EU Inc. Survived the Council—But Founders Lost More Than They Gained

Jan de Vries · 2026-10-26

On Friday, October 23, 2026, the Council of the European Union adopted its negotiating position on the proposed 28th corporate regime, known as EU Inc. The headline promise is still there: companies could incorporate online within 48 hours for no more than roughly $110 and operate across the EU single market. That sounds like a big win. And in some ways, it is. But the agreement landed just over a week after the EU–INC campaign—backed by more than 26,000 founders, investors, and startup operators across Europe—warned that the legislation was being stripped of its most important provisions. So here's the question worth asking: are Europe's founders actually getting what they asked for? Or just a watered-down version that looks good on paper? ### A win, with strings attached One of the most significant developments is that the proposed European Employee Stock Option Plan (EU-ESO) survived. This is the mechanism designed to help startups attract and retain talent—a big deal for young companies that can't match the salaries of larger corporations. The EU–INC campaign had argued that removing harmonized stock-option rules would undermine one of the framework's central advantages. Startups lean heavily on equity incentives to compete for employees, and without them, recruiting gets a lot harder. The Council kept the scheme, including provisions meant to defer taxation until shares are sold—rather than when options are granted, vested, or exercised. That's a meaningful detail. It means employees aren't taxed on paper gains they haven't cashed in yet. But eligibility got tighter. The Council's position restricts the relevant tax provisions to companies with fewer than 750 employees and annual turnover not exceeding about $163 million. An earlier compromise had proposed thresholds of 1,000 employees and roughly $490 million. Dr. Peter Möllmann, founding partner of German law firm PXR, put the tension plainly: "The Council has preserved the original idea of EU Inc. as an optional, digital and Europe-wide regime. But 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." That's the crux of it. A framework nobody uses isn't really a framework at all. ### The missing pieces Other concerns raised by the startup community appear less resolved. The Council's full negotiating mandate confirms that plans for a central European company register have been removed, along with the requirement for real-time tracking of registrations. Digital registration and a simplified digital share register remain, but they're not the same thing as one centralized European company register. For founders and investors, that distinction matters. A shared registration infrastructure could have simplified due diligence, company verification, and cross-border financing. Without it, businesses may still have to navigate different national administrative systems—the very friction EU Inc. was supposed to reduce. The Council also removed the dedicated insolvency chapter from the Commission's original proposal. EU Inc. companies would keep facing applicable national insolvency rules rather than benefiting from simplified European procedures. And then there's freedom of incorporation. The Council maintains the optional nature of EU Inc., letting companies choose the new framework instead of existing national corporate forms. But the structure still operates within national legal systems, which govern matters not harmonized by the regulation. That leaves open a real concern: the regime could develop into 27 national variations rather than the recognizable, predictable European standard its supporters wanted. ### What the presidency says Despite the gaps, Micheál Martin, Taoiseach of Ireland—the country currently holding the presidency of the Council of the European Union—was positive in his comment shared with the press. "I warmly welcome the agreement on 'EU Inc.' reached in the Council today. As Presidency, Ireland has placed strong emphasis on improving Europe's competitiveness. This is a measure that will make a real and practical difference to startups and SMEs looking to scale up across the continent." ### The bottom line EU Inc. is still alive, and that alone matters. The 48-hour, low-cost incorporation promise could genuinely change how founders think about building across borders. But the Council's version is a compromise—and compromises tend to leave everyone a little unsatisfied. The stock option plan survived with tighter limits. The central register is gone. Insolvency stays national. And the whole thing remains optional. For founders, the practical takeaway is simple: watch the final text closely, and don't assume the framework will deliver the seamless European standard that was pitched. The ambition is intact. The execution is still up for negotiation.