‘Barriers inside Europe hurt us more than tariffs from the outside.’ Not the words of a business leader or op-ed writer with an axe to grind, but the president of the European Commission Ursula von der Leyen and an admission that the Single Market has fallen short in some aspects of its mission to date.
Speaking in March, Von der Leyen went on to offer a frank assessment of the challenges entrepreneurs face in growing their businesses on an EU-wide basis. Those looking to scale up in the trading bloc ‘instead of one market, face 27 legal systems and more than 60 national company forms,’ she said. Tony Connelly, RTÉ Europe editor, reported broad recognition in the upper echelons of the EU that this ‘uncertainty and complexity’ means ‘European start-ups tend to relocate to the US in order to scale up and attract funding’.
A new regime
The reflections were also preamble to a pending solution: EU Inc. Billed as a single set of corporate rules that companies can choose instead of navigating the paperwork of the 27 member states, EU Inc offers an effective ‘28th regime’ – an EU-wide legal framework that companies can adhere to.
‘EU Inc would allow high-potential, high-growth companies to scale faster’
EU Inc in addition promises to be a fully digitised process that will allow a company to be created within 48 hours from any member state. (See boxout.) While explicitly geared towards innovative start-ups, the proposals currently allow any company to transfer to the framework.
If welcome on its own terms, EU Inc also demonstrates the growing traction of ‘One Europe, One Market’ – a shared initiative of the European Commission, the European Parliament and the Council of the European Union designed to promote greater economic dynamism within the EU.
Benefits of EU Inc
Streamlined incorporation. A new (optional) type of company benefiting from 48-hour incorporation, fees under €100 and no minimum share capital
Simplified crossborder operations. Single set of EU-wide rules, giving effective access to the single market and eliminating the need to navigate 27 national frameworks
Reduced administrative burden. A ‘once-only’ principle for submitting corporate information, a central register and an extension of the ‘once-only’ principle to other authorities, so no need to resubmit information to receive tax and VAT numbers
Digital-by-default approach. Online meetings and European Business Wallet compatibility
Investment and talent advantages. Simplified share transfers, flexible share classes, stock exchange access and employee stock options
Easier exit and restart. Simplified insolvency and digital wind-down procedures
Source: McCann FitzGerald
Eurostat data provides a stark backdrop to these actions, putting average annual GDP growth in the EU at 1.2% over the 19 years to 2025 and just 1.1% in the eurozone. It’s a different story in Ireland, where Trading Economics says annual GDP growth has averaged 5.8% over the years 1996 to 2026.
The proposals are championed by Michael McGrath, former Irish minister for finance and now European commissioner for democracy, justice, the rule of law, and consumer protection, who described them as a ‘now or never moment for the European Union. If we are serious about addressing the scale of challenge that we face, then we must deliver on this proposal.’
Real cost savings
For EU Inc to become a reality, the support of the parliament and the council is required, and the commission is calling for agreement from both by the end of the year. In McCann FitzGerald’s upbeat assessment, EU Inc is ‘a gamechanger’ in terms of streamlining complexity that ‘would allow high-potential, high-growth companies to scale faster and with significantly reduced administrative burdens across the EU’.
‘EU Inc risks creating a back door for companies to sidestep labour protections’
Financial journalist Jakob Steinschaden points to savings of ‘between €328m and €440m over a period of 10 years, spread across the approximately 308,000 EU Inc companies that are anticipated’. The impact on investment transactions is particularly noteworthy, he says. ‘For a growth-stage share transfer worth €500,000, savings of €1,780 to €2,850 are estimated.’
However, the commission acknowledges that this reduced administrative burden may result in income loss for notaries and intermediaries in particular, although they will also benefit from ‘a harmonised corporate law framework that creates greater legal certainty’.
Employment and insolvency concerns
The commission says the new approach will not facilitate a watering down of employer responsibilities and that an EU Inc company ‘would remain subject to the national employment, tax, health and safety, equality and social protection laws in the EU member state in which its work is habitually performed’.
However, Dublin Labour MEP Aodhán Ó Ríordáin has voiced concern that EU Inc ‘risks creating a back door for companies to sidestep labour protections unless strong social safeguards are built into the proposal’. This ‘matters particularly in Ireland’, he says, as it ‘has some of the weakest labour protections in Europe’.
‘The regime may channel viable but insolvent start-ups towards liquidation’
A simplified insolvency procedure, without the need for practitioners or lawyers, also forms part of the proposal. Wolf-Georg Ringe, professor of law and finance at University of Hamburg, sees this as no small afterthought. ‘The European Union’s efforts to harmonise national insolvency laws have long been seen as a key step towards the completion of the Internal Market and, in particular, its Capital Markets Union project,’ he wrote in May.
Writing in the European Corporate Governance Institute’s blog, Irit Mevorach, professor of international commercial law at the University of Warwick, voiced a note of caution, saying that while ‘it is sensible to enable and incentivise a quick and simplified exit…a key risk is that the EU Inc 28th regime may channel viable but insolvent start-ups towards liquidation’. She argued that a ‘procedure combining both liquidation and restructuring’ would be preferable.
A new mindset
EU Inc undoubtedly reflects a changed mindset within the European Commission, and the soundings to date show a sense of urgency not routinely seen in the corridors of Brussels. The ‘secret sauce’ that allows the EU to compete head-to-head with the US as a hub of tech innovation may not yet be fully formulated, but EU Inc looks well positioned as a key ingredient.
More information
Read AB’s article about the mixed reaction to the EU’s plans from member states
