Is EU Inc in trouble? European innovators warn landmark startup reform is being stripped of its purpose

“Dear Europe, why are you killing EU Inc?” That’s how many in the European startup community were greeted when they read this morning’s brief by the highly supported EU–INC initiative.

Backed by some of Europe’s most prominent startup founders and investors, the initiative has issued an urgent warning that the European Union’s proposed ‘EU Inc’ pan-European company framework is losing the very provisions that made it attractive to entrepreneurs.

In a public statement released on 15 October 2026, the campaign accused European policymakers of weakening the proposal through months of negotiations, reducing an ambitious effort to little more than a fast-track company registration system.

Since launch, the EU-INC campaign has since attracted more than 26,000 supporters from across 27 countries, including founders associated with Stripe, Mistral AI, Klarna and Wise, alongside investors from Atomico, Index Ventures and Seedcamp. Its central ambition has been to establish a common European company structure that would help startups access international investment, recruit talent and expand across borders without navigating fragmented national corporate systems.

In its latest statement, addressed directly to Europe’s Heads of State and Government, EU–INC declared: “The EU Inc you championed – one that will enable Europe to compete at scale – no longer exists. Months of negotiations have removed the core of the proposal. As it stands, it will do nothing to improve Europe’s competitiveness.”

The initiative has not been formally cancelled, and negotiations remain ongoing. However, campaigners argue that the emerging compromises threaten to undermine its original purpose.

From European dream to compromise

Known as the 28th regime, EU Inc was introduced by the European Commission on 18 March 2026 as an optional corporate framework operating alongside the 27 existing national systems.

The Commission’s original proposal would allow entrepreneurs to establish a company digitally within 48 hours for no more than €100, without minimum share capital requirements. It also envisaged simplified share transfers, digital insolvency procedures, access to modern financing instruments and a common employee stock option scheme with deferred taxation.

One of its central elements was freedom to choose the EU country in which a business incorporates, regardless of where its employees and operations are based. This would allow companies and investors to converge around familiar legal jurisdictions and standardised investment documentation, similar to the role Delaware plays in the United States.

The EU–INC campaign argues that restrictions on this freedom would prevent a recognised European corporate standard from emerging.

Stock options on the chopping block

Another major disagreement concerns employee stock options, which startups frequently use to attract skilled workers when they cannot match the salaries offered by larger companies.

The Commission originally proposed a harmonised framework under which taxation would be deferred until employees sold their shares, avoiding situations where workers face tax liabilities before receiving any proceeds.

However, the Irish presidency of the Council of the EU introduced restrictions in its July compromise text, limiting the proposed stock option scheme to companies with fewer than 1,000 employees and turnover below €450 million. Subsequent negotiations have raised further questions about whether the provisions will survive at all.

According to Agence Europe, discussions among EU ambassadors on 30 September failed to resolve disagreements over stock option taxation.

Stéphane Séjourné, European Commissioner responsible for Prosperity and Industrial Strategy, had already warned against weakening the framework during a meeting of industry ministers in Brussels on 24 September.

Séjourné said: “I cannot see the 28th regime and the Commission’s proposal without stock option harmonisation.”

The proposed central digital company register has also become a point of contention. The Commission initially envisaged an EU-level registration interface followed by a central register, designed to make company information accessible across Member States and simplify procedures such as opening bank accounts, verifying ownership and conducting compliance checks.

Yet the first Council compromise text removed plans for the central register, prompting criticism from campaigners who consider a shared digital infrastructure essential to establishing trust in the new corporate framework.

Workers’ rights enter the fray

Beyond these disagreements, EU Inc has encountered opposition from European trade unions concerned about its potential impact on workers’ rights.

On 24 September, hundreds of trade union activists demonstrated in Brussels, arguing that the proposed framework could enable companies to register in countries with less demanding corporate rules while operating elsewhere.

The European Trade Union Confederation (ETUC) has warned of potential risks to collective bargaining, employee representation and national labour protections.

The Commission maintains that EU Inc. would not override national employment and social legislation. EU–INC emphasised that workers would remain protected by the labour laws of the countries where they work, while companies and employees would continue to pay taxes according to applicable national rules.

Taxation represents another unresolved dimension. In July 2026, the European Parliament adopted recommendations for an optional tax regime accompanying EU Inc, including a single EU VAT number, centralised VAT declarations and refunds, and simplified corporate tax procedures.

This leaves open questions about how much administrative friction EU Inc would actually remove for businesses operating across multiple European markets.

A make-or-break moment for Europe

The dispute comes at a sensitive moment for European competitiveness. The EU has repeatedly identified fragmented regulation, limited access to growth capital and difficulties retaining entrepreneurial talent as barriers to building globally competitive technology companies.

With EU institutions targeting a political agreement before the end of 2026, the coming negotiations will determine how much of the Commission’s original proposal survives.

EU–INC is now appealing directly to Europe’s national leaders to intervene, reverse objections to its central provisions and restore what it considers the minimum requirements for a functioning European startup standard.

“If Europe’s leaders cannot even align on a solution like EU Inc, Europe’s founders will lose more than a proposal. They will lose faith in Europe’s ability to face the challenges of our time. Europe’s founders will have a future. Whether that future is European is in your hands.”