THE NEW EUROPEAN COMPANY (EU INC)

On 18 March 2026, the European Commission presented the proposal for a Regulation COM(2026) 321 final, which establishes the EU Inc. (European Incorporated Company), a new form of limited liability company under European law.

The initiative, which is part of the project of the so-called ’28th corporate regime’, aims to offer entrepreneurs and businesses a  harmonised regulatory framework that is an alternative — and not a substitute — to the national company forms of the 27 Member States.

The proposal follows the Draghi and Letta Reports on European competitiveness (September 2024 and April 2024 respectively), which had both highlighted how the fragmentation of European company law constitutes one of the main obstacles to the cross-border growth of companies, in particular innovative startups and SMEs.

According to the Commission’s data, European companies wishing to expand into the Single Market are now confronted with 27 distinct legal systems and more than 60 national company forms, with costs and times that can delay their incorporation by weeks or months.

Although it is designed mainly for innovative startups and SMEs, the new form is open to companies of any size and sector: during the process, the field of application has been extended to all companies, overcoming the definition — of problematic delimitation — of “innovative” company.

This circular sets out the main elements of the proposal, with a focus on the operational benefits and aspects that are most relevant for European entrepreneurs, as well as the time frames for the entry into force of the new regime.

♦ The Regulatory Framework: Nature and Scope of the Proposal

The choice of the instrument of the Regulation — rather than the Directive — is politically and legally significant: based on Article 114 TFEU (approximation of laws for the functioning of the internal market), the proposal will be directly applicable in all Member States without the need for national transposition, ensuring a uniformity of discipline that a directive could not have ensured. The legal basis chosen also allows for approval by qualified majority in the Council, avoiding unanimity voting.

It should be noted that the European Parliament, in its resolution of 20 January 2026 (rapporteur René Repasi), had expressed preference for the instrument of the maximum harmonisation directive and for the alternative name ‘Societas Europaea Unica’ (S.EU). This difference in approach may be the subject of discussion in the negotiation phase between Parliament, the Council and the Commission (the so-called institutional trilogue), which precedes the final approval of the text. The final agreement could therefore modify some aspects of the current proposal, including the name and, hypothetically, the regulatory instrument itself.

On a systematic level, EU Inc. does not replace national company forms: it joins them as an optional option, offering a harmonized regime governed by the European Regulation, by a statute (customizable or standard) and — where not expressly regulated — by the national law of the State of registration. On this last point, a warning is necessary: the proposal expressly refers to national law for all matters not regulated by the Regulation or the Statute, identifying for each State the national “reference” company form whose rules fill the gaps. It follows that uniformity essentially concerns the corporate envelope, while the legal substratum remains partly national. The name ‘Eu Inc.’ will in any case have to follow the name of the company in all Member States, making it immediately recognisable as a European company form.

♦ The Operational Advantages of Eu Inc.

 Fast, digital, and low-cost establishment

The most innovative aspect of the proposal is the constitutive procedure. Through a European digital interface based on the Business Register Interconnection System (BIS), it will be possible to:

• complete the company registration within 48 hours;
• incur a maximum cost of 100 euros for the entire procedure;
• operate entirely online, without the need for physical presence;
• adopt a standard statute prepared by the Commission or a personalized statute (with slightly longer timeframes, governed by Directive 2017/1132).

The elimination of the minimum capital requirement — a significant discontinuity with respect, for example, to the requirement of €50,000 for the Italian S.p.A. or €10,000 for the ordinary S.r.l. — further lowers the access threshold. At the same time, there is a mechanism for preventive control of legal compliance (of an administrative, judicial or notarial nature depending on the choices of each State) to prevent abuse, fraud and fraudulent constitutions.

Once-only principle and simplification of obligations

Company information will have to be transmitted only once at the time of incorporation (the “once-only” principle) and will be conveyed automatically between the business registers and the competent authorities of the various states. The company will be assigned a European Unique Identifier, intended to serve as a common reference in interactions with public administrations.

It should be noted, however, that the Regulation does not introduce either a ‘European tax number’ or a ‘European VAT number’: taxation and VAT remain a national competence (see below). The unique European identifier simplifies the identification of the institution and interoperability between registers, but does not replace national tax obligations related to the business activity.

At a later stage, the Commission will establish a central EU register as a reference point for the corporate information of EU Inc. incorporated in the Union. This system — intended to integrate with the planned European Business Wallet — should allow companies to concentrate resources on economic activity, reducing the time spent on administrative tasks. It should be noted that, at the stage of the proposal, the ‘central’ register operates as a shared interface on the 27 national registers, which remain distinct.

Digital management throughout the entire life cycle

EU Inc. is conceived as a digital by default company at every stage of its existence. Shareholders’ meetings, decisions of corporate bodies and communications with public authorities take place via digital tools. The shares — with no par value unless otherwise provided for in the bylaws — are dematerialized, recorded in a digital shareholders’ register with incorporation effect, and can be transferred entirely online without mandatory notarial supervision.

In terms of governance, the statutes define the composition of the administrative body (one or more directors, at least one of whom is resident in the Union). There is also significant flexibility in the creation of share classes with differentiated economic or voting rights, which is particularly useful for protecting founders from hostile takeovers or for structuring multi-stage investments. The proposal also expressly enables financial instruments widespread in venture capital, such as SAFEs, convertible notes and warrants.

Simplified closing procedures: two separate tracks

The proposal also intervenes on closure procedures, with the aim of reducing the time that, in continental systems (and in particular in Italy), can last for years, discouraging entrepreneurial risk and the culture of learning from failure (so-called fail fast). However, it is important to distinguish two tracks, which are often confused:

1. Accelerated voluntary liquidation (solvent and debt-free companies). A fully digital and short-term dissolution procedure is envisaged, accessible provided that, on the date of dissolution, the company has ceased economic activity, has no assets or liabilities (i.e. has the consent of creditors) and is not a party to pending proceedings. Based on the available analyses, the procedure can be completed in approximately three months and does not require, as the text stands, the intervention of a notary or auditor.
2. Simplified liquidation procedure for insolvent “innovative startups”. For innovative startups in a state of insolvency only, a simplified winding-up procedure is envisaged, with entirely digital filing, simplified procedure for filing claims, suspension of enforcement actions and realisation of assets through electronic auction systems interconnected at European level.

Point to be clarified — the detailed procedural deadlines — including the possible period of opposition by creditors and the total duration of the two procedures — will be defined by the final text and its implementing measures. The values indicated (in particular the estimate of about three months for the solvent liquidation) are therefore indicative and will be confirmed on the approved version of the Regulation.

Improving access to capital

The proposal removes physical presence formalities for financing operations and simplifies the transfer of shares. In terms of access to markets, multilateral trading facilities and SME Growth Markets are accessible without the need for authorisation from individual Member States, while access to regulated markets remains the discretion of each Member State; In some jurisdictions, with a view to listing, it may be necessary to convert it into a national company form. The Commission also announced complementary measures to facilitate the flow of venture capital, including the revision of the European Risk Capital Funds Regulation (EuVECA).

♦ The European Share Ownership Plan (EU-ESO): Structural Tax Relief

One of the provisions of greatest practical interest to companies geared towards attracting talent is the EU Employee Stock Option Plan, which is governed by Chapter VIII of the proposal (Article 78 et seq.).

Structure and operation

Eu Inc. may issue warrants to be assigned to members of the administrative body or employees of the company or group companies. Warrants are non-transferable. The methods of issuance (beneficiaries, number of shares, vesting period) are resolved by the shareholders’ meeting. The minimum vesting period between the issuance and exercise of the warrants is set at 24 months.

Anyone who holds — or has held in the previous 24 months — shareholdings of more than 25% in terms of voting rights or profit-sharing is excluded from the group of beneficiaries. Some trade associations have already pointed out that these thresholds (the 25% limit and the 24-month look-back) are restrictive for founders of early-stage companies and could be revised during the process.

Tax regime: deferred taxation

The most disruptive element of the EU-ESO is the deferred taxation regime provided for by art. 79. Under that provision, the beneficiary does not constitute taxable income:

• at the time of the assignment of the warrants;
• on the vesting date;
• at the time of exercising the option to subscribe for the shares.

Taxation is deferred at the time of the next sale of the shares. Taxable income is quantified as the difference between the fair market value of the shares at the time of realisation and their purchase cost.

This structure overcomes the problem of the so-called dry income — the obligation to pay taxes on assets that have not yet been monetized — which is one of the main obstacles to the use of equity incentive instruments in European systems, including the Italian one. Article 79 also leaves it to the Member States to determine the classification of income and the rate, but requires that the treatment is not less favourable than that provided for any other share ownership plans already existing in their national legislation; the Commission also encourages states to treat these revenues as capital gains rather than as labour income.

For Italy, the qualification of the differential remains uncertain. On the one hand, if the income were traced back to other income of a financial nature, the substitute tax of 26% would be applied to the sale (Article 5, Legislative Decree 461/1997). On the other hand, the orientation expressed by the Revenue Agency in its answer to ruling no. 258 of 1 October 2025 — on the subject of the qualification of income related to the holding of warrants — appears rather to trace these income back to employment income (fringe benefit pursuant to Article 51 of the TUIR), with progressive IRPEF taxation.

Point to be clarified — the tax qualification in Italy of EU-ESO income (capital gain subject to a substitute tax of 26% or employment income subject to ordinary taxation) is not defined to date and will depend on the approval of the Regulation and any clarifications by the Revenue Agency; the current orientation of the Administration on warrants seems to be going in a different direction from taxation as capital gain. The precise scope of ruling no. 258/2025 must also be verified in the full text of the answer. The paragraph will therefore have to be updated on the final text.

♦ Eu Inc. vs. National Company

The following table summarizes, for disclosure purposes, the main differences between the establishment of a company under national law and the future EU Inc.

♦ Aspects That Remain Governed by National Law

Although the scope of the new regime is broad, the proposal COM(2026) 321 does not intervene in some key areas, which continue to be regulated by national law:

• Labour law and employee protection: national laws on labour relations, safety, collective bargaining and worker participation (co-determination) continue to apply to EU Inc. as well as to any other national company.
• Taxation: The taxation of corporate income and distributions remains the responsibility of the Member States. Tax harmonisation is deferred to other ongoing initiatives — Head Office Tax (HOT) and Business in Europe: Framework for Income Taxation (BEFIT) — which proceed on separate tracks from the EU Inc. proposal.
• VAT and social security contributions: the national laws of the country of registration of EU Inc. apply.

In addition, as already mentioned, there is the general reference to national law for matters not governed by the Regulation or the Statute. This limitation is one of the most relevant critical aspects of the proposal: as observed by several parties, a company active in several countries will continue to have to manage different tax systems, national collective agreements and non-homogeneous contribution regimes, with an impact on compliance costs that could reduce, at least in part, the benefits of corporate simplification.

♦ When Will It Be Possible to Set Up the First EU Inc.

At present, EU Inc. is a proposal for a Regulation: the text was presented by the Commission on 18 March 2026 and received the political support of the European Council on 19-20 March 2026, but it is not yet in force, nor are the European Digital Interface and its registration procedures operational.

The legislative process involves the following phases:

• Scrutiny and negotiation: The proposal is being examined by the European Parliament (JURI Committee) and the Council, in accordance with the ordinary legislative procedure. The Commission has invited the two institutions to reach an agreement by the end of 2026.
• Institutional trilogue: a forum where any adjustments to the Commission’s text can be defined, including the possible change of the name and, hypothetically, of the regulatory instrument (regulation vs. directive).
• Final approval and publication in the Official Journal of the EU: plausibly in the course of 2027, if the roadmap is met.
• Deferred application: the proposal provides that the Regulation will apply only from the last day of the twelfth month following its entry into force. In addition, there is the need to adopt implementing acts (including standard statutes and forms) and to complete the digital infrastructure (BRIS-based interface and connections with national registers and authorities).

It follows that, even in the event of a political agreement by 2026 and adoption in 2027, the first EU Inc. can realistically be established no earlier than 2028. Operators’ analyses converge on this horizon, in line with the Commission’s objective of completing the ‘One Europe, One Market’ design by 2028. Compared to the first disclosure communications, which indicated 2027, this is a more conservative estimate, consistent with the mechanism of deferred application of the Regulation.

♦ Operational Considerations and Recommendations

Although it is a regime that is not yet in force, the EU Inc. proposal has characteristics that merit an advance analysis for companies that:

• operate or intend to operate in more than one Member State of the European Union;
• they are startups or scale-ups with employee share ownership structures (stock options, incentive plans);
• plan cross-border capital raising operations or access to European venture capital funds;
• intend to evaluate, once the Regulation has been approved, the conversion of existing corporate structures into this new vehicle.

It is particularly important:

• Monitoring the evolution of the legislative process: The political agreement expected by 2026 and the subsequent trilogue could bring significant changes to the current text, including the EU-ESO tax regime and the name.
• Evaluate prospective corporate planning: for companies planning European expansions, EU Inc. could offer a structurally more efficient alternative to the establishment of subsidiaries in each individual member state, without prejudice to the horizon of operation (2028) and the need to wait for more certainty on the final text before any reorganization decision.
• Update staff incentive plans: the EU-ESO legislation, if confirmed, may significantly change the comparative convenience of stock option plans for innovative Italian companies, subject to internal tax qualification (see above).

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Do not hesitate to contact us for any further information or to receive support in implementing the new provisions.

Sincerely,

Aldo Filippini

This newsletter is the result of a collaboration between artificial intelligence and human expertise, with revision and editorial care by Aldo Filippini.