Matheson EU Legislative Insights
Expert analysis of the EU legislation shaping Ireland’s Presidency agenda.
Matheson EU Legislative Insights is a fortnightly update focusing on key aspects of the legislative agenda during the course of Ireland’ s Presidency of the Council of the European Union.
Every two weeks, Matheson experts will review a key piece of legislation to provide an “at-a-glance” summary of its strategic context, objectives and implications. Should you have any queries in respect of the contents of the update, please do not hesitate to contact your usual Matheson LLP contact or any member of our team detailed below.
In focus: The EU 28th Regime
What is the EU 28th Regime?
In its Work Programme for 2026, published on 21 October 2025, the European Commission announced plans to introduce a 28th Regime — an EU-level business framework that would allow companies to operate across Europe under a single set of rules. The Commission published its legislative proposal on 18 March 2026.
The regime will be voluntary and sit alongside existing national forms, offering companies an opt-in corporate legal framework built on a “digital by default” approach. Features include a company registration certificate, flexible governance arrangements, employee share options to help attract and retain talent, and improved access to investment. Though designed primarily with small companies and start-ups/scale-ups in mind, the regime will be available to businesses of all sizes. It should be considered alongside the forthcoming European Innovation Act, given the significant overlap between the two initiatives.
The corporate form is commonly referred to as “EU Inc.”. The legal basis for the proposal is Article 114 TFEU, and the instrument of choice is a Regulation, meaning it will apply directly and uniformly across all Member States without requiring national transposition — a deliberate design choice to avoid the divergent implementation that has undermined previous harmonisation efforts.
The 28th Regime at a glance
| What it is | A voluntary, EU-level corporate framework allowing companies to operate across Europe under a single set of rules, built on a “digital by default” approach |
| The legal instrument | A Regulation based on Article 114 TFEU, applying directly and uniformly across all Member States without requiring national transposition |
| Common name | “EU Inc” |
| Who it targets | Designed primarily with small companies, start-ups and scale-ups in mind, but available to businesses of all sizes |
| Publication date | Proposal published 18 March 2026 |
| Current stage | Legislative process underway; Ireland takes over the Council Presidency in July 2026; Commission targeting political agreement between Council and Parliament by end-2026 |
| Key institutional lead | Commissioner Michael McGrath (Renew/Ireland) |
| Matheson key contacts | Susanne McMenamin and Emma Doherty |
What are the key legal and political challenges?
Member State sovereignty is the central political risk. The proposal’s success will depend largely on Member States’ willingness to cede control over company law to a genuinely unified regime. The central tension in negotiations will be between creating real harmonisation and protecting national prerogatives.
Eligibility scope will shape the regime’s practical value. Whilst start-ups and SMEs are the main target, the appeal to larger companies will depend on the final shape of the legislation — particularly what practical benefits and flexibility it offers for specific business structures. A regime that is too narrowly scoped risks limiting take-up; one that is too broad risks political resistance from Member States concerned about regulatory arbitrage.
Jurisdictional interaction with national systems is an unresolved complexity. Questions will arise about how the 28th Regime interacts with national company law systems, particularly around jurisdiction, taxation, and mutual recognition of corporate entities. The interaction with national tax regimes — including the timing and scope of the deferred taxation treatment for employee share options — will be a high-priority question for in-house lawyers and general counsel, and one that the proposal does not fully resolve at this stage.
Employment rights protections are clear in principle but politically sensitive in practice. The proposal is explicit that EU Inc. does not weaken employment rights, does not alter labour law, and does not remove co-determination where it exists. Such protections are governed by the law of the Member State of the registered office — EU Inc. removes unnecessary company law barriers, not social protections. This will nonetheless be a sensitive political issue in several Member States and defending this distinction will be fundamental.
Forum shopping and letterbox company risks are the most politically charged negotiating flashpoints. The proposal includes anti-abuse provisions, but the degree to which Member States trust enforcement and oversight mechanisms will significantly shape the negotiations. Targeted reassurance on enforcement integrity, rather than permitting national add-ons, will be crucial.
Digital speed and AML safeguards must coexist. The speed and digital nature of the incorporation process is balanced by identity authentication requirements using eIDAS-recognised electronic identification tools, and the continued application of EU AML obligations. Member States retain the ability to apply additional scrutiny, subject to the time and cost deadlines.
Implementation sequencing and Ireland’s Presidency priorities are critical. Even if political agreement is reached by end-2026 as targeted, additional time would be required for implementing acts and technical infrastructure to be put in place, and the proposed Regulation provides it will apply only from the last day of the 12th month after entry into force. Ireland’s Presidency will be critical to maintaining negotiating momentum and avoiding political drift. Four key priorities for the Irish Presidency are: (i) protecting the core architecture (optionality, digital-by-default, removal of national barriers); (ii) resolving sensitive issues early (employment safeguards, anti-abuse provisions); (iii) keeping the scope disciplined; and (iv) aligning with the European Parliament early to make trilogues realistic.
Systems remediation for the once-only principle is a significant practical challenge. Whilst automatic data exchange is conceptually straightforward, the practical implementation — connecting business registers to tax, VAT, social security and beneficial ownership authorities across 27 Member States — will involve significant systems remediation. Meaningful lead-in time for Member States will be essential.
What does this mean for your business?
Now that the Commission’s proposal has been published, the EU 28th Regime is a live legislative file that warrants active monitoring by businesses with cross-border European operations. At this stage, the following points are most relevant:
- Assess the structural opportunity, but do not act prematurely. The regime is voluntary, and businesses should begin assessing whether the EU Inc. structure could offer a more efficient vehicle for cross-border operations than their current national incorporation model. Features such as the “fast-track” incorporation route, flexible capital structure and the digital-by-default principle represent a material operational advantage over conventional national models, and businesses considering new cross-border structures should be aware of them as the regime takes shape. Any decision to restructure should await greater certainty on the final shape of the legislation. The core architecture – optionality, digital by default, the removal of national barriers – is worth monitoring closely as negotiations progress.
- Monitor the taxation treatment closely. The EU-ESO framework’ s deferral of taxation to the point of disposal of shares is a particularly notable feature for businesses seeking to attract and retain talent across the EU. It is important to note that while the timing of taxation is harmonised, tax rates and capital gains treatment remain jurisdiction-specific. Therefore, the interaction with national tax regimes remains to be fully worked through and should be tracked as the file progresses.
- Note the entry into force timeline. Because the instrument is a Regulation, there will be no national transposition requirement. However, the Regulation will apply only 12 months after entry into force — meaning that even after political agreement is reached, businesses should not expect immediate operational availability of the EU Inc. form. The Commission is required to adopt implementing acts (including standardised template articles of association and forms for the EU central interface) before the regime can function in practice. The build-out of the technical infrastructure, including the EU central interface built on BRIS and the connections to national registers and public authorities, will likely require further lead-in time beyond the 12-month application date. Real-world EU Inc. incorporations are therefore unlikely before 2028.
- Engage during Ireland’ s Presidency window. Ireland takes over the Council Presidency in July 2026, with the Commission targeting political agreement by end-2026. Businesses with a stake in the outcome — particularly on anti-abuse provisions, employment protections and scope — should consider engaging with the legislative process during this window.
- Plan for systems lead-in time. The “once-only” registration principle and digital infrastructure requirements will involve significant systems work across Member States. Businesses that rely on cross-border data exchange with public authorities should factor this into their planning timelines.
