On 18 March, European Commission President Ursula von der Leyen presented the proposal for EU Inc., formerly known as the 28th regime, which mainly addresses business demands. Overall, this constitutes a harmonised and digital legal framework for European companies, which they can apply following on their discretion. This raises concerns that legal provisions in the respective member states could be circumvented.

Legal cuts

According to von der Leyen, it should therefore be possible to set up a business digitally from anywhere in the EU within 48 hours for less than €100, and without any share capital. Moreover, EU Inc. companies should only have to submit their company information once via a central interface at EU level, which links the national business registers. In a further step, the Commission plans to establish a new central EU register. Under the EU Inc. initiative, companies are to gain access to fully digital liquidation procedures and, particularly in the case of start-ups, to insolvency proceedings subject to comparatively less stringent regulation. Furthermore, EU-wide employee share ownership schemes are envisaged, and the Commission has put forward a recommendation on the definition of start-ups.

A separate communication published at the same time outlines additional initiatives under the 28th   regime. The proposal is for interaction between businesses and public authorities to be as digital as possible. Member States are also being asked to set up specialised courts for EU Inc. companies in order – according to the Commission – to enable the effective, efficient and uniform application of the rules. This would allow companies to bypass national legal systems.

EU Inc.: a major concern for workers

The European Trade Union Confederation (ETUC) has strongly criticised the Commission’s plans. It points out that the Commission’s proposal for EU Inc. creates legal loopholes that allow companies to bypass national worker protection measures. The draft lacks legal safeguards to stop companies under the 28th regime from bypassing labour laws, ignoring collective agreements and tax contributions, avoiding inspections, or replacing wages with share options. Co-determination rights in the event of restructuring or the representation of workers on supervisory boards could also be undermined. ETUC is therefore calling for clear legal provisions to protect workers. Esther Lynch, General Secretary of the ETUC, notes: ‘The evidence is clear: innovation is strongest in countries with robust collective bargaining. Europe should build on its heritage of social dialogue and strong labour law – not bypass it.’

AK points to serious shortcomings in the proposal

AK also considers the Commission’s proposal to be poorly thought out. Setting up an EU Inc. online in any Member State would enable companies to deliberately bypass the employee co-determination rights established under Austrian law. One of the consequences of the 28th regime would therefore be Europe-wide ‘regime shopping’ at the expense of workers. Another problem is that it is possible to set up an EU Inc. without any minimum capital requirements, and without any verification of personal identity or notarial scrutiny. The limited liability associated with the EU Inc. is thus available at “zero cost”. This shifts the business risk onto creditors, the tax authorities and, not least, employees. What the Commission presents as a reduction in red tape, actually creates, in practice, a structural breeding ground for dubious business practices and shell companies, and, in the worst case, for fraud and money laundering.

The legal basis chosen for the proposal, which relies on Article 114 TFEU, is also questionable. This had been criticised by EU legal experts even before the proposal was published and also contradicts the European Court of Justice’s (ECJ) previous case law. The Commission appears to have deliberately chosen Article 114 TFEU as the legal basis in order to circumvent the ‘correct’ legal basis under Article 352 TFEU, which would require unanimity among Member States in the Council. Overall, AK calls for clear legal provisions to safeguard national workers’ rights.

What happens next?

The proposal must now be negotiated and adopted by the European Parliament and the Council. The Commission insists that the proposal should enter into force by the end of 2026. The European Council attaches high priority to the 28th regime and its swift implementation. While the Commission’s proposal received overwhelming support in the European Parliament, there were also some critical voices. Estelle Ceulemans, MEP (S&D), is right to highlight the risk of a new form of social dumping. After all, companies are able to register in countries with flexible regulations even though they operate in others.

Further information

EU Commission: EU Inc.
AK EUROPA Position Paper: 28th Regime
AK EUROPA: Draghi report on the future of European competitiveness
EU Commission: Press Conference 28th Regime
ETUC: Missing guarantees for workers’ rights in EU Inc. plan
ETUC: Unions take EU Inc. campaign to Commissioner’s home city
European Law Blog: The ESSU: crossing the constitutional boundaries of Article 114 TFEU?
EU Parliament: MEPs assess the results of the 19 March European Council
European Council: Conclusions, 19 March 2026
Estelle Ceulemans (LinkedIn): 28th Regime: The road to hell is paved with good intentions… (French only)