EU Governments Agree Their Position on EU Inc, the Startup Company Law

European founders have spent years asking for one simple thing: a single company form that works across all 27 EU countries. On Friday, 23 October, that idea moved a real step closer to law.

The Council of the European Union adopted its negotiating position on EU Inc, the proposed "28th regime" that would sit alongside the 27 national company laws. Founders who choose it could register online within two days, for a maximum fee of 100 euros, and operate across the single market.

What the Council Agreed

According to the Council's press release, companies will be able to choose between their existing national corporate law and the new EU Inc framework. The Council says its version keeps the proposal's main goals but simplifies parts of it, trims the digital provisions, and adds safeguards against abuse.

Member states will be allowed to refuse registration on grounds linked to money laundering, terrorist financing or other criminal activity. Countries would have 21 months to implement the regulation once it is final.

Ireland, which holds the Council presidency, pushed the file hard. Taoiseach Micheál Martin said the measure "will make a real and practical difference to start-ups and SMEs looking to scale up across the EU."

The Stock Option Win

For startups, the biggest relief is that the European employee stock option plan survived. Equity is how young companies compete for talent against employers that pay higher salaries, and founders had warned that losing harmonised option rules would gut the framework.

EU-Startups reported that the scheme keeps provisions meant to defer tax until shares are sold, rather than when options are granted or exercised. But eligibility is narrower. The Council limits it to companies with fewer than 750 employees and annual turnover of up to 150 million euros, down from an earlier compromise of 1,000 employees and 450 million euros.

What Founders Lost

Not every request made it through. EU-Startups reported that the Council removed plans for a central European company register and dropped the dedicated insolvency chapter from the Commission's original proposal. That means EU Inc companies would still face national insolvency rules.

Tax is also unchanged. Beyond the stock option provisions, EU Inc does not create a single European tax regime, so companies would still deal with national corporate tax, VAT and employment rules.

On worker participation, an EU Inc company would generally follow the rules of the country where it has its registered office. The Council added an optional mechanism for cases where a company crosses participation thresholds in another member state.

Dr. Peter Möllmann of the German law firm PXR told EU-Startups that the more restrictions and national safeguards are added, "the greater the risk that Europe creates a politically acceptable framework that founders and investors will simply not use."

What Happens Next

The Council's position is a mandate, not a law. The European Parliament still has to adopt its own position. As of 26 October, EU-Startups reported, the file was still awaiting a committee decision. Only then can the Parliament, Council and Commission begin the three way talks known as trilogues.

Even with a fast deal, the 21 month implementation window means founders should not expect to incorporate as an EU Inc in the near term.

What It Means for Founders Now

If you are building a company with customers or staff in several EU countries, keep incorporating under the national law that suits you today. Watch three things as talks continue: whether Parliament restores the central register, where the stock option thresholds land, and how much room member states keep to add their own checks.

The idea that a founder in Lisbon or Tallinn could open one company and sell across Europe in two days is still alive. The details will decide whether founders actually use it. Founder 100 Magazine will keep tracking the file as it moves to the Parliament.