Unified and simplified legal framework for companies envisaged
On 18 March 2026, the European Commission presented revolutionary proposals aimed at fundamentally simplifying the legal framework regarding the establishment and expansion of companies within the European Single Market.
Central to the initiative is an optional, uniform set of rules in the form of a “virtual 28th Member State / regime”. Of particular interest are the following aspects:
- Fast incorporation: Fully digital incorporation within 48 hours at a cost of less than EUR 100
- No minimum capital requirement
- No notary requirement: Neither for the formation of the company nor for the transfer of shares
- Fully digital operations: All business processes can be handled digitally, including financing
- Simplified administrative procedures: One-time submission of company information via an EU-level interface connecting national business registers; in a second step, the establishment of a central EU register, alongside the allocation of tax identification and VAT numbers without the need for resubmission of paperwork
- Uniform legal framework: Independence from the place of incorporation, coupled with simplified liquidation and insolvency procedures
- EU-wide employee participation plans: Taxation of options for employees deferred until the point of disposal, without complex requirements
The objective is to simplify access to the European Single Market of approximately 450 million consumers for European growth companies and to mobilise investment more efficiently. At present, companies in the EU face considerable barriers: Divergent national legal regimes necessitate parallel structures across multiple member states. This results in significant administrative burden, time delays and costs when scaling across the EU, posing structural challenges particularly for young and innovative companies and constraining their growth.
The 28th regime does not aim to amend (harmonise) national legal systems, but rather to provide an additional, optional, uniform EU-wide framework. Under this regime, companies would therefore be able to choose between national company law (e.g. a German GmbH) and the EU regime (“EU Inc.”).
Outlook
The detailed legislative proposals are expected to be submitted shortly and will be subject to further negotiations at EU level, with a political agreement envisaged by the end of 2026. As has been the case with similar initiatives, a key challenge will be ensuring that European protection standards are not undermined, for example in relation to employees’ rights.
If implemented as currently envisaged, the EU Inc. would be highly attractive. It has the potential to become a genuine game changer and to put existing national legal forms, such as the German GmbH, at a clear competitive disadvantage, whose formation and financing are widely regarded, in an international comparison, as unnecessarily bureaucratic and therefore both time- and cost-intensive. We advocate for also enabling a streamlined transformation from national legal forms into the EU Inc. regime.
(19 march 2025)