knowledge 21 October 2026

MCF horizons Podcast Series Ep.6: EU Inc - Europe’s Big Bet on Growth

In this episode, Ciara O'Herlihy and Stephen Tallon examine the proposed EU Inc. and what it could mean for startups, scale-ups, investors and employees.

Audio Transcript

Transcript available to view here, or in full below.

[00:00 - 00:29]

Welcome to MCF horizons, McCann FitzGerald’s podcast series, where we explore the legal and market developments, trends and policy milestones that are shaping today's landscape.  Through conversations with our lawyers, we share practical, forward-looking insights to help organisations navigate change and make informed decisions. Now let's turn to today's episode. Stephen, today we're talking about the EU Inc., which is one of the most ambitious company law initiatives to come from the EU in recent years.

[00:29 - 00:53]

For those who haven't heard about the EU Inc. proposal, what exactly is it? The idea behind EU Inc. is really to have a single EU-wide corporate structure that can be used by founders and investors who are starting the next wave of high-growth, innovative businesses here in Europe. The principle behind it is to foster innovation and promote competitiveness across Europe.

[00:53 - 01:23]

Okay. And while it's open to any businesses on an opt-in basis, it's really aimed at those innovative start-up and scale-up companies, right? That's right. EU Inc. is meant for the most ambitious founders who are building right here in Europe. And the idea behind it is to avoid the loss of these high tech, high-growth companies to places like Delaware, where they've got a long-established, easy business environment for setting up and growing high-growth companies.

[01:24 - 01:55]

Take Stripe, for example. The Collison brothers, two Irish guys, decided to start their company in California rather than in Ireland or in Europe for a variety of reasons, but one of which was the regulatory hurdles that they hit here with 27 different Member States, 27 different legal and tax regimes to tackle with.  The idea behind EU Inc. is to provide a streamlined, fast and efficient way of doing business that's familiar to founders and investors across the globe.

[01:55 - 02:20]

Yeah, okay. And I think it's worth taking a step back, Stephen, isn't it and reflecting on that bigger picture because this isn't just a technical company lawyer forum - this is a key part of Europe's drive to regain its competitiveness. It's a core focus of Ireland's Presidency of the EU, and Ireland has a real opportunity over the course of the next few months to shape the discussions around the EU Inc. proposal.

[02:20 - 02:41]

In Europe, we have one of the largest economies in the world. We have world class universities. We have more early-stage startups than any other region globally. And yet, as you say, we've struggled to produce the same number of globally successful growth companies as the US and China. And this is our opportunity to really reset that. I think so.

[02:41 - 03:11]

And the reaction from the community, both founders and investors, has been overwhelmingly positive to what EU Inc. could be for them. Obviously, industry wanted one thing, which was a very ambitious overhaul of what has come before, and reality hits the road a little bit with what the EU is proposing in terms of taking some of the good bits of their proposal from industry and overlaying that with some pragmatism.

[03:11 - 03:37]

I think that we might touch on later. But the question remains whether this is a genuine transformation of corporate structures across Europe, which would drive that innovation and ambition for those founders you mentioned, or whether it's just another overlay of a corporate structure for us. Okay, so lots to talk about and let's dig into some of that and see where this proposal really delivers and where it has compromised.

[03:37 - 04:14]

And maybe one of the best places to start is the very beginning of a company's lifecycle. Because before you hire your first employee, before you raise any investment, you've got to register your entity, you've got to incorporate. And still today, that is a very cumbersome process in lots of European countries. The industry’s blueprint for EU Inc. was for a totally fresh start, a brand-new EU registry that would be overseen by a dedicated EU agency, a fully digital, English-first, zero minimum capital requirements and no intermediaries.

[04:14 - 04:35]

In other words, a system where a founder in Dublin or Barcelona or Berlin could start a company from their laptop in a couple of minutes. How close does this EU Inc. proposal come to that industry vision? Yeah, I think we got pretty close to all of that. And the Commission listened to industry's proposals for what they wanted, what they needed to see.

[04:35 - 05:06]

And I do think they've come forward with a big change in that regard. So they have proposed the online digital-first incorporation process that you mentioned, with a fast turnaround time of getting it done within 48 hours at a low cost-point of about €100. And vitally, and this isn't a big change from an Irish context, but across the bloc it will be a change of having this no minimal share capital requirement

[05:06 - 05:29]

that will apply to an EU Inc., which again is just removing barriers to entry for founders doing business here. And you will start it with a harmonised incorporation template, which would be the same for everybody. And if you use that, you submit it through an online portal that gets submitted to national registries, and you get issued with your corporate certificate where you can get up and do business from there.

[05:29 - 05:58]

However, they did stop short of harmonising across the board the incorporation and the registration framework for Europe. You will plug into a European database that then gets transmitted to national registries. Okay. But a fully digital 48-hour incorporation turnaround. I mean, that's a pretty big deal, right? Like in Ireland, we have already developed a pretty user-friendly system for incorporating companies.

[05:58 - 06:19]

We can incorporate a private limited company here with nominal share capital online in a couple of days. It's pretty similar to the system for registering a corporation or an LLC in Delaware or a private limited company in in the UK. But that is not the reality everywhere in Europe. And we've had clients pulling their hair out over the years at the set-up

[06:19 - 06:54]

incorporation requirements in other European countries, where setting up a company can still involve having to fly over in person, deal with local notaries, open local bank accounts, deal with a ton of paperwork and a lot of delays. So for those European countries, this EU Inc. proposal really will streamline the incorporation process. That certainly is the hope. And at its core is this principle of the once-only principle, and the idea behind that being that you will provide all of your registration documentation, your ID documentation at the start of this process.

[06:54 - 07:23]

And once you're registered on the EU system, that all gets shared with the relevant national authorities, whether that's the registrar for companies, the tax authority, any payroll that you need to do. And it's streamlining the process for founders. And that's potentially huge, right. I mean, one of the biggest frustrations we hear from clients is the sheer amount of bureaucracy and administration and paperwork.

[07:23 - 07:45]

And this really will streamline that process and remove a lot of that duplication. That's the idea. So founders spend less time on the administration of incorporating their company, and they've got more time then to build the business, hire the team and get really focused on the growth that we want to see here in Europe. So potentially game changing, right,

[07:45 - 08:08]

if the technology and the infrastructure hold up? Yeah, it's a big if. But we'll see. Okay. So let's assume you've successfully incorporated, you've logged in with your digital ID, you've paid your €100, you’ve got your incorporation cert. You're up and running as an EU Inc. The next challenge is raising investment and hiring your team. Looking at the kind of capital raising first.

[08:08 - 08:32]

What does this EU Inc. proposal say about fundraising? Sure. So capital is the lifeblood of these early-stage companies. They need the funding to get up and off the mat quickly so that they can compete on a global scale with US companies who can act quickly. Industry’s proposal to address the time it takes to get from startup to funded was this idea of an EU-FAST.

[08:32 - 09:03]

So this was going to be a streamlined, standardised fundraising document that was open to all founders and investors to use and could be rolled out across EU Inks. Okay, so basically Europe's answer to the SAFE notion in the US. That's it. Exactly. This idea of a standardised convertible financing instrument that importantly, from a European context, had no interest rate attached to it, no maturity date and would push out conversion until a later date.

[09:03 - 09:24]

So whether that was the next funding round, a sale or a liquidation of the company.  Okay, and the key attraction being for founders is that you don't have to agree a valuation early doors, that you don't have to actually issue any shares at that early stage. That's it. Because particularly for very early-stage companies, it's hard to value them.

[09:25 - 09:54]

Founders will think it's worth one thing, investors another. And so the idea behind the FAST or the SAFE or an ASA or versions of the same thing is to defer those difficult decisions, get the funding in quickly and allow these companies to get started. Okay, so that's the kind of early-stage fundraising. And what we're saying is the EU Inc. proposal facilitates the use of standardised EU-FAST investment instruments, but doesn't mandate them.

[09:54 - 10:23]

So companies and founders can use alternative financing structures if they want. The next stage is really, you know, when you come to your secondary or on an eventual exit. What does the EU Inc. proposal say about capital in those circumstances? So they looked at not only making it easier for founders to start businesses, but also then to go through the lifecycle of that company.

[10:23 - 10:55]

So when you are into the growth stages and you are focused on maybe your later transactions that might involve secondaries or an eventual exit and a sale, the EU Inc. proposal will have an online platform where you can access standardised transfer documents, whether that's stock transfer forms or others, execute them digitally, keep a record of your cap table, who owns what, and really avoid mistakes or delays later down the line for corporate transactions.

[10:55 - 11:19]

Okay, so a lot of flexibility around capital. And it's funny because as an Irish listener you might be listening thinking, like, what's the big deal here? We already, in truth, have quite a lot of flexibility in Ireland. You know you can already incorporate a company with nominal share capital. We can issue flexible share classes. And we generally have a pretty flexible approach to corporate structuring and investment.

[11:19 - 11:44]

I think that's why Ireland has been successful over the years at attracting international investment. The real disruption, though, will be for those European countries where company law still involves a lot of formality. So if you're used to dealing with local notaries and paper-based processes and long registration periods, moving to a fully digital system for share issuances and share transfers, really will be a game changer.

[11:44 - 12:05]

That's right. Ireland is ahead of the curve. It's been a business-friendly jurisdiction. We are familiar with instruments like a SAFE or an ASA, and so there's not much of a change there. But the idea here is to harmonise across the EU so that we can harness the competitiveness of the bloc, not just individual Member States, but conscious as well

[12:05 - 12:26]

that two corporate lawyers sitting here talking about corporate structures all day long –there's more to these companies than just the corporate shell that they sit within. Most notably there are the talented and innovative people that are driving the growth within those companies. And EU Inc. has a lot of changes coming down the line that are possibly more significant for them.

[12:26 - 12:53]

Yeah. And let's turn to that. Let's turn to talent, because I actually think this is where the EU Inc. proposal promises really significant change. Stepping back – start-ups can rarely compete with big corporates on salary alone. They've got to use equity to attract and retain the best people. And one of Europe's long-standing challenges has been that every country has its own way of taxing employee stock options.

[12:53 - 13:20]

The rules can vary a lot between countries, and in lots of cases, employees are taxed on their stock long before they've actually realised any value from their shares. They are generally seen as having a more favourable framework for start-ups. They have incentive stock options, ISOs, which allow employees to defer tax until the shares are sold and in lots of cases benefit from preferential capital gains tax treatment

[13:20 - 13:42]

on the upside.  The blueprint for the EU Inc. was for a standardised EU-ESOP - employee share option plan - which would apply all across the EU, and one of the key requests of industry was for the end of this dreaded dry taxation, so that tax would only apply when employees actually sold their shares, either on a sale or an IPO.

[13:43 - 14:07]

That's right. And that idea of dry tax charges that you've mentioned there is really one of the biggest barriers to retaining top tech talent here in Europe. And we've seen the flight of people to the US for that very reason. So rather than getting charged their tax on an exit or an eventual liquidity event, some jurisdictions decide to tax at the point of grant or exercise.

[14:07 - 14:39]

And that means that an option grant, which is meant to be a financial incentive and alignment with the long-term growth prospects of this company, can be a financial liability for these early-stage employees. And that just works counter to the whole purpose of it. And so the EU Inc. proposal, I'm glad to say, is to eliminate this idea of a dry tax charge and get rid of it completely and defer the taxation of options in an EU Inc. until the point of a sale.

[14:39 - 14:58]

And that's huge, right? Because just to bring this to life for people who aren't close to it. Imagine you've just joined a startup, you know, a tech start-up that has a promising new AI platform, and you get options that are valued at €50,000 when you exercise them. The company is still private, so you can't sell those shares.

[14:58 - 15:24]

You've got no actual cash. In a dry tax system, you would be taxed on that €50,000 notional paper gain. And depending on where in the EU you're based, your effective tax burden could be anywhere from close to zero to more than 50%.  If the company ultimately didn't succeed, if the product just wasn't right or the market fit wasn't there, those shares could ultimately be worthless.

[15:24 - 15:47]

But you've paid your tax bill. The cash has left your account. So, as you say, what should have been an incentive has actually become a real financial liability for you. That's right. And the removal of that risk for early-stage employees will enable more people to take the leap and leave the large multinational and the cushy salary for the potentially lower salary, but higher upside that the incentive and the option has to give.

[15:48 - 16:15]

So it's potentially game-changing for EU talent. And while we have harmonised tax deferral, though, the other request of industry was for a common capital gains tax treatment right across the EU. And on that point the Commission was a bit less ambitious. Right? That's right. They give with one hand and take with the other. So rather than harmonise taxation treatment - they did so for the point at which tax comes across -

[16:15 - 16:49]

but the rate of tax they left with the Member States to decide on an individual basis. So a Member State may choose to tax the option as employment income, which will attract a higher rate, whereas a different jurisdiction might choose to treat it as a capital gain and tax it at a lower rate. Okay. So in effect, that means that as an EU Inc., you could have a standard EU-ESOP that applies all across the EU, but that package could be worth very different amounts to different employees depending on where in the EU they're based.

[16:49 - 17:21]

That's right. Unfortunately, there's no harmonisation in the rate of tax which will create differences in different markets. But they've taken the same approach for employment law as well. So a sticky political issue across the EU is social protection for employees and industry’s proposal was initially to have no employee participation rights at board level. And that might be more common to a US investor than certain European investors.

[17:21 - 17:45]

And the Commission proposal does not extend those employment rights to an EU Inc. on a harmonised basis. Rather, they defer to each individual Member State to apply the local employment laws. So if you have employees in France, the employment law attaching to them will apply. Similarly, if you have employees in Ireland, the employment laws there will attach to those employees.

[17:45 - 18:14]

And so it's harmonised from a company law perspective and the corporate structures that we talked about. But tax and employment remain localised.  Okay, so again you could have an EU Inc. in Germany that's facing a very different tax and employment law landscape than an EU Inc. operating in Ireland for example. Yeah you could. Okay, there’s one final aspect I think that's worth mentioning, Stephen.

[18:14 - 18:43]

And that's what happens when an EU Inc. business fails. Closing a business in Europe has traditionally been seen as much more complex, costly, time-consuming than in the US, where they obviously have Chapter 11. This EU Inc. proposal promises to introduce a harmonised, simplified, six-month insolvency regime for qualifying EU Inc. companies. That's right. And qualifying company is a tricky term in that.

[18:43 - 19:10]

So EU Incs are intended for innovative companies. And the debate is out on what qualifies as an innovative company. But think high tech, not heavy industry. And if you do fall within that category of qualifying and the business is high-risk, doesn't work out for whatever reason, the EU Inc. proposal not only makes it easier to start your company at the beginning of the process, but also then if it doesn't work out to wind it down.

[19:10 - 19:46]

So it's removing the time and the cost associated with liquidating a business in the EU. Okay, so make it easier to start a business and make it easier to fail and move on if things don't work out. That's the idea. Okay, so let's put it all together. This EU Inc. proposal promises a 48-hour fast track incorporation process, a fully digital, once-only reporting system, zero minimum capital requirements, and the end of dry taxation on employee equity and they’re significant reforms.

[19:47 - 20:15]

At the same time, founders will still have to navigate 27 different tax and employment law regimes. So the question is Stephen, I think at the end, are the benefits of this EU Inc. proposal enough to persuade our most ambitious founders to build, stay and scale their companies here in Europe? It's certainly one of the biggest changes that we've seen in several years on a company law basis throughout Europe.

[20:15 - 20:37]

It has the potential to really change the game for Europe and make it competitive versus a Delaware or China, where they have unified markets and harness the talent that we've got here. The proposal doesn't go as far as industry would like, but I mean, not to let perfection be the enemy of progress, it’s better than what we had before.

[20:37 - 21:02]

And it has many elements that will be appealing to different founders at different stages. The process is still ongoing throughout the rest of 2026, with the idea that the first EU Incs could be available to be launched in 2027 or 28, and the real test of it will be the founders and the investors. Do they want this? Does it make sense for them, and do they actually use it when it's available to them?

[21:02 - 21:24]

Okay, Stephen. Well, we'll watch this space. Thank you very much. Thanks, Ciara. Thank you for listening to MCF horizons. For more insights and updates, visit mccannfitzgerald.com. And don't forget to subscribe to stay up to date with future episodes.