A corporate law concept known as EU-Inc has sparked considerable interest in European economic and political discussions, according to Magyar Csaba, Vice President of the Hungarian Association of Certified Accountants (MOKLASZ) and Head of Crystal Worldwide Law Firm.
The European Union is attempting to create the next stage of evolution for the common market, specifically to facilitate financing for growth-oriented companies.
While the EU has long functioned as an economically integrated region, corporate law has remained within national frameworks, posing a significant challenge, particularly for rapidly growing technology companies. EU-Inc emerged from this necessity, envisioning a new, EU-regulated common corporate form offering a unified regulatory system for companies expanding across the continent and beyond.
Magyar Csaba recently told Index that the concept is fundamentally driven by global competitiveness concerns. Numerous analyses in recent years have indicated that Europe’s shortcomings compared to the United States aren’t necessarily in innovation or talent, but in the difficulty successful startups face in scaling to a continental level. For a startup based in France, Germany, or Hungary, growth often means adapting to new legal systems, corporate regulations, investment structures and differing stock option schemes when entering a new country.
EU-Inc: A European Response to the Delaware Effect
Experts advising large investors often recommend an American structure, which explains why many promising European companies ultimately establish themselves in Delaware. EU-Inc aims to reverse this trend by creating a single, officially recognized and uniformly understood corporate legal language across all member states, facilitating communication between startups and investors. The initiative is closely linked to a report by Mario Draghi, which identified the legal fragmentation of the single market as a major obstacle to European growth.
According to Draghi, Europe doesn’t need new subsidy programs but institutional reforms that genuinely enable companies to grow across borders. EU-Inc aligns with this thinking, focusing on creating new infrastructure rather than providing subsidies. “When Ursula von der Leyen publicly discussed the project at Davos, she presented it not as a startup initiative, but as a strategic economic policy tool to help Europe compete with American and Asian rivals,” Magyar Csaba summarized to Index.
A key feature of EU-Inc is that it wouldn’t affect existing corporate forms in the 27 member states, but would function as a “28th jurisdiction.” This means companies could choose between traditional national corporate law or a unified EU corporate form and operating model when founding their business. The proposal envisions EU-Inc as a limited liability company with characteristics of a corporation, which could be established and operated entirely digitally.
The emphasis is on rapid operation and investment compatibility, not on traditional legal formalities. Corporate governance rules would be standardized, and decision-making could be conducted electronically.
Digitalization is a key consideration. The concept proposes creating a central EU company registry accessible to banks and investors, along with an EU Dashboard for managing shareholders, resolutions, and investment transactions. This approach reflects the increasing reliance of modern corporate governance on digital infrastructure, requiring the legal environment to adapt.
Magyar Csaba highlighted that “the system also aims to create a unified EU-level stock option, allowing employees to participate in the company’s growth under uniform conditions. The proposal suggests that profits from these options should be treated as capital gains, with taxation occurring only upon actual sale, which could significantly improve the competitiveness of European startups in the global labor market.”
Why Delaware Became the Legal Hub for Companies
The expert noted that EU-Inc adopts a cautious approach from a tax perspective. It wouldn’t create a uniform corporate tax rate or infringe on member states’ tax sovereignty. The company would continue to pay taxes where it conducts actual economic activity, but the goal is to establish a centralized reporting and profit-sharing system for operations in other member states, reducing double taxation disputes and administrative burdens. This would be more of a coordination reform than a corporate tax revolution.
A recurring comparison point for the concept is Delaware. Surprisingly, a large proportion of Fortune 500 companies are incorporated in Delaware—roughly two out of three. This means that the majority of the largest American companies operate under Delaware corporate law in a state with a population of just under one million. In recent years, approximately 80% of U.S. Initial public offerings (IPOs) originated from Delaware.
This doesn’t imply these companies operate there, but that investors and the market view Delaware’s corporate law as the default corporate framework. A well-known example is the office building at 1209 North Orange Street in Wilmington, considered one of the most densely populated headquarters in the world. Public records indicate that nearly 300,000 companies are registered at this single address, including numerous Fortune 500 firms.
This phenomenon demonstrates Delaware’s true strength: it has become a dominant global corporate legal infrastructure, which is one of the main inspirations for the EU-Inc concept.
It’s worth noting that Delaware isn’t known for high taxes internationally. For example, the holding company of Google, Alphabet Inc., is also located in this state. The structure was once nicknamed “Tax Paradise Soup” in Hungarian due to its favorable tax environment. This raises questions about the European Commission’s assertion that the state’s popularity isn’t due to low taxes.
The Commission argues that the more critical factors are Delaware’s predictable legal system, expert courts, and investor-friendly precedent. The creators of EU-Inc aim to replicate this model in a European context. The goal is a legal framework that investors automatically understand and reduces transactional uncertainty. The parallel is not accidental: Delaware symbolizes a unified corporate startup ecosystem currently lacking in Europe.
Can Europe Prevent Startups from Going to Delaware?
Magyar Csaba emphasized that in Delaware, shareholder and beneficial owner data are not public. This environment is particularly attractive to investors who prefer to keep their involvement in promising startups confidential. When Warren Buffett or Jeff Bezos decide to invest in a promising startup, their Delaware investment can remain invisible to the outside world, especially competitors.
The EU-Inc concept, but, leans towards greater transparency. It remains to be seen which approach will be more successful.
It’s important to remember that the European Union has previously attempted to create unified corporate forms. The Societas Europaea exists, but has largely become a tool for large corporations. EU-Inc is therefore another chapter in a longer reform process, learning from past failures. One lesson is that excessive complexity deters users, so the new model plans for a low barrier to entry, such as no minimum capital requirement.
The proposal’s future remains open. The Commission is expected to formulate the idea into a legislative proposal, which will be followed by a lengthy negotiation process involving the European Parliament and the Council.
The final regulations will likely be the result of compromises, and some elements may be simplified or modified. It’s also a question of whether member states will support it, as a unified European company form could partially reduce competition between national jurisdictions.
EU-Inc is therefore simultaneously a legal innovation, an economic policy experiment, and an institutional self-reflection. It’s about whether Europe can build its own corporate infrastructure in a global competition where the legal environment is as important as capital or technology. The question isn’t whether a new corporate form will be created, but whether an environment can be created where companies don’t have to abandon Europe to become global players. If so, EU-Inc could indeed be the next major step for the single market; if not, it will remain another interesting, but short-lived chapter in the history of European corporate law.
(Cover image: Donald Trump shakes hands with Ursula von der Leyen as they announce a trade agreement between the European Union at the Trump Turnberry golf club on July 27, 2025. Photo: Andrew Harnik / Getty Images)
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