EU Inc.: The European Parliament now has the chance to raise the ambition

The Council of the EU agreed its negotiating mandate on EU Inc. on 23 October. AustrianStartups welcomes the agreement, Austria’s support for it and the progress made. The Council text keeps important elements of the Commission proposal, including share transfers without a notarial deed and the EU stock option plan. However, it does not yet offer the legal certainty and flexibility founders need to make EU Inc. an attractive alternative to the US Delaware Inc.

This is about more than a company’s legal form. It is about whether the EU remains competitive. In his 2024 report on European competitiveness, Mario Draghi warned: “We have reached the point where, without action, we will have to either compromise our welfare, our environment or our freedom.” His report called for a new EU-wide legal statute for innovative startups.

Today, growing across several Member States often means dealing with several legal structures and sets of national rules, and many founders still turn to the US Delaware corporation instead. EU Inc. is a once-in-a-generation opportunity to change that and make Europe a more attractive place to build and scale a company.

Where our five non-negotiables stand

For EU Inc. to work in practice, AustrianStartups considers five elements non-negotiable. Here is where they stand in the Council text.

1. Free choice of registration seat: retained, but less predictable 

Companies could still register in one Member State and run their business from another. But the Council adds requirements for cross-border operations and changes an important rule: for company matters not covered by the EU Inc. framework, the text no longer clearly states that the law of the country of registration applies. For founders, the concern is predictability: they need to know which company rules apply as they grow across Europe.

2. Access for all companies: kept

EU Inc. remains open to all founders and is not limited to “innovative” companies or specific sectors. Companies in regulated sectors would still have to meet the rules that apply to their activities.

3. One central register: removed

A common European legal form should come with a common place to find reliable company information. A central EU register would give founders, investors, banks and authorities that shared reference point.

However, the Council removed the planned central register. Instead, an EU interface would connect national registers and support procedures such as company registration and filing. Companies would still be registered in separate national systems. The interface would connect those systems rather than replace them with one European register.

4. Standardised stock options: kept, but limited

The EU employee stock option plan stays. For qualifying options, employees would pay tax when they sell the shares, rather than when the options are granted, vest or are exercised.

But this tax treatment would only apply to options granted when the company has fewer than 750 employees and annual turnover of no more than €150 million. 

The Council also removes the guarantee that EU options receive tax treatment at least as favourable as comparable national schemes. Employees could therefore get a better tax deal under a national scheme than under the EU plan.

5. Local labour laws and taxes: kept

Apart from the specific rules on stock options and employee participation in company governance, the Council text leaves employment, social security and tax law unchanged. Registering a company in another Member State would not, by itself, change which employment, social security or tax rules it must follow.

Parliament’s chance to raise the ambition

The European Parliament has the opportunity to strengthen the EU Inc. framework in three areas: greater legal certainty for companies registered in one Member State and managed from another, a stock option plan that remains attractive as companies grow and offers tax treatment at least as favourable as comparable national schemes, and a path to a central EU register.

AustrianStartups recommends that Members of the European Parliament carry these priorities into the negotiations.