The European Union is preparing to unveil an ambitious plan aimed at simplifying how companies operate across its 27 member states — a proposal that could reshape the bloc’s fragmented business landscape. The initiative, known as the “28th regime,” would allow firms to operate and raise funds under a single, EU-wide legal framework instead of navigating different national systems.
The European Commission is expected to introduce the plan early next year as part of its 2026 work programme, which it presents to the European Parliament this week. The move is designed to streamline corporate regulation, reduce bureaucracy, and help European start-ups compete globally.
One Legal Framework for the EU Market
The goal of the 28th regime is to give companies the option to register under one set of rules valid across all EU countries, covering areas such as taxation, labour law, and corporate governance. Currently, businesses must comply with the separate legal codes of each member state, a challenge that entrepreneurs say limits growth and cross-border investment.
“This would simplify rules and tackle critical issues in areas like insolvency, labour, and tax law,” said a draft of the Commission’s work programme seen by the Financial Times.
The initiative has already gained support from EU Inc, a grassroots campaign advocating for a unified business structure. “We need one standard legal entity for all of Europe,” said Andreas Klinger, one of its founders. “It’s extremely hard to raise funds in Europe because of legal fragmentation. Only about 18% of early-stage investment is pan-European — the rest is trapped within national borders.”
Klinger argues that the current system stifles competitiveness. “You need continental scale,” he said. “Otherwise Dutch founders compete alone against China, and Lithuanian founders compete against the US.”
Competing Visions: Narrow vs. Broad
Policymakers are now debating how extensive the 28th regime should be. Two main options are on the table:
- Narrow but deep: A comprehensive regime that harmonises not just incorporation rules but also tax, labour, and governance laws, though limited to select “innovative” firms.
- Broad but shallow: A simpler model open to all companies, offering EU-wide incorporation while leaving most labour and tax regulations at the national level.
Trade unions strongly oppose the narrow option, warning it could undermine workers’ rights. “This risks creating a two-tier system that weakens labour protections,” one EU official noted.
Klinger supports the broader approach, arguing that innovation cannot be neatly defined. “Who is Brussels to decide what counts as an innovative business?” he asked.
Political Momentum, Practical Challenges
Earlier this year, EU leaders urged the Commission to propose an “optional 28th company law regime”, suggesting broad political support for the concept. But the key test, analysts say, will be whether the final design attracts real-world use.
“The challenge isn’t political compromise — it’s building something the market will actually use,” Klinger cautioned.
Experts say that unless the framework is practical, cost-effective, and widely recognized by investors, it risks becoming another symbolic project with limited impact — similar to previous EU-wide initiatives that failed to gain traction.
A Push for a More Competitive Europe
The proposal comes as the EU faces mounting pressure to make its single market more business-friendly, particularly amid competition from the United States and China. Fragmented legal systems have long been cited as one of the biggest obstacles to scaling European start-ups and attracting cross-border investment.
By introducing a single legal structure, Brussels hopes to make it easier for firms to expand across borders, reduce administrative burdens, and strengthen the EU’s global economic position.
“If done right,” Klinger said, “EU Inc could be the foundation for a truly unified business environment — one where European companies compete together, not apart.”
Whether the 28th regime becomes a transformative success or another bureaucratic experiment will depend on one critical question: Will Europe’s businesses actually use it?
