Is EU Inc the startup game-changer Europe needs?
Or just more red tape?
Simplifying company formation across the EU sounds like a dream for startups. But can the ambitious EU Inc proposal break through Europe’s fragmented regulatory maze?
On December 12, Tenity, TGS Baltic and Startup Estonia gathered at SEB Eesti's office to discuss the 🔴 “EU Inc.” 🔴 initiative, a proposal aiming to simplify company formation and management across the European Union. Still in the petition stage, the initiative has drawn interest from the European Commission and may be included in its next five-year work plan.
The panel explored the business need for EU Inc as well as its political and legal feasibility
✨ The Business Case
EU Inc seeks to address the barriers faced by startups in Europe’s fragmented regulatory environment. Unlike the Societas Europaea (SE) model, which requires €120,000 in equity, EU Inc proposes a low-capital, fully digital setup. Central to this are harmonised tools like EU FAST (based on SAFE notes) and EU ESOP, designed to standardise funding and equity compensation. These tools could simplify cross-border transactions, enhance talent attraction, and foster a more vibrant startup ecosystem in Europe.
However, concerns remain.
Would venture capitalists trust an untested legal framework with limited case law?
The EU could mitigate this by acting as a limited partner in funds supporting EU Inc startups. Taxation challenges for equity-based compensation also need resolution to ensure widespread adoption.
🏛️ Political and Legal Feasibility
Implementing EU Inc as a “28th regime” would face resistance. Member states may oppose ceding control over economic affairs, especially if tax revenue is in question. Additionally, ideological divisions in the European Parliament could hinder progress. Given the decades-long process to establish SE companies, panelists suggested a phased approach—focusing first on EU FAST and ESOP instruments and leveraging existing national registries.
👀 Looking Ahead
EU Inc offers a bold vision for innovation in Europe, but its success will depend on balancing ambition with practicality. Starting with harmonised tools before pursuing a full pan-European framework could provide a realistic path forward, ensuring progress without overreach. Practically, this may include leaning on national business registries - as is the case with the Societas Europaea - and making use of national eIDs as well as the Estonian e-Residency program for those nationals whose EU and non-EU countries who lack qualified electronic identity solutions.
So... circling back to our initial question. Is EU Inc the startup game-changer Europe needs – or just more red tape? What do you think?
Thank you to Maris Vutt, PhD, Kati Pärn, and Uve Poom for your insights and SEB Eesti for having us!
