Form a company online within 48 hours, with no minimum capital requirement and under largely uniform rules: With “EU Inc.,” the European Union aims to facilitate business start-ups and cross-border growth. However, this is still only a legislative proposal.

Anyone looking to start a business today and operate in multiple EU member states faces a fragmented legal framework. The European Union has 27 national corporate law systems and a wide variety of legal structures. For startups and growing companies, this often means a need for additional legal advice, differing registration procedures, and legal uncertainties regarding expansion and financing.

The European Commission intends to address this issue through what is known as “EU Inc.” On March 18, 2026, it presented a draft regulation (COM(2026) 321 final) aimed at creating a new, digitally oriented corporation.

But what does this really mean? And would “EU Inc.” actually lead to a uniform European corporate law? “EU Inc.” would be a harmonized corporate form within national legal systems—not a fully autonomous supranational corporation.

Who is EU Inc. intended for?

EU Inc. is aimed in particular at startups, scale-ups, and innovative companies that want to operate across borders from the outset or attract investors from various member states.

However, under the current proposal, its use would not be limited to startups. Existing companies and corporate groups could also adopt this legal form. For corporate groups, for example, it could be an attractive option for establishing subsidiaries in various member states based on a largely uniform model.

As a general rule, shareholders are not personally liable for the company’s obligations. Thus, in its basic structure, the EU Inc. corresponds to a limited liability corporation.

Company Formation Within 48 Hours

One of the most important goals is a fast and fully digital incorporation process. According to the Commission’s proposal, it should be possible to incorporate an “EU Inc.” using a standard European articles of incorporation:

• entirely online,
• within 48 hours,
• for no more than 100 euros
• and without a statutory minimum capital requirement.

If the company is not incorporated through the expedited procedure, the process should generally be completed within five business days.

A central European interface is intended to facilitate access to the national registries. There are no immediate plans to establish a separate, central EU company registry. Companies will continue to be registered in the registry of the Member State in which they are incorporated.

“Digital-only”: A Society for Digital Legal Transactions

Digitization should not be limited to the incorporation process. It should be possible to handle all essential processes in the life cycle of EU Inc. digitally. These include, in particular:

• Registrations and amendments to the articles of incorporation,
• Shareholders’ meetings and the adoption of resolutions,
• Financing measures,
• the transfer of company shares,
• the establishment of branch offices,
• as well as liquidation and certain insolvency proceedings.

This would mean that EU Inc. would go well beyond the current level of digitalization in German GmbH law in several respects.

“Once-only”: Submit company data only once

Another guiding principle is “once-only.” Companies should, as a general rule, be required to submit certain information to a public agency only once.

After registration, the registry data should be able to be shared with, for example, tax authorities, social security agencies, and beneficial ownership registries. In the event of subsequent administrative or legal proceedings, authorities should also be able to access existing registry information rather than requesting the same information from the company again.

Whether this principle works in practice, however, will depend largely on whether the Member States’ registry and administrative infrastructures are technically and reliably interconnected.

No minimum capital requirement

No statutory minimum capital requirement is to apply to EU Inc. This distinguishes it from the German GmbH, which generally requires a share capital of 25,000 euros.

Instead, creditor protection is to be ensured more effectively through restrictions on distributions and solvency tests. Under this approach, distributions to shareholders would be permitted only if the company passes both a balance sheet test and a solvency test based on a 12-month period.

This approach is based more on the company’s actual ability to pay than on a capital amount set once at the time of incorporation.

Digital Equity Interests

Shares of EU Inc. are to be recorded in a digital share register. In principle, the entry in the register shall determine who is considered the owner of a share.

The transfer of shares should also be possible entirely digitally. A notarized deed, as required by § 15 of the German Limited Liability Companies Act (GmbHG) for the transfer of shares in German GmbHs, should not be required for the transfer of shares.

This could significantly speed up financing rounds and changes in ownership. At the same time, the question arises as to who will verify the validity of a transfer of shares. Under the current approach, the company itself is responsible for verifying whether the transferor has the authority to dispose of the shares and whether the provisions of the articles of incorporation have been complied with.

Legal advice is therefore likely to remain necessary, particularly in the case of complex ownership structures. It would also be conceivable to delegate the maintenance of the share register to specialized service providers or notaries.

European Employee Stock Ownership Plan

A particularly practical component of the proposal is a European employee participation program known as the EU Employee Stock Option Plan (EU-ESO).

Companies should be able to issue subscription rights to executives, as well as to their own employees and the employees of their subsidiaries. This is intended to make it easier for startups to attract qualified employees and retain them in the long term.

The proposed tax treatment is of particular importance. In principle, taxation is to occur only when the shares acquired through the options are sold. This is intended to prevent employees from having to pay taxes even though they have not yet received any cash proceeds. However, the specific tax rates and other tax details would continue to be governed by national law.

Free Choice of Country of Incorporation

In principle, companies should be able to choose in which Member State to incorporate their EU Inc. The registered office and principal place of business do not necessarily have to be located in the same Member State, as long as the required connection to the European Union exists.

This freedom of choice is intended to facilitate cross-border business formation. However, it also carries the potential for conflict. Companies might be tempted to choose a registered office in a Member State with particularly favorable corporate law conditions, even though their actual business operations take place in another country.

The EU-Inc. initiative considers precisely this freedom to choose the country of registration to be an essential element of a functioning European standard. Critics, on the other hand, see risks of regulatory competition among member states.

What are the rules regarding labor law and taxes?

EU Inc. does not result in a uniform European labor, social, or tax law. National regulations governing labor law, social security, and taxation generally remain applicable. Nor does the new corporate form generally supersede national protection standards.

The legal form alone does not, therefore, eliminate all legal differences within the single market. A company with employees and business establishments in several Member States will still have to deal with various labor, tax, and social security regulations.

EU Inc. would thus be an important building block for a more unified single market, but not a complete solution to all cross-border legal issues.

Co-determination remains a contentious issue

Employee co-determination is a particularly sensitive issue. Under the current proposal, the co-determination rules of the state where the company has its registered office would generally apply. This could lead to a situation where a company with a majority of its employees in Germany establishes an “EU Inc.” in another Member State and is thereby not subject to the German provisions of the One-Third Participation Act or the Co-Determination Act.

While the proposal emphasizes that EU Inc. should not be used to circumvent workers’ rights, it is debatable whether the proposed rules will actually prevent such abuse. The issue of worker participation is therefore likely to be one of the most difficult aspects of the legislative process.

Is the EU Inc. really a single European corporation?

The term suggests that, in the future, a completely uniform legal form will be available throughout the EU. However, the current proposal does not go that far.

While the European regulation is intended to standardize key issues, the law of the respective country of registration remains applicable in cases where the regulation does not provide definitive rules. Depending on the Member State in which the EU Inc. is incorporated, differences may therefore still exist.

The startup initiative behind the term “EU Inc.” also points out that the Commission’s proposal does not yet establish a fully harmonized European corporate law or a unified European court system. It views the draft more as a potential starting point for a common European standard. We’ll take a closer look at how this interacts with national law in the third part of this series.

When can an EU Inc. be incorporated?

Not at all at this point. EU Inc. is currently just a proposed regulation from the European Commission. The European Parliament and the Council, in which the member states are represented, must agree on a final text.

The European institutions are currently aiming to reach a political agreement by the end of 2026. The proposal is currently under discussion in the European Parliament; the Committee on Legal Affairs (JURI) presented a draft report with numerous proposed amendments at the end of June 2026. It remains to be seen whether the timeline will be met and when the regulation would subsequently take effect. Significant aspects of the proposal may still change before the legislative process is concluded.

What should founders and companies keep in mind right now?

Companies cannot currently choose “EU Inc.” as a legal form. Therefore, existing national legal forms continue to apply to specific business formations.

Startups, investors, and corporate groups should nevertheless keep an eye on the legislative process. EU Inc. could be of particular interest to:

• cross-border startups,
• Companies with international investors,
• Europe-wide employee stock ownership programs,
• Corporate structures with subsidiaries in several Member States,
• as well as companies that want to use digital share transfers and flexible financing instruments.

In the second part of this series, we’ll examine whether EU Inc. actually offers advantages over a German GmbH, UG, or AG: EU Inc. or GmbH? A Comparison for Founders .

Outlook: An important step, but not yet a unified corporate law

EU Inc. is one of the most ambitious European corporate law initiatives since the introduction of the European Company. It promises rapid digital company formations, lower costs, flexible financing, and simpler cross-border structures.

At the same time, key questions remain unanswered. These include, in particular, the relationship to national corporate law, employee participation, oversight of digital share transfers, and the practical implementation of the “once-only” principle.

If European lawmakers succeed in regulating these issues in a way that is legally sound and practical, the EU Inc. could become an attractive legal structure for companies with a European focus. Whether it will actually become the uniform standard for startups in Europe, however, will only be determined as the legislative process moves forward.

Our earlier article, “EU Inc.: Is a European GmbH for Startups on the Horizon?”, also offers a concise introduction to the topic.