When 27 Rulebooks Become the Competitiveness Problem
Prefer the short version first? We made a video explainer that walks through the core idea behind the 28th regime, what EU Inc. could change in practice, where the national systems still reappear, and why we think Europe may be edging toward something like institutional interoperability. You can watch that first, then come back here for the deeper analysis, the failed precedents, the competitiveness argument and the parts of the architecture that are still unresolved.
Europe has twenty-seven Member States, which is already enough to make most institutional diagrams look busy. Yet one of the more interesting ideas moving through the EU’s competitiveness agenda at the moment is something called a “28th regime.”
There is no new country involved. No territory is waiting to be admitted, nobody needs another seat at the Council table, and the graphic designers of Brussels can leave the circle of stars alone. The twenty-eighth is something stranger: a European legal framework that would sit alongside national systems and could be chosen by companies that want to operate through it.
Enrico Letta captured the idea unusually well when he described it as a kind of “virtual 28th state” that businesses could choose for smoother operation at European level. The national systems would remain exactly where they are. The European layer would exist because they remain different.
That distinction is what makes the idea worth paying attention to. For most of its history, European integration has dealt with national differences by trying, in one way or another, to make them less consequential. Rules are harmonised. Standards are agreed. Decisions made in one Member State are recognised in another. Administrations slowly learn to trust one another’s paperwork, while courts occasionally spend several decades explaining what everybody meant.
The 28th-regime idea raises a slightly different possibility. Perhaps Europe does not always have to make twenty-seven systems converge before companies can experience something genuinely European. In some areas, it might instead leave those systems underneath and build a common layer across them.
That sounds like a technical distinction. It may turn out to be a rather important one, because the competitiveness problem Europe is trying to solve is not simply that its companies take too long to register or fill in too many forms. The harder problem begins later, when a successful company tries to become a large European company and discovers that the market around it has integrated much faster than many of the systems through which it has to grow.
Europe does not have as much of a start-up problem as a scale-up problem
The appealingly simple version of the European competitiveness story is that Americans start companies and Europeans regulate them. Reality, unfortunately, has once again failed to respect the slogan.
Recent ECB analysis finds that annual firm-birth rates in Europe and the United States are broadly comparable, at around 10%. The divergence appears later. Europe creates businesses, but fewer grow into the large, research-intensive firms that disproportionately contribute to productivity and wages. Firms employing fewer than ten workers account for just over 20% of EU employment, around twice the US share, while large European enterprises generate roughly twice as much value added per worker as micro-enterprises. In a counterfactual exercise, ECB researchers estimate that differences in firm-size composition could account for around one-third of the aggregate EU-US labour-productivity gap.
That changes the way the 28th regime should be understood. If Europe’s central problem were simply that forming a company takes too long, a better registration portal would be useful and profoundly uninteresting. The more difficult question is what happens after a company survives its first years and begins requiring the institutional machinery of scale: repeated funding rounds, increasingly complicated shareholder structures, employee equity, investors from several jurisdictions, cross-border restructuring and, eventually, either a successful exit or an unsuccessful one.
This is also the stage at which Europe’s financing problem becomes harder to ignore. The ECB reports that non-EU lead investors account for more than half of aggregate venture-capital deal value involving European firms, with US investors especially important at later stages. It also points to evidence of innovative European companies moving headquarters, intellectual property or selected functions abroad as they mature, often towards the United States,
Company law plainly does not explain all of this. Europe’s scale problem also involves capital-market depth, innovation financing, taxation, energy costs, labour markets, procurement, the supply of late-stage investors and the relative attractiveness of public markets. Any article suggesting that a new corporate form will repair European competitiveness by itself should probably be placed gently beside the articles explaining how blockchain was going to repair democracy.
Company law nevertheless matters because fragmentation becomes more expensive as the company becomes more complicated. A young business may survive perfectly well inside one domestic legal form. A firm preparing its fourth investment round, issuing different classes of shares, distributing employee equity and bringing in investors from several jurisdictions begins to care much more about whether its corporate architecture travels.
Europe’s problem, then, is not simply that companies encounter rules. It is that a firm trying to become European can repeatedly find itself becoming national again.
The 28th regime tries to change the route rather than every road
There are several familiar ways the EU can respond when national systems interfere with the functioning of a common market.
The most obvious is harmonisation. Governments agree that particular rules should converge, Parliament and Council legislate, and the Member States adjust their systems accordingly. This has built enormous parts of the Single Market, but it becomes progressively harder when the subject reaches taxation, insolvency, labour relations, company governance or other areas embedded deeply in national legal and political traditions.
Mutual recognition offers another route. The systems remain different, but something lawfully created, certified or recognised in one Member State can be accepted elsewhere. This works particularly well where Member States trust the underlying standards and where the recognised object can travel without bringing an entire national legal environment with it.
The 28th regime introduces another architecture. Instead of rewriting the twenty-seven systems, Europe creates an additional European framework into which users can opt. The national systems remain available, but companies that see an advantage in the European route can choose it. That is the core definition used in the 2025 CEPS/Ecorys study commissioned by the European Economic and Social Committee, which describes a 28th regime as an optional EU-level framework coexisting with, rather than replacing, national law.
The technique is not new, although the examples are not all legally identical and are better understood as 28th-regime-like experiments rather than members of one tidy family. The European Company, PEPP, UCITS, the Unitary Patent, the proposed European Private Company and the Common European Sales Law all offer different lessons about what happens when Europe creates a common legal layer around persistent national difference. Some succeeded spectacularly. Some survived but remained niche. Some acquired the institutional status of a very expensive conversation.
What has changed is the prominence now given to the method. The 28th regime moved into the centre of the EU competitiveness agenda, and in March 2026 the Commission gave the corporate part of that idea a concrete form.
It called it EU Inc.
Then the abstract twenty-eighth acquired a company
On 18 March 2026, the European Commission proposed a regulation creating EU Inc., a new optional limited-liability company form governed by a directly applicable European framework. It remains a legislative proposal under negotiation, not an existing company form.
The headline proposition is deliberately attractive, but the legal text is more precise than the publicity around it. Founders using the harmonised EU templates through the central interface would have access to a fast-track formation process that the proposal caps at 48 hours and €100. A company that wants tailor-made articles instead could still use the European interface, but the proposed registration deadline would be five working days rather than 48 hours. The same distinction applies where formation takes place fully online through a national business register.
That is a small legal detail with a useful larger lesson. “A European company in 48 hours for €100” is a perfectly respectable headline. “A European company in 48 hours for €100 if you use the standardised articles, or within five working days if you bring your own corporate constitution” is the sentence a founder’s lawyer would actually need.
The regime would also remove conventional minimum-capital requirements, provide digital corporate procedures and create a once-only information architecture designed to stop companies repeatedly submitting the same verified data to different authorities. Company information provided at formation would be exchanged digitally with the authorities responsible for tax identification numbers, VAT identification, social security and beneficial-ownership records. The proposal goes further than merely promising that founders will not need to type the same address into four portals: for TIN and VAT identification, the company should receive the identifiers through that exchange without submitting a separate application, except where strictly necessary additional VAT information cannot be obtained elsewhere.
This is important because it corrects an easy misunderstanding. EU Inc. doesn’t create a European tax system, European social-security system or one European set of operating licences. Those underlying obligations remain national. What the proposal tries to Europeanise is part of the administrative plumbing between the company and those systems.
The obligation remains.
Some of the paperwork is supposed to stop travelling back to the user.
That difference will become important later.
For now, imagine a founder inside the proposal.
What would actually change for a founder?
Suppose she has built a technology company in Portugal with eight employees. It already sells in several Member States. A Dutch venture fund is considering leading its next round, the company wants to hire an engineer in Germany, senior employees are asking for equity and, if growth continues, the business may eventually have operations spread across several countries.
This is approximately the kind of firm European competitiveness policy spends a great deal of time wishing existed in greater numbers.
Under EU Inc., our founder could begin with a common European corporate form rather than one of the many national limited-liability forms available across the Union. The company would acquire an EU Inc. identity but would still be registered in the business register of the Member State chosen for its registered office. The proposal requires its registered office and either its central administration or principal place of business to be somewhere within the Union; it does not require those locations to be in the same Member State.
That last point looks technical until the rest of the proposal arrives.
At formation, the experience could feel meaningfully European. Standardised documents, digital procedures, one corporate form and information exchanged among authorities rather than repeatedly demanded from the founder would remove real friction. The ECB nevertheless notes that EU Inc. companies would remain subject to national tax, employer, licensing and sector-specific requirements, while registration and enforcement would initially continue to rely on interconnected national company registers. The Commission intends to move towards a central EU register from 2030.
So the company may become European without every institution it encounters becoming European with it.
This is not necessarily a contradiction. It is the architecture.
The investor is where EU Inc. becomes much more interesting
Our Dutch investor is unlikely to become emotional about the registration portal. What matters is what kind of shares can be bought, which rights attach to them, how another round will work, whether the documentation resembles something the fund already understands and how easily ownership can be transferred later.
This is where EU Inc. reaches beyond administrative convenience.
The proposal allows no-par-value shares, differentiated share classes, preferred equity, warrants and convertible instruments, and it explicitly accommodates financing arrangements familiar from venture-capital practice, including SAFE- and KISS-style instruments. The Commission’s impact assessment estimates savings of around €1,100 per financing round and roughly €1,780 to €2,850 on a growth-stage secondary share transfer of €500,000.
Those savings are useful, but they are not the most interesting part.
The more consequential possibility is standardisation.
If an investor looking at a company registered in Portugal, Austria or Latvia repeatedly encounters the same basic corporate machinery, a common legal vocabulary can begin to form. Lawyers reuse documentation. Investors understand the same share structures. Due diligence begins from a more familiar baseline. Courts accumulate interpretations. Intermediaries develop expertise that transfers across deals rather than remaining trapped inside one jurisdiction.
The ECB makes this point through the comparison with Delaware. Delaware’s attraction is not merely cheap or rapid incorporation. Its corporate law operates as a portable legal framework supported by specialised courts, extensive precedent, a sophisticated legal-services industry and financing structures that founders and investors already understand. The firm can operate elsewhere while its internal corporate affairs remain governed by a framework familiar to the market.
Europe cannot reproduce Delaware simply by writing “EU Inc.” at the top of a regulation. Delaware’s advantage is an ecosystem, not a font choice.
But the comparison reveals the ambition.
The real prize is not €1,100 saved on a funding round. It is a future in which the investor stops asking quite so often what kind of company sits underneath the deal.
Then our founder tries to give employees ownership
The employee-equity provisions show particularly well how far the common layer reaches and where it stops.
The proposal creates an optional EU Employee Stock Option Plan, or EU-ESO. Technically, the company would issue warrants to eligible employees and board members of the EU Inc. or its subsidiaries. Those warrants would be subject to a waiting period of at least 24 months, and individuals holding more than 25% of the company’s voting or economic rights would be excluded.
The tax mechanism is the more interesting part. Under the proposal, no taxable income would be deemed to arise when the warrant is granted, vests or is exercised. Tax would arise only when the shares obtained through exercising the warrant are eventually disposed of. That avoids the familiar and not especially charming possibility that an employee owes cash tax on shares from which no cash has yet appeared.
But Europe harmonises the timing of the tax event, not the whole tax system.
Member States would remain free to determine how the income is classified and which tax rates apply, while national rules would also remain relevant to the treatment of comparable employee-equity arrangements. The ECB therefore concludes that portability would remain incomplete because broader differences in tax rates, eligibility, valuation and administrative practice would continue.
That is an almost perfect miniature of the 28th regime.
The instrument becomes European.
The tax authority remains national.
The interface works, but the backend remains visible.
Employee participation shows where “optional” becomes political
The proposal creates a common governance architecture for EU Inc. companies, including digital corporate procedures and significant freedom in the articles of association. But it doesn’t create one European system of employee participation.
This is a point where the primary legal text matters, because some secondary commentary has described the rule differently. Under Article 12 of the Commission proposal, an EU Inc. created from scratch or through a domestic conversion, merger or division would be subject to the employee-participation rules of the Member State of its registered office. If the company is created through, or subsequently undergoes, a cross-border conversion, merger or division, the employee-participation safeguards already contained in Directive 2017/1132 would apply.
Now return to our founder.
The European corporate form may be common. Employee-participation rules can still depend on the Member State underneath it. Matters not covered by the EU regulation or the company’s articles are likewise governed, under Article 4, by the national law applicable to the corresponding domestic company form in the Member State of the registered office.
And the proposal permits the company’s registered office to be in one Member State while its central administration or principal place of business is elsewhere in the Union.
At this point, the choice of registration state has not disappeared merely because the company acquired a European label.
That doesn’t prove that companies will choose jurisdictions for abusive reasons. It means the choice has consequences.
If important parts of the legal environment remain national, founders and advisers have incentives to compare those environments. That is precisely why debates about regulatory arbitrage, worker participation, letterbox companies and national safeguards are not peripheral ideological objections to an otherwise technical company-law proposal. They arise from the architecture itself.
The more national law remains underneath EU Inc., the more consequential the choice of national foundation can become. Yet the more of those national differences Europe removes, the closer the project moves towards ordinary harmonisation.
This is one of the knots the 28th regime cannot escape simply by calling itself optional.
Then something goes wrong, which is where start-up policy becomes less photogenic
Innovation policy has a natural affection for beginnings. There are accelerators, launch events, pitch decks and photographs of founders beside screens on which the graph is, reassuringly, travelling upwards.
Economies also need companies to fail.
How they fail matters before failure happens, because investors price the possibility of failure when deciding whether to invest. Differences in insolvency procedures, recovery rates, creditor rankings, restructuring tools and the time it takes to resolve a failed company therefore affect the cost of taking risk much earlier in the company’s life.
EU insolvency systems remain highly heterogeneous. EU Inc. would introduce fully digital and expedited liquidation for solvent companies and simplified insolvency procedures for qualifying innovative start-ups. But most EU Inc. companies would still remain subject to existing national insolvency regimes, while creditor hierarchies, judicial processes and much of the restructuring environment would continue to vary nationally.
This is not a small hole in the architecture.
The IMF’s 2026 modelling of a broader 28th enterprise regime illustrates why. Its scenario combines lower barriers to firm entry, improved access to financing and a much stronger insolvency framework than the Commission’s present EU Inc. proposal. Under those assumptions, IMF staff estimate GDP gains of about 3.3% after ten years and 4.4% after twenty. These are model simulations, not forecasts of what EU Inc. itself will deliver. More revealingly, when the IMF removes the insolvency channel from its model, the estimated ten-year GDP gain falls to about 1.5%.
The numbers should not be mistaken for a forecast, but the mechanism is telling.
The less flashy part of the corporate lifecycle may carry an enormous amount of the economic weight.
If Europe harmonises how a company is born while leaving much of what happens when it becomes distressed inside national systems, it may have created an excellent European maternity ward without quite completing the rest of the hospital.
The line is mildly ridiculous.
The design problem isn’t.
Europe may finally be discovering the API
This is where the 28th regime begins to look less like company law and more like something we recently explored in an entirely different context.
Interoperability.
When two digital systems need to work together, the normal answer is not to rebuild both until their internal structures become identical. One may store information differently from the other. They may run on different technology, serve different purposes and have acquired their peculiarities through entirely different histories.
Instead, we create an interface.
The interface defines what needs to pass between those systems, in what format and according to which rules. The complexity underneath can remain, provided enough of it stops leaking into every interaction above.
European law is obviously not software. Democratic choices are not legacy code, labour protections are not inconvenient data formats, and governments cannot resolve political disagreement by publishing more enthusiastic API documentation.
But as an architectural analogy, it is surprisingly useful.
The 28th regime asks whether twenty-seven national systems can remain meaningfully different while a European layer makes some of those differences less consequential to the actor using it.
Europe may finally be discovering the API.
The more precise term is institutional interoperability.
Institutional interoperability doesn’t require Portugal, Germany and Estonia to organise themselves identically. It requires enough common structure at the point of interaction that a company doesn’t have to rediscover every national difference every time it raises capital, changes shareholders, establishes somewhere else or closes.
The once-only provisions are perhaps the clearest literal example. A national authority remains responsible for a national tax identifier, but the founder should not have to carry the same verified company data manually from the business register to the tax authority. The proposal makes the systems exchange it instead. The national institution remains. The interface absorbs part of the friction.
The same analytical test can be applied to the rest of EU Inc.
When incorporation stays inside the European framework, the interface is doing its job. When the same financing architecture can be understood by investors across Member States without being legally reconstructed for each jurisdiction, the interface is doing its job. When the EU-ESO harmonises the moment at which tax arises but the employee’s actual tax outcome still varies materially by country, some of the backend becomes visible. When insolvency pushes most firms back into national creditor hierarchies and judicial procedures, considerably more of the backend becomes visible.
Article 4 is therefore not merely a technical fallback clause. It is where we can watch for leakage through the interface.
This gives us a much stronger definition of institutional interoperability than simply “systems working together”:
National systems don’t need to become identical. But if their differences leak into every transaction conducted above them, the common European layer has not abstracted very much.
The success of EU Inc. will depend heavily on where that line eventually falls.
Europe has already tested several versions of this idea. The graveyard is useful.
One advantage of European integration having taken several decades is that almost every apparently new institutional idea has ancestors.
The important thing is not to force those ancestors into one legal category. The EESC/CEPS study itself describes them as 28th-regime-like cases because their legal structures differ. That is exactly why they are useful: they show several distinct ways in which a European layer can succeed, fail or survive in a slightly awkward condition between the two.
The European Company: European on the letterhead, national underneath
The Societas Europaea is probably the most obvious warning for EU Inc. Adopted in 2001, it created a European public limited-liability company form that could operate across Member States. Yet much of its functioning still falls back on national company law, while employee participation is handled through a companion directive.
That hybrid structure made the SE politically possible, but it also created complexity for users. The 2025 EESC study reports fewer than 3,000 SEs, with uptake concentrated largely among major corporations and micro or shelf companies. A €120,000 minimum-capital requirement, procedural complexity and reliance on national fallback law all weakened its usefulness for ordinary SMEs.
The lesson for EU Inc. is rather unsettling because it is so obvious: a company can be European in its name and still require bespoke national legal advice whenever something important happens.
The complexity has not disappeared.
It has moved downstairs.
PEPP: the European product whose incentives stayed national
The Pan-European Personal Pension Product failed differently.
PEPP created a voluntary European pension framework with portability, standardised disclosure and centralised authorisation. Yet by mid-2025 the EESC study found only two authorised providers and availability in five Member States. The study attributes much of the weak uptake to incomplete tax integration: savers could receive a European pension product while still encountering national tax treatment and country-specific sub-accounts designed around domestic payout and fiscal rules.
This is a particularly useful warning for EU Inc. because PEPP demonstrates that legal portability is not enough if the user’s economic incentives remain national.
The wrapper can travel.
The reason for choosing it may not.
The Common European Sales Law: when the cure becomes another legal system
The proposed Common European Sales Law encountered almost the opposite problem.
CESL would have created an optional, fully harmonised contract-law framework covering 186 articles across much of the sales-contract lifecycle. It was intended to provide an alternative European system for certain cross-border transactions rather than force national contract laws to converge.
The project encountered strong objections over subsidiarity, legal basis, consumer protection and practical complexity. Business groups questioned whether learning a substantial new parallel regime would really reduce the cost of doing business, while national institutions raised broader constitutional and regulatory concerns. The proposal ultimately failed to secure sufficient political support.
CESL therefore supplies the reverse warning to the SE.
A European layer can fail because it leaves so much national law underneath that the promised simplicity evaporates.
It can also fail because it becomes an entire additional legal universe.
The design problem is almost cruel: the 28th regime must cover enough that users stop falling through it, but not so much that simplification itself becomes another compliance project.
Europe needs an API that doesn’t require the equivalent of a 400-page manual before returning “success”.
SPE and SUP: making it optional did not make the politics optional
The proposed European Private Company is the ancestor with perhaps the most obvious political relevance.
The Commission proposed the SPE in 2008 as a simpler European private-company form for SMEs, including a very low capital requirement and more flexible cross-border operation. The project quickly encountered resistance over employee participation, letterbox companies, social dumping, tax arbitrage and the relationship between a company’s legal seat and its real economic activity. According to the EESC study, eight rotating Council presidencies failed over roughly five years to resolve the underlying disagreements.
The study says the proposal was effectively abandoned in 2013, but the formal EU procedural record places the Commission’s withdrawal on 21 May 2014. The distinction matters if we are being precise, which we are.
The Commission subsequently tried a narrower approach through the single-member private limited liability company proposal, or SUP. Many of the same concerns around regulatory shopping, worker protection and national company law reappeared, and that proposal also ultimately failed to become law.
The political lesson is more important than the chronology.
Optionality does not remove the consequences of somebody else choosing the option.
If companies can choose a European legal form partly to determine which national framework remains relevant underneath it, workers, creditors, governments and regulators have an entirely rational interest in how that choice affects them.
The fact that nobody is forced to enter the regime doesn’t mean the regime is politically neutral.
Then there is the Unitary Patent, which inconveniently worked
A graveyard is a dangerous place to conduct research if one forgets to visit the survivors.
The Unitary Patent is useful because its value proposition is unusually easy to explain. Instead of validating and maintaining equivalent patent protection country by country, a proprietor can obtain unitary effect across the participating states and manage one renewal-fee system.
The current system covers 18 EU Member States. The EPO estimates that, for an average 12-year patent term, renewal-fee savings compared with separately maintaining equivalent protection in all 18 states are around €26,000. The comparison is not universal — a company seeking protection in only a handful of countries may have a different calculation — but for broad territorial coverage the practical advantage is immediately intelligible.
More importantly, people are actually using it. By the end of 2025, almost 79,000 Unitary Patents had been registered, and 28.7% of European patents granted in 2025 received unitary effect. Uptake among patentees based in Europe was 40%, while SMEs, individual inventors, universities and public research organisations represented a substantial share of European users.
The lesson is not that every European regime should imitate patent law.
It is that users can understand the benefit without needing a conference.
Instead of repeating this process many times, do it once.
That is approximately the standard against which the 28th regime should be judged.
The API test is therefore brutally practical
Taken together, these earlier experiments reveal several ways EU Inc. could fail without anybody doing anything obviously foolish.
The first is shallowness. Europe could harmonise incorporation, shares and parts of governance beautifully while leaving the most expensive moments of scaling inside national taxation, insolvency, labour administration and capital markets. The European front end works; the costly transactions still require national reconstruction.
The second is leakage. Article 4 or divergent national administration and judicial interpretation could make the same European form behave differently depending on where it is registered. The ECB itself identifies consistent implementation and judicial interpretation as conditions for the regime’s effectiveness and notes that administrative practice, dispute resolution and registration remain partly embedded in national systems.
The third is the opposite: overengineering. In trying to close every gap, legislators could turn EU Inc. into the next very large optional code, comprehensive enough to require its own specialist ecosystem before most firms feel comfortable using it.
The fourth is political substitution. Employee participation, creditor rights, taxation and insolvency are not merely administrative inconveniences. They express national political choices about how economic risk and power are distributed. Removing their effects from the European interface can itself become a substantive political decision.
The fifth is institutional incompleteness. Delaware works because corporate law, precedent, specialist courts, advisers and capital markets reinforce one another. A harmonised form without a similarly coherent surrounding ecosystem may remain legally elegant while investors continue behaving much as they do today.
And the sixth is the least forgiving failure mode of all: companies may simply decline to use it.
The Commission impact assessment estimates roughly 308,000 EU Inc. companies over ten years and administrative savings of between €328 million and €440 million. Those are modelled expectations based on assumptions about uptake, not observed behaviour.
An optional regime becomes consequential only when the option is attractive enough to be chosen.
If founders do not choose EU Inc., there is no 28th Europe.
There is merely another field in the dropdown menu.
EU Inc. still cannot solve the whole competitiveness problem
Keeping the proposal in proportion matters.
A common corporate form could reduce fixed costs, make financing structures easier to recognise across borders and create a corporate identity that investors understand more readily. If enough firms use it, familiarity itself can generate network effects: advisers build standard practice, investors become more comfortable with the form, courts create precedent and each additional user makes the framework somewhat easier for the next one.
That is one of the strongest arguments for EU Inc.
But EU Inc. won’t manufacture investors or deepen European public-equity markets by itself, eliminate national tax differences, harmonise the majority of insolvency law or remove sector-specific operating requirements. The ECB explicitly treats EU Inc. and the broader Savings and Investments Union as complementary: one can reduce company-law frictions and improve the supply of investible corporate vehicles, while the other is intended to deepen and integrate the pools of capital available to finance them.
This makes the proposition more modest than some of the political marketing around European competitiveness, but also more credible.
The question is not whether EU Inc. will turn Europe into Silicon Valley.
The question is whether removing one important layer of fragmentation can create enough common infrastructure and enough network effects that successful European firms find it easier to remain European as they become larger and more complicated.
That is a narrower claim.
It may also be the more interesting one.
Optionality looks gentle until enough people choose it
There is another reason the 28th regime deserves attention beyond company lawyers.
If EU Inc. becomes attractive, it changes the relationship between European and national systems even though no national system is formally abolished.
Imagine founders begin preferring the European form. Investors learn it. Lawyers standardise around it. Cross-border financing increasingly assumes it. The domestic Portuguese, German or Austrian company form remains perfectly legal, but internationally oriented firms begin moving towards the common European layer.
At that point Member States are no longer comparing their systems only with one another.
They are comparing them with Europe.
A founder who can complete a European procedure digitally may start asking why a domestic one still requires a different sequence. Investors accustomed to one financing structure may become less enthusiastic about bespoke national alternatives. Administrative practices that once seemed inevitable begin looking increasingly like choices.
This could produce something resembling integration through adoption. The Union does not formally harmonise every national system. It creates a European alternative, users choose it, and the success of that alternative creates pressure underneath.
That possibility is attractive to some policymakers precisely because it appears less politically intrusive than forcing every national system to converge.
But adoption is not politically neutral.
If the European regime is disproportionately used by internationally oriented businesses with sophisticated advisers, Europe could develop two overlapping corporate environments: one continental layer used by firms equipped to navigate it, and national systems serving much of the rest of the economy.
If the European regime eventually becomes the standard for high-growth companies, it could also shape national reform without any formal decision that domestic company law should be harmonised.
Optionality does not remove power.
It changes the route through which power operates.
There is also a problem with very good bypasses
Suppose the system works exceptionally well.
Companies that suffer most from cross-border fragmentation adopt EU Inc. Investors become familiar with the form. European interfaces improve. The most internationally active firms stop encountering much of the national company-law complexity that frustrated them before.
What happens to the national complexity underneath?
One possibility is encouraging. EU Inc. becomes a demonstration effect. National administrations modernise because companies can compare their systems with something visibly simpler. Common procedures spread. Domestic law borrows successful elements. The European option becomes a bridge towards wider convergence.
The less pleasant possibility is that the businesses with the strongest reason to demand reform simply leave the difficult national architecture for the European one. The national systems remain complicated, but the constituency most likely to complain about that complication now has somewhere else to go.
Europe hasn’t repaired the road. It has built a very good bypass for the vehicles most bothered by the potholes.
This is why a 28th regime should not automatically be confused with completing the Single Market. It may help complete it. It may also make particular forms of incompleteness much easier to live with.
That distinction matters because the Commission itself presents EU Inc. as part of a broader 28th-regime agenda rather than an isolated corporate reform.
If the method proves attractive, the question will not remain confined to company law.
The twenty-eighth is still being negotiated by the twenty-seven
As of 29 September 2026, none of this is settled law.
The European Parliament’s legislative observatory still lists EU Inc. as awaiting committee decision with the Legal Affairs Committee responsible.
The Council has meanwhile been working through the proposal in its Company Law Working Party. A second Presidency compromise text was circulated on 7 September and discussed at meetings on 10 and 17 September, with another working-party meeting scheduled for 29 September.
At the Competitiveness Council on 24 September, ministers were informed about the state of the EU Inc. file as one of several current legislative proposals; it was not the subject of the meeting’s main policy debates.
The Commission is calling on Parliament and Council to reach agreement by the end of 2026. That is a political target, not a prediction of what the co-legislators will eventually agree or when the final regime will become operational.
This means some of the most interesting questions remain open. The final balance between EU rules and national fallback can change. Safeguards around employee participation can change. The relationship between the European interface and national administration can change. Insolvency provisions can change. Amendments may reduce leakage through the European layer, or create new points at which national differences return.
Those are not secondary implementation details.
They determine whether Europe ends up with an interface or merely another layer.
The 28th Europe
The Single Market has always been an experiment in deciding which national differences should continue to matter.
It didn’t abolish European states. It changed what happened when people, goods, services and capital crossed their borders. A national boundary remained politically real while becoming less consequential to an enormous amount of everyday economic life.
The 28th-regime idea applies the same instinct somewhere deeper inside the machinery.
Instead of requiring every national company system to become identical before a firm can experience something resembling a European corporate environment, EU Inc. tries to construct part of that environment directly. The national systems remain underneath, but the European layer attempts to prevent some of their differences from travelling upwards into every registration, financing round, share transfer or corporate decision.
That is why the API analogy matters.
A good interface doesn’t erase the systems underneath it. It allows them to remain different without requiring the user to understand those differences every time they interact.
The political equivalent is harder because some national differences deserve to remain visible. They reflect legitimate choices about taxation, employee participation, creditor protection, insolvency and the distribution of economic power. Europe should not quietly relabel every disagreement as technical debt.
But that leaves a genuinely useful distinction. Some differences require political convergence because the rules themselves need to become more alike. Others can remain because mutual recognition is enough. Some should remain precisely because they embody democratic choices. And some differences may not need to disappear at all, provided Europe can construct a sufficiently good interface across them.
The 28th regime is a test of that final category.
Its success will not be demonstrated simply because a regulation labelled EU Inc. eventually exists, because several hundred thousand companies register under it, or because the interface looks pleasingly European. A more meaningful test will be how often a founder operating through the European layer still has to descend through it, identify which Member State sits underneath and reconstruct the same economic activity according to another national logic.
If that happens occasionally, precisely where national political difference genuinely matters, Europe may have discovered something valuable: a way to integrate without making uniformity the precondition for every form of common action.
If it happens constantly, the twenty-eighth regime will have achieved something more familiar.
Europe will have built a very elegant interface, while the twenty-seven systems behind it continue waiting for somebody to open advanced settings.
