On April 24, the Dutch government published its formal position on the EU Inc. The proposal published by the European Commission last March, aims to enable the fully online incorporation of a company through a fast-track procedure. By using standardised articles of association and making a single submission of the relevant company details via an EU platform, it would be possible to incorporate an EU Inc. within 48 hours for less than EUR 100. No minimum share capital is required.

At present, entrepreneurs operating across different EU member states must navigate divergent national rules, procedures and a wide variety of corporate forms, which can make cross-border business more complex and costly. The EU Inc. is intended to make it easier for entrepreneurs to operate directly in multiple EU member states from the outset. The question is whether that is the case.

The 28th regime
The EU Inc. initiative forms part of a broader European drive to strengthen the competitiveness of the internal market and to address the current fragmentation of company law: the “28th regime”. The regime constitutes a supplementary, EU-wide legal framework, intended to sit alongside the twenty-seven national legal systems of the member states as a ‘twenty-eighth system’. The framework will take the form of a regulation and would therefore be directly applicable in all member states. Existing legislation and national corporate forms — such as the Dutch private limited company (besloten vennootschap met beperkte aansprakelijkheid) — will remain in force unchanged, giving entrepreneurs the choice between the EU Inc. and the national corporate form. The Dutch government has expressed its support of this optional regime.

Key features of the EU Inc.
If the proposal is adopted, the EU Inc. is intended to become a low-threshold, uniform and fully digital corporate form. Shares will be exclusively digital and registered in a fully electronic shareholders’ register. Work is also underway on a single central EU-level platform connecting all national trade registers. The European Commission will make standardised articles of association available, which must be accessible both in the language of the member state of establishment and in English. Tailored arrangements will remain possible, though these will attract longer timelines and higher costs. Under the new framework, share transfers can take place online, without the mandatory involvement of a civil-law notary, as is the current situation under Dutch company law.

An EU Inc. may be established not only by way of incorporation, but also through a domestic or cross-border conversion, legal merger or demerger of an existing undertaking. The proposal also provides for the conversion of an EU Inc. into a national private limited liability company governed by the law of the member state of registration (and vice versa).

Criticism of the proposal
The EU Inc. is primarily designed to make it easier and less costly for entrepreneurs — in particular those operating startups and scale-ups — to be active across multiple EU member states. The ambition is significant: fewer member state-specific barriers, lower costs and faster access to the international market. Whether the current proposal can deliver on that ambition is, however, open to question, and it has attracted considerable criticism.

To begin with, the proposal gives rise to a number of uncertainties: it remains unclear how supervision, oversight and enforcement will be structured in practice, and employment law and tax law remain matters of national competence. This sits in tension with the promise of a single, uniform European corporate form. Earlier today, investor associations Eumedion and the VEB expressed a sceptical view. Although the EU Inc. is well-intentioned, the VEB considers it to be, above all, an unworkable hybrid form, under which the market will remain largely fragmented.

Additionally, according to the Royal Dutch Association of Civil-law Notaries (Koninklijke Notariële Beroepsorganisatie, or “KNB”), the EU Inc. increases the risk of circumvention, sham arrangements, and fraud, partly due to the absence of robust anti-money laundering mechanisms and systems for identity verification and fraud prevention. The current proposal provides only for limited mandatory checks at incorporation and upon amendment of the articles of association. No such preventive checks apply to share transfers, issuances, or conversions, which significantly curtails the supervisory role of the civil-law notary. This stands in direct contrast to recent developments within the EU in the field of anti-money laundering: the EU Anti-Money Laundering Regulation — due to take effect in July 2027 — introduces stricter due diligence and reporting obligations across a wide range of legal services involved in the incorporation, operation, or management of companies. This tension is one that both the Dutch government and the KNB have noted explicitly.

Finally, the question is what real practical benefit the EU Inc. will offer entrepreneurs, both in terms of legal certainty and clarity as to the applicable set of rules. Although the proposal aims to simplify the incorporation process by making it faster, more digital, and less costly, entrepreneurs will still face a layered patchwork of national and European legislation, which will be difficult to navigate without specialist legal advice. This complexity is likely to undermine the very certainty and clarity that entrepreneurs require when structuring and operating their business. The lack of supervision and oversight in the current proposal also means that the EU Inc. is likely to be regarded by banks, lawyers, and civil-law notaries as a high-risk corporate form and subjected to enhanced client due diligence. This will result in an increased administrative burden on the entrepreneur — an outcome that serves neither the entrepreneur nor the institutions involved.

Current status
The proposal is currently still in the development phase. It will be considered by both the European Parliament and the Council of the European Union and is not expected to enter into force before 2028. Despite the criticism raised with respect to its substantive implementation, the Dutch government is broadly supportive of the proposal and the wider framework of the 28th regime. We also welcome the initiative for the EU Inc. and the ambition to reduce administrative barriers for entrepreneurs operating across the EU. However, we consider that the proposal, in its current form, risks being a false simplification, and that its substantive implementation warrants further refinement in order to be brought into alignment with broader European initiatives in the field of prevention and compliance.

Stay tuned for further developments on this topic.

Should you have any further questions regarding the EU Inc., feel free to contact one of our corporate lawyers.