Brussels pitches EU-wide corporate form in bid to out-Delaware Delaware

BRUSSELS (CN) — Europe has a startup problem, and Brussels thinks it has a fix.

The European Commission — the EU’s executive arm — on Wednesday unveiled a proposal to let companies incorporate under a single set of EU-wide rules, in a bid to make it easier to build a business in Europe — and harder to justify leaving for the U.S., Singapore, or anywhere else.

The new corporate legal form is called “EU Inc.”

Under the proposal, anyone could register an EU Inc. company in 48 hours, for a maximum of 100 euros ($108) — with no minimum share capital required. Everything digital, from incorporation through shareholder meetings and share transfers. Submit your information once; tax ID and VAT numbers come automatically.

Brussels wants to build something like Delaware: one recognizable corporate brand, the same rules everywhere, that investors and founders across the continent would learn to trust and transact with without hiring a lawyer in every country where they operate. Just as a startup can incorporate in Delaware while operating out of a garage in Austin, an EU Inc. company could register in Estonia while doing business in Paris.

But the analogy only goes so far. Delaware’s appeal isn’t just standardized paperwork — it’s the Court of Chancery, a specialized tribunal with decades of corporate case law that gives investors fast, predictable dispute resolution.

Without an equivalent, EU Inc. is offering the brand without the infrastructure that makes the brand trustworthy. The commission is nudging countries to set up specialized domestic courts, but can’t require it.

The Court of Justice of the European Union would backstop consistent interpretation — but it’s a last resort, not a fast-track commercial tribunal.

“If investors still face different outcomes depending on where a case is heard, the promise of a single European regime risks remaining more theoretical than real,” Vasco Pereira da Silva, head of policy at advocacy group Allied for Startups, told Courthouse News.

Even the name caused a row. Parliament’s lead lawmaker on the file, German Social Democrat René Repasi, objected in January that “Inc.” — a U.S. abbreviation with no equivalent in European law — sent “the wrong signal” amid trans-Atlantic tensions.

Europe’s startup deficit

The EU has 27 national legal systems and more than 60 separate company legal forms. Expanding across borders can take weeks or months and cost a small fortune in paperwork and notary fees.

The backdrop is a competitiveness alarm sounded by former European Central Bank President Mario Draghi, whose landmark 2024 report warned that Europe was falling dangerously behind the U.S. and China in innovation and venture capital.

Despite producing a fifth of the world’s scientific publications, the EU counted just 331 unicorns — startups valued above $1 billion — as of last year, compared with 1,963 in the United States, according to data from Dealroom.

“Barriers inside Europe hurt us more than tariffs from the outside,” Commission President Ursula von der Leyen said Wednesday. Her goal: “One Europe — one market — by 2028.”

The framework would let companies use SAFEs — Simple Agreements for Future Equity, the standardized investment contracts that Silicon Valley investors have long preferred but that remain legally murky in much of Europe.

Employee stock options would only be taxed when the underlying shares are actually sold. For cash-strapped startups trying to compete with Big Tech salaries, that’s not a small thing.

For companies that fail — and most startups do — the proposal creates a fast-track exit. Qualifying innovative startups can wind down with a single trigger — inability to pay debts — no mandatory lawyer or insolvency practitioner required, and a six-month deadline to close proceedings.

The goal is to make failure cheaper so founders can try again faster.

The proposal doesn’t touch labor or tax law. Employment law follows the employee, not the company’s registered address.

Martin Bresson, public affairs director at Invest Europe, the main EU-level VC association, said fragmentation doesn’t stop deals from happening, but adds cost and delay. “Different national legal regimes mean duplicating legal analysis, adapting term sheets, and sometimes restructuring deals to fit local constraints,” he told Courthouse News.

“Innovators look elsewhere to grow and expand. Today, we are delivering a pragmatic revolution,” Executive Vice President Henna Virkkunen told reporters Wednesday. “This is about smart regulation, not deregulation.”

Workers’ rights groups are less convinced.

“Working people were promised their rights would be ‘fully protected’ but those protections are nowhere to be seen in the regulation,” said ETUC General Secretary Esther Lynch. The proposal, she warned, “seems to assume all actors are good. Not only is that dangerously naive, but it would also fail a basic legal exam.”

Owen Reidy, head of the Irish Congress of Trade Unions, accused the commission of taking “a bargain basement approach to workers’ rights.”

IndustriAll Europe, representing manufacturing and industrial workers, warned that fast digital registration makes it harder for labor inspectors to verify “whether a company has real economic activity or is simply a letterbox.” The Societas Europaea — the EU’s last attempt at a pan-European corporate form — “is already being used in some member states to circumvent worker participation rights,” Isabelle Barthès, deputy general secretary, told Courthouse News.

“[Europe needs] to learn from these loopholes,” she said, “instead of creating new ones.”

The commission is calling on the European Parliament and EU member states to finalize the deal by the end of 2026.

Courthouse News correspondent Yuval Molina is based in Brussels, Belgium.