Listen: What would EU Inc change for European companies?

Production: By Europod, in co-production with Sphera Network. EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms. Find the full transcript below: Creating a company that operates across several EU countries could soon become easier. But the proposed “EU Inc” regime is also facing strong opposition. So what exactly is EU Inc, and why is it proving so controversial? EU Inc stands for “European Incorporated”. It would create a new legal regime for setting up a company. Let’s take a concrete example. Today, if you want to start a business that operates in several European countries, you still have to register it in one of the EU’s 27 member states. So, say you choose Belgium. You have to follow Belgian procedures to set up your company. And if you then want to open a subsidiary in another EU country, you may face a different set of rules and procedures. That’s where EU Inc would come in. The idea is to allow you to set up a company anywhere in Europe in less than 48 hours, entirely digitally and without requiring any initial capital. You would be able to operate wherever you want in the EU, although you would still need to have a registered office in one member state. And this is where things get messy. For now, EU Inc would only cover the creation of a company — and its dissolution if necessary. For everything else, companies would still have to follow the rules of the country where their registered office is located. So why not go further? Because every country has its own legal framework, and governments are reluctant to replace it with a common European one. Getting all 27 countries to agree on one set of rules would be extremely difficult. Take employment law. Countries with stronger protections for workers may not want to approve a new European regime with lower standards. And the opposite could be true in countries with more flexible labour laws. Taxation is even more sensitive. Corporate tax rates vary widely across Europe, and EU countries have so far never agreed on a single common rate. So, rather than agreeing on everything, countries could start by harmonising the less sensitive parts, such as the procedure for registering a company. Some people argue that we could gradually go further over time. Take taxation again. You don’t necessarily need a single corporate tax rate to start harmonising certain aspects of the system. For example, the European Parliament argues that EU countries could have common rules for calculating the corporate tax base — in other words, the amount of income that is subject to tax. But all of this is already sensitive. So, is a broader EU-wide regime a long-term objective? I would say yes. It certainly fits with what the European Commission wants to achieve: simplifying the rules for businesses, making it easier to create companies and ultimately strengthening Europe’s competitiveness. Plus, the idea was also included in Enrico Letta’s 2024 recommendations on the single market. But for EU member states, agreeing on a much broader common framework remains extremely difficult. As for the EU Inc regime, it will certainly not be up and running for at least two years.