After years of deliberation, the so-called 28th Regime — the European Union’s bid for a pan-European legal framework for businesses — has finally taken a concrete step towards becoming reality.
On March 18, the European Commission presented its legislative proposal, rebranded as EU Inc, aimed at speeding up company registration and paving the way for a single EU-wide business registry with fully digital operations. But the plan isn’t without controversy, as unions worry the legislation could undermine labor rights. Some start-up founders, on the contrary, believe the proposal doesn’t go far enough, like creating an EU-level court to settle business disputes.
The proposal will now be discussed by the European Parliament and the Council, with the Commission aiming to finalize the legislation by the end of 2026.
“Not the full ambition we had asked for, it needs improvements,” said Simon Schaefer, the president of Allied For Startups, an organization advocating for Europe’s start-up community. “But definitely wins for Europe’s business community."
Why does Europe need a 28th Regime?
For decades, the innovation gap between the EU and the United States has widened, as many of the world’s largest tech companies have emerged and scaled on the other side of the Atlantic.
Start-up founders, venture capitalists, and analysts attribute much of that gap to Europe’s still-fragmented single-market. Unlike the US, which operates under a unified system across all 50 states, companies in the EU must navigate a thicket of different member state regulations. To give an idea, the International Monetary Fund estimates that Europe’s red tape and differing regulatory standards incur costs equivalent to 110% tariff on services traded within the EU.
Faced with such hurdles, many growing European companies move to the US. As an example, Biernat pointed to the Swedish AI-assisted coding company Loveable, which was widely celebrated as one of Europe’s tech successes in 2025. While the company’s founders are Swedish, the company is incorporated in the US, placing critical intellectual property outside European jurisdiction.
If approved, the 28th Regime aims to reverse that trend by creating a pan-European legal framework to minimize bureaucratic friction across member states. While the fine print is still being ironed out, the framework will likely include a digitized European-wide company registry, standardized stock options, and a central depository for all legal documents.
Iwona Anna Biernat, the head of legal strategy at EU Inc., a group of start-up founders and companies advocating for the Regime’s implementation, said such a framework is critical for Europe to remain competitive with the US and China.
“It’s important to address this structural issue, so we can have these companies incorporate and stay in Europe and stay as long as possible,” she said.
Helping business or harming workers?
But workers’ unions and a number of MEPs have lined-up against the proposal.
Esther Lynch, General Secretary of the European Trade Union Confederation, told The Parliament that the 28th Regime could re-open long-settled issues about workers’ rights.
“Proposals that would allow companies to opt-out of national labour law, collective agreements, or established systems of worker involvement would undermine the EU’s social model and decades of progress on workers’ rights,” she said.
While the proposed 28th Regime would not concern member state individual labour or taxation law, it might not be a sufficient firewall. As pointed out by Marcus Meyer-Erdmann, a senior researcher at the European Trade Union Institute, company and corporate labour law are deeply intertwined, with many labour protections embedded directly in corporate governance rules.
An example is codetermination — the principle that workers must be involved in company decision making — which exists in some form in 18 of 27 member states. A pan-European company form that omitted such provisions could trigger a race to the bottom, allowing business owners to sidestep stronger protections by choosing the most permissive company structure.
At its broadest, Antonio Aloisi, an associate professor of law at IE University in Madrid, said the 28th Regime could put the EU’s social goals in direct conflict with economic integration — a long-standing tension at the heart of the European project.
What is the status of the proposal?
The 28th Regime has gained momentum under the second mandate of Commission chief Ursula von der Leyen who explicitly called for its implementation in her September State of the Union Speech. In January, the Parliament voted on a series of recommendations, and on March 18 the Commission unveiled its proposal as an ambitious slate of regulation that will be binding for all member states.
The Commission's proposal was broadly in-line with what business interests had asked for: a completely digital process, fast and low-cost registration, EU-wide company stock option plans and full access to the single market. However, there were a few sticking points, such as the lack of an EU-wide company registry and EU-level courts to adjudicate business disputes. Under the current proposal, only national company registries will initially be connected together, with the Commission promising a central registry later.
Founders expressed concern that, without a central EU registry and EU courts, the law will yet again be fragmented on the national level — cementing the issue of patchwork implementation.
However, the Commission stressed that labor and taxation law is untouched by the proposal, with member state labor law still applying to the places where the work is “habitually performed,” according to a Commission fact sheet.
How would the 28th Regime change the EU?
In any case, a proposal is still years away from being finalized, with advocate Anna Biernat hoping that the first company registrations could go into effect by late 2027 or early 2028.
If implemented, however, it would undoubtedly have a profound impact on the future of Europe. A European-wide legal framework for companies — and the power it would concentrate in Brussels — would deepen integration while further diluting the power of individual member states.
Europe urgently needs to strengthen the single market and its ability to compete in technology, but the question is if that can be achieved without eroding the social model that has long defined the continent.
This article was updated March 18, 2026.
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