The 28th Regime and Its 27 Back Rooms
In 2024, after the Letta and Draghi reports, the European Union began to acknowledge the scale of its economic problem and to look for remedies. Letta proposed a European Code of Business Law and a Simplified European Company. Draghi was more precise: an Innovative European Company that would unify company law, insolvency and, in key respects, labour and tax law, so as to ease the regulatory burdens that weigh on European firms, especially those trying to innovate and grow.
The Commission responded, at least in appearance. At Davos in 2025, Ursula von der Leyen turned that ambition into a political promise: a 28th regime that would integrate company law, insolvency, labour and taxation in a single European framework. At Davos in 2026, she rebranded that promise as EU Inc. and rhetorically linked it to Delaware, the corporate-law benchmark for firms with continental ambitions.
The regulation proposed on March 18th shows what remains of those promises: a framework for operating firms has become an instrument for incorporating them and arranging their internal affairs.
The Commission itself presents EU Inc. as the first step in a broader strategy, not its culmination. It promises incorporation in 48 hours for under €100, no minimum capital, digital procedures and a European interface connected to national registers.
But Europe’s problem is not incorporation. It is operation.
Fifteen years ago, ready-made shelf companies could already be bought, turnkey, for modest sums: £144 in Britain, €1,032 in Spain, €1,180 in France and €1,500 in Germany. If incorporation were the true bottleneck, such vehicles would command a far larger premium. They do not. Markets had largely solved that problem long before Brussels rediscovered it.
What remains intact is what matters: 27 labour regimes, tax systems, licensing frameworks and consumer-law regimes. The burden lies not only in their multiplication by 27 for any firm seeking to grow across borders, but also in their substance. Many EU-wide minima are already restrictive; many national rules are more restrictive still. Although the text removes some peripheral frictions, the Commission also makes clear that it fully preserves workers’ rights, leaves labour law and the company’s general tax treatment untouched, and merely improves the tax treatment of stock options.
Brussels promised a 28th regime for operating firms. It has delivered a new corporate form that slightly simplifies incorporation and liberalises the company’s internal life. At best, an EU Inc. will find it easier to register and to organise its internal relationships. After that, it will still hire and fire, pay social contributions, pay taxes, obtain licences, litigate and sell under distinct and often onerous national regimes.
Even in incorporation, the reform is less ambitious than it looks. It does not create a truly European register. It merely adds an interface to BRIS, the system that already links national business registers. The application goes to the national register, the decision to register is taken there, and ex-ante control remains in the hands of each member state, whether administrative, judicial or notarial. Even when European templates are used, the proposal does not replace national infrastructure; it merely wraps it in a digital gateway. Rather than simplify, it adds another layer of bureaucracy. The genuinely new elements are postponed to a later round of reforms: a central European register, specialised courts, cross-border telework, access to capital and other complementary measures.
To be fair, EU Inc. is not merely a digital channel for incorporating companies. It also contains a quiet corporate-law reform, and this may be its strongest feature: it abolishes minimum capital, partly decouples shares from capital, liberalises capital increases, treasury shares, dividends and certain pre-emption rights, and creates a common stock-option scheme whose tax point—within that scheme alone—is deferred until the shares are sold. On those points, it offers a more rational regime than much of existing European company law.
That only sharpens the criticism. When Brussels is willing to reform seriously, it does so only inside the corporate shell. Europe’s real bottleneck remains outside it: in labour, general taxation, licensing, consumer law and cross-border growth, hampered less by fragmentation than by the mandatory nature of the rules themselves.
The impact assessment itself lowers expectations. It does not foresee systemic effects on capital markets and estimates savings of €328m to €440m over ten years for some 308,000 firms—less than €150 a year per company. That projection looks more like wishful thinking than a plausible forecast. The comparison with the European Company counsels caution, though not because the two regimes are identical: the latter was designed for large public companies, required €120,000 of capital and was no vehicle for creating startups from scratch. The more useful lesson is different. A European label, added as an option, changes little if the main costs of operating and growing still rest on national regimes.
Another needless concession is the privilege reserved for “innovative” firms. Not even the public consultation called for it: 83% of those who would choose EU Inc. preferred a framework open to any private limited company. For good reason. There is no case for privileging such firms except on the basis of externalities the Commission does not demonstrate. And even if such externalities existed, the public bureaucracy would have no idea how to identify them. The first Zara—which was making dressing gowns in 1963 and opened its first shop in 1975—would never have passed any administrative test of “innovation”.
The most serious objection to this initiative came from the unions. Not without reason: a genuine 28th regime touching labour and taxation would have introduced regulatory competition in areas with strong distributive effects. The conflict was real. Brussels has chosen not to resolve it, but to avoid it. The impact assessment itself acknowledges that, for political or legal reasons, it excluded precisely the elements that would have made the regime a genuine alternative to national frameworks. To avoid paying that political cost, the Commission has emptied the project until it is harmless for politics and inadequate for business. What looked ambitious a year ago now disappoints by its triviality.
The episode reveals the limits of the European method. When serious reform would require confronting powerful national systems, Brussels adds a new company form that stops short of what matters. It could have opened national regimes to competition, including in labour and taxation. Or it could have created a European framework under which firms might operate with less mandatory rules than those governing them where they actually do business. It did neither. EU Inc. does not create a 28th regime. It adds a 28th label to 27 back rooms.
English version prepared with ChatGPT GPT-5.4