU Dashboard | Company management interface |
Current state: Register with your national authority (Portugal: IRN, Germany: Handelsregister, France: Greffe). Each has different processes, languages, and requirements.
With EU Registry: Register once through a unified portal. Your company is automatically recognized across all member states. All filings, updates, and communications happen through one system.
The target is 48-hour incorporation — comparable to Delaware's efficiency but with immediate EU-wide validity.
Who Should Use S.EU?
The S.EU isn't for every company. It's designed for innovative, growth-oriented businesses planning cross-border operations.
Ideal Candidates
| Profile | Why S.EU Makes Sense |
|---|---|
| Pre-seed startups with EU ambitions | Start with the right structure from day one |
| Scale-ups expanding across EU | Avoid subsidiary complexity |
| Deep tech with multi-country teams | Simplified employee equity |
| VC-backed companies | Standardized investment instruments |
When to Stick with National Forms
| Profile | Why National Forms May Be Better |
|---|---|
| Local service businesses | No cross-border needs |
| Companies in one market only | National frameworks are mature and understood |
| Businesses needing specific national incentives | Some tax benefits are jurisdiction-specific |
| Companies with existing complex structures | Migration costs may not justify benefits |
The "Wait and See" Question: Should you wait for S.EU before incorporating? Our recommendation: Don't delay. The legislative proposal isn't expected until Q1 2026, with adoption likely taking another 1–2 years. If you're starting a company now, incorporate under an appropriate national framework. The 28th Regime will likely include conversion paths for existing companies.
What's Still Being Decided
The Parliament has made recommendations, but many details remain open until the Commission's legislative proposal:
- Exactly which areas are harmonized? Corporate law is confirmed. Tax harmonization is politically complex. Labour law alignment is still debated.
- Relationship to existing EU company forms? The Societas Europaea (SE) already exists for larger companies. How S.EU interacts with SE and national forms is still being defined.
- National implementation requirements? Even an EU Regulation needs national infrastructure. Registry integration with national systems must be designed.
- Tax treatment details? EU-ESOP tax deferral mechanisms need member state agreement. Cross-border taxation remains politically sensitive.
- Dispute resolution specifics? Parliament recommends accelerated, specialized procedures — potentially in English. Exact mechanisms not yet defined.
The Political Path
The 28th Regime has broad support in principle, but:
- Member states may resist harmonization that reduces national control
- Tax authorities have concerns about revenue implications
- National registries face integration challenges
- Legal professions may protect existing structures
Expect negotiations through 2026–2027 before final adoption.
What to Do Right Now
If You're Incorporating Now
Don't wait for S.EU. Build with what exists today:
- Choose an appropriate national jurisdiction based on your current needs
- Document your cap table cleanly for future conversion options
- Use standardized investment documents where possible (local SAFE equivalents)
- Track 28th Regime developments through official EU sources
If You're Planning Cross-Border Expansion
- Evaluate current expansion options (subsidiaries vs. branch offices)
- Consider timing relative to S.EU availability
- Structure employee equity with future harmonization in mind
- Prepare for potential conversion once S.EU is available
If You're Raising Capital
- Use local SAFE equivalents appropriate to your jurisdiction
- Explain to US investors that local instruments serve the same purpose
- Document everything for future standardization
- Watch for EU-FAST template availability
📖 Related: EU-INC Explained: What the 28th Regime Means for European Startups
The Bottom Line
The 28th Regime is the most significant structural reform for European startups since the single market itself. Not because it creates new rules. Because it removes the ones that never should have applied to startups in the first place.
27 incorporation systems for 27 countries made sense when companies were local. They make zero sense when a Portuguese startup hires in Berlin, raises from Paris, and sells across the continent.
S.EU: one structure, 27 markets. EU-ESOP: one equity plan, 27 countries. EU-FAST: one investment template, 27 jurisdictions.
The legislative proposal hasn't landed yet. The details will be negotiated through 2026–2027. But the direction is irreversible: Europe is building startup infrastructure to match its startup ambition.
Don't wait for it. Don't ignore it either. Build with what exists today, and structure your company so the upgrade path is clean when it arrives.
Resources and Further Reading
Official Sources:
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