What is the 28th regime, or EU Inc? The European company explained

The 28th regime is one of those Brussels phrases that sounds technical and means something simple. The EU has 27 member states and 27 company laws. A founder in Valencia who wants to hire in Lisbon, raise money from a fund in Amsterdam and give stock options to engineers in Kraków has to deal with several of them. The 28th regime would be one more set of rules, valid in the whole Union and optional: a company could choose it and then work everywhere under the same corporate law, while every national company form carries on as before.

Where the idea comes from

Enrico Letta put it on the agenda in April 2024. His report on the single market, which we explain in the Letta report explained, proposed a European code of business law that would give companies a 28th regime to operate in the single market, which he called a game changer for SMEs. Mario Draghi's competitiveness report of September 2024 asked for an EU-wide statute for innovative start-ups. That October a group of European founders and investors launched a petition called EU Inc., which gathered about 11,000 signatures in under two weeks and asked for a regulation, directly applicable everywhere, and a one-euro company.

The Commission adopted the idea in its Competitiveness Compass of January 2025, promising a 28th regime that would simplify rules including relevant aspects of corporate, insolvency, labour and tax law, and repeated it in its start-up and scale-up strategy of May 2025. On 20 January 2026 the European Parliament backed it by 492 votes to 144 in a resolution drafted by the German Social Democrat René Repasi, asking for one euro of capital, set-up within 48 hours, optional employee share schemes and a regulation as the legal instrument, without prejudice to labour law.

Europe has tried this before. The European company, the Societas Europaea, has existed since 2004 but needs at least €120,000 of subscribed capital, and the Commission itself says its capital floor and formation rules make it unsuitable for start-ups. A lighter European private company was proposed in 2008 and withdrawn in 2014.

What the Commission proposed

The proposal came on 18 March 2026, as a regulation under the single market article of the treaty, with the name EU Inc. Its main features are these.

Formation goes through an EU central interface linked to the business registers. If the founders use the harmonised form and the EU template articles, member states must complete their checks and register the company within 48 hours, at a cost of no more than €100. There is no minimum capital; to protect creditors, any reduction of capital has to pass a balance-sheet test and a solvency test. Any company can use the form, new or existing, through formation, conversion, merger or division, and it gets a European unique identifier.

For growing firms, the most valuable piece may be the EU employee stock option plan. Under the proposal, income from these options is taxed only when the employee sells the shares, and not when the options are granted, vest or are exercised. Start-ups that qualify as innovative get a simplified digital winding-up procedure.

What the proposal leaves out is as important. The Commission says the provisions touching tax and employee participation are not meant to harmonise those fields. Board-level employee participation follows the rules of the member state where the company has its registered office. So, despite the promise of the Compass, labour and most tax law stay national.

Where it stands, and the arguments

The Council adopted its negotiating position on 23 October 2026 under the Irish presidency. According to the law firm Freshfields, it removed the insolvency chapter entirely, leaving winding-up to national law, and Euronews reports that it moved away from the central registry towards national arrangements. In Parliament, the legal affairs committee has not voted on its report. Repasi had proposed that, if negotiations between management and employees fail, the highest level of participation among the countries involved should apply; that idea was dropped, and the vote has been postponed more than once. EU leaders had asked for adoption by the end of 2026, and trilogue negotiations have not begun.

The objections come from two directions. At a European Economic and Social Committee event in April 2026, union representatives warned that participation rights would follow the registered seat, and not the place where management decisions are taken, opening the door to letterbox companies and to choosing the weakest rules. Germany's Federal Chamber of Notaries has questioned the legal basis and warned that light identity checks invite shell companies and money laundering. On the other side, founders and investors warned in September 2026 that if the central registry and the tax treatment of options are weakened, the law could become unusable.

Our reading

For Spain, EU Inc. is a mirror. As we showed in starting a business without the obstacle course, Spanish law already promises a company in hours for about €100 in fees, and 29% of new limited companies still wait more than ten days.

Our position takes from the left the demand that worker participation and tax obligations hold wherever a company is registered, with serious checks against shell companies, written into the articles of the law. It takes from the liberal market tradition the core of the Commission's design: one optional company form, 48 hours, no minimum capital and options taxed at sale, because firms that can hire and share ownership across 27 countries grow faster. The idea that fits neither side is to make the protection and the speed come from the same tool. The EU digital identity wallet, which member states must offer under the 2024 eIDAS regulation, can verify founders remotely against their national identity, so a 48-hour deadline and a real identity check stop competing with each other. And EU Inc. should be treated as a benchmark: if Spanish founders start choosing the European form over the SL, Spain will know exactly which parts of its own company law to fix.