Rarely has a company-law initiative from Brussels mobilised such opposing camps. On 18 March 2026, the European Commission under President Ursula von der Leyen presented the draft regulation for the EU Inc. – a so-called “28th regime” intended to sit alongside the 27 national company-law systems. The European Council granted the project high priority just one day later, with an ambitious goal: an agreement between Parliament and Council by the end of 2026, and the first incorporations from 2027 or 2028.

The eight-week public consultation runs until 25 June 2026 – and it is precisely in this phase that the conflict is sharpening. While startup associations across Europe are calling for mobilisation, union resistance is forming above all in Germany and Austria. Supporters already fear that the long-awaited reform could yet collapse.

What it’s about: the EU Inc. in brief

The EU Inc. is designed as an optional limited-liability company with its own legal personality. The key points of the Commission’s draft:

• Incorporation in 48 hours, fully digital via an EU-wide standardised online form, with no notary appointment
• No minimum share capital, with set-up costs below 100 euros
• Valid in all 27 member states, with the option to register a branch in any country using a standard form
• Open to all companies – originally intended only for innovative start-ups and scale-ups, but under the current draft without any size or revenue threshold
• Registered office and head office must be located in the EU; tax, insolvency and labour law remain, in principle, governed nationally
• “Once-only” procedure: registration data is automatically transmitted to the tax, transparency (UBO) and social-security authorities

The supporters and their arguments

Behind the EU Inc. stands a broad alliance of the founder scene, venture capital and business associations. The driving forces of the original EU-INC citizens’ initiative are the Austrians Andreas Klinger (Prototype Capital) and Susanne Knoll, who organised a Europe-wide grassroots movement of thousands of entrepreneurs and investors. In Austria, an open letter to Justice Minister Anna Sporrer is piling on the pressure – signed, among others, by AustrianStartups CEO Hannah Wundsam, Speedinvest founder Oliver Holle, refurbed co-founder Kilian Kaminski, TTTech CEO Georg Kopetz, business angel Johann “Hansi” Hansmann and Senat der Wirtschaft chairman Hans Harrer. There is political tailwind, too: German Chancellor Friedrich Merz (CDU) ties the initiative to his deregulation agenda and wants to push it through by the end of the year.

Their central arguments:

• Competitiveness: Europe is falling behind in the global competition for talent, capital and innovative companies. The 2024 Draghi report showed that without more productivity and innovative strength, things will get tight. Almost all of the new global players of the past 20 years have come from the US.
• A real single market instead of a patchwork: The more than 60 national company forms were not built for a functioning single market. The EU Inc. would create a single point of entry for the first time.
• Free choice of seat as the foundation: The free choice of the registration seat is “not a loophole, but the foundation of a functioning European standard” (Hannah Wundsam). If it is watered down, 27 national variants under a common name would effectively emerge.
• Keeping companies in Europe: Without the EU Inc., holding structures outside the EU – such as the “Delaware Inc.” – would remain the obvious option for scaling startups. According to the Austrian Startup Monitor 2025, Austrian startups generate around 42 percent of their revenue abroad.
• Open to all: Restricting innovation to startups and scaleups would leave the definition of growth to politics rather than the market. Founders should decide for themselves which legal form suits them.
• The money-laundering argument reversed: A central digital register with strong KYC/AML and UBO enforcement would make prevention more efficient than today’s fragmented national systems.
• Labour law remains untouched: Wages, collective agreements and social security follow the place of work, not the registered seat – this already applies to foreign companies today and does not change with the EU Inc.
• “Do it right or don’t do it at all”: Initiator Andreas Klinger rejects implementation as a directive (rather than a regulation), because each country would then transpose it separately – and the common standard would be lost.

The opponents and their arguments

The sharpest criticism comes from unions and worker representatives: the German Trade Union Confederation (DGB), the service-sector union ver.di, the Austrian Chamber of Labour (AK) and the union-affiliated Hans Böckler Foundation. At the political level, SPD MEP René Repasi had introduced a counter-proposal early on. The accusations range from “half-baked” and “social dumping” to “gateway for money laundering”.

Their central arguments:

• Hollowing out co-determination: Because the registered seat and operational activity can be separated, a company could deliberately register in a member state with weak co-determination while operating elsewhere – thereby circumventing employee co-determination on the supervisory board.
• The SE as a cautionary tale: The already existing European company (Societas Europaea) has developed into a central instrument for avoiding co-determination. According to the Hans Böckler Foundation (I.M.U. institute), around 400 companies with some 2.4 million employees already circumvent co-determination today via the SE or foreign legal forms such as the Dutch B.V. or the Irish Ltd.
• Existing co-determination not protected: Even an already parity-based supervisory board structure would not be protected, as things stand, if a company converts into an EU Inc.
• Race to the bottom: The EU Inc. would be established in parallel to the national legal forms and would thus stand in direct competition with them – which could trigger a race to the bottom on labour and social standards.
• Harder to monitor: The heavily simplified incorporation (“once-only”) and the absence of mandatory data on employee numbers when registering branches could make oversight by labour-inspection, tax and social-security authorities more difficult.
• Money-laundering risk: The fully digital incorporation without personal identity verification or notarial control, together with the absence of any minimum capital, would be a gateway for abuse and endanger sound business dealings (AK Vienna).
• The wrong answer to the real problem: The Draghi figures show that young companies have, above all, a financing problem. More targeted measures would be direct equity stakes by development banks such as the EIB or KfW in later growth phases – not a new legal form.
• The GmbH as the benchmark: The AK demands that an EU Inc. founded in Austria be subject to the same co-determination, transparency and governance obligations as a GmbH (supervisory board from 300 or 500 employees respectively).

What happens next

The draft regulation is in the ordinary legislative procedure; a qualified majority of Council and Parliament would suffice. It becomes delicate on the question of whether member states will accept tax-related content, for which unanimity applies at EU level. Another central point of contention is the legal nature: supporters insist on a regulation that applies identically in all countries; a parliamentary counter-proposal favoured a directive that each country would have to transpose nationally.

If the targeted agreement is reached by the end of 2026, the regulation could enter into force 20 days after publication in the Official Journal and become applicable around twelve months later – meaning the first EU Inc. could be founded at the earliest in late 2027 or 2028.

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