You can just do things – Creating a pan-European legal entity, the right way

Jun 27, 2025 · 16 min read · 6 views

Context:

• I am part of a group of people that push for a pan-European legal entity in Europe: EU Inc
• The goal of this post is to explain a) how we got so far and b) what’s still needed and c) how you can help
• First the good news: Brussels is convinced, something like EU-Inc will come.
• The bad news: The startup ecosystem needs to stay actively involved, otherwise politicians will do a solution that won’t be useful for founders and investors – and this is very likely to happen by default.
• We need your help getting this right!

Ok let me explain and give you a bit of backstory:

There is a common saying… "Europe doesn't have a startup problem; it has a scale-up problem." Effectively, this means we have enough startups, but not enough money for scale-ups.

I think that's bogus. Yea, we need more money for late-stage VC. However, in reality, Europe faces an early-stage momentum problem.

It's tough for startups to quickly raise, hire, scale, etc in Europe.

Why? Fragmentation.

It's obvious in customer acquisition.

But it's also a huge issue in raising capital. Less than 18% of all early-stage investments in Europe are pan-European. Or differently put: Unless you have local angels you won't be able to efficiently raise.

And even if those angels won't be the best in Europe (or the world) in said domain. They will just likely be local angels.

In smaller ponds, fish stay smaller.

Or differently put, there is no "European Startup Scene" – there are 30+ national ones. It's not EU vs US vs China. It's Denmark vs US, Lithuania vs China, etc.

Why the lack of pan-European investments?

As angel investor and VC myself, i can tell you why:

I won't invest in a Lithuanian legal entity. I don't want to find local lawyers, hope they have startup experience, vet the legal and incorporation papers, figure out all the local differences, find a local tax person, and then still have unknown-unknowns that come at me in 5 years. "Oh that's different in Lithuanian corporate law… sorry you messed up… please explain this now to your LPs and say good bye to your investment…"

"But if you want to do a deal you will jump through hoops"

Maybe… if I do a EUR 5 million investment, but not for a quick first angel check that gives momentum. Most startups in Europe die due to a lack of momentum.

But even if I'd do a larger investment that could justify going into the effort and risk, I will push them to reincorporate into a US Delaware Inc, because there is no way that later-stage investors want to go through all of that as well.

"It's just a bit of friction." But at what cost?

Imagine you have a regular disadvantage of 1%. Daily. This 1% compounds to a lot quickly, after a year you’d have 90%+ lower momentum.

Who do you think will succeed in this environment? You or your competitors in larger unified blocks?

In the US I start a company in Boston, send an investor in California a YC SAFE note, they don't even need to involve their lawyers because they have seen that document hundreds of times. They directly just sign online and wire the money.

In Europe we don't even have comparable distances but even getting an investor from a neighboring country is already unlikely. Even worse, most founders start by figuring out which local entity to use and then decide if they want to be punished by international investors (who don't want to learn about your local entity's gotchas) or by local tax authorities (who assume you try to do tax evasion if you use a Delaware Inc that investors understand)

It's simple: Standards create confidence, and confidence creates momentum.

The solution: A pan-European standard legal entity

This is where a project we have been working on over the last year comes in – www.eu-inc.org

We sat down with Orrick, Bird&Bird, multiple other startup legal teams, and over 100+ open-source contributors and figured out how in detail a pan-European legal entity could work.

What compromises to pick, and which trade-offs to do?

We then promoted it and had got 16,000 people to sign it – effectively the who-is-who of European Startups. From Patrick Collison, to Paul Graham, to the founders of Wise, Wolt, Bolt, and thousands more.

How? By making sure that the solution makes sense for startups.

Since then we became, the defacto go-to experts for the topic of "a pan-European legal entity using the 28th regime" for anyone taking this topic seriously.

(FYI: 28th regime is basically the idea that you define something on European level. It's like cloud computing. By itself not yet a specific product or solution. You could EU-standardize anything. EU-Inc is ONE specific solution, using the 28th regime.)

Since then we met (almost) every politician working on this actually trying to have a solution useful for startups. From DGs, to workgroups, to thinktanks, to taskforces. We've been everywhere in Brussels, like a 28th regime circus show.

How does it work?

It's fairly simple:

• A new legal entity in every European country
• Using a standardized corporate law at the European level
• A new digital-first online registry to leap-jump digitalization
• An API for this registry to create an ecosystem
• Standardized stock options for Europe, without tax-wtf-ery

In a nutshell, this allows creating a single playbook for European founders – a website to create an entity online, issue stock options to attract talent across Europe, and use standardized legal docs to raise from investors globally – all online and in real-time! Plus if done well, an API that creates an ecosystem of better services around it.

If you have experience with startups – think Delaware Inc, meets Stripe Atlas, meets YC SAFE.

You can read the details about it here.

Is the EU-Inc a perfect solution? No. A perfect solution would be a magic button that solves every problem we have – in life, in work, in the universe, in general.

The EU-Inc is, based on every feedback we got so far, a sensible compromise for something that is possible in Europe and what startups need.

Keep in mind that Europe is not the US. Each European member state is a sovereign country that does not want to hand over authority where it does not have to. The most important topics are taxes and employment protection. The commission in Brussel doesn’t make the decisions. The leaders of the member states, the parliament, the council do.

And let’s be honest, finding a solution to a complex problem is hard — even if everyone shares the same goals. Just stack-ranking priorities differently can lead to very different outcomes, often resulting in solutions that don’t work at all.

So, what are the trade-offs we push for?

EU-Inc for everyone, not just "startups"

While we designed the EU-Inc with startups in mind we do not explicitly say it's only for startups.

Why? Because it's really hard to define startups.

“But…” Yes, we tried all the definitions.

You could define them as "Innovative" "R&D heavy" "tech-driven" – what does this mean? Does FlixBus (a German unicorn) pass your panel of government appointed innovation judges? For heaven’s sake, I know people who became rich investing in random coffeeshops around the corner. Should those founders not be able to quickly raise money?

You could say "fast growing" or "raised money" – both would be in hindsight and not useful at company formation, would it?

You could say "below 10 years" or "less than 100 people" or "less than 5M annual revenue" – what happens once the company leaves that boundary? Or more worryingly would you incentivize people to stay small? All of those definitions share the same underlying risks:

a) billion-euro potential startups can’t raise globally and never get built because they don’t qualify,

b) breakout companies must reincorporate at their riskiest stage killing any momentum, or

c) government-given incentives trap companies in the "startup" phase — undermining the whole goal of startups of building massive job creating companies

And honestly, last but not least, we want to avoid a PR release "Brussel now regulates what a startup is allowed to be."

This is not the kind of "vibeshift" message Europe's founders need to hear right now.

So while it sounds easy to “just allow it for startups only”, in practice we believe you should just make it simple and allow it for everyone.

A true European standard

This is our second constraint.

No hot-fix of existing solutions.

We call those suggestions asteriks solutions. As in "not GMBH but GMBH with a star ", or OOD, EOOD*, Sarl*, etc – the core idea is simple. Let's keep everything as is, but allow them to use 28th regime corporate law attached to it to "enhance the local solution".

Why is this subideal? We would end up with 27+ new legal entities instead of only one new one. Leading to even more uncertainty – and definitely not one standard.

This would also mean we do not want to update existing company registries – which have very varied levels of digitalization (if any) in Europe.

We need a new company registry. A modern one. A clean start. This would a) be easier to implement (you please wait for all 27+ registries to modernize and harmonize) and b) would allow leap-frogging digitalization for fast moving companies.

Local registries can easily be kept in sync via updates (read only).

This would not only allow proper digital services – it would also allow us to think of this new entity like a product. "Go to www.abcd.com and create your European company.

And given it's only one API, it would also allow the creation of a whole ecosystem. And we have all seen in countries like Estonia how quickly new creative solution and better services get created, once the systems are properly digital.

No goodies

Surprisingly, we do not advocate for the reduction of redtape, harmonization of taxes, or even simplification of employment.

Yes this means your French EU-Inc would fall under french taxes and employment law.

Only corporate law would be standardized.

But… why?

This is a trade-off.

We fear that otherwise, every country leader in Europe would worry that their biggest tax-paying companies would pretend to be "5 startups in a trench coat".

How would they avoid this? By limiting who the entity is for – "only innovative startups" – and then narrowing this definition down until it's only for a niche that doesn't really matter for their taxes and nobody can use it.

The whole point of startups is to build massive companies – quickly. Forcing them to stay small, reincorporate, etc defeats the purpose.

So do we not want these harmonizations?

We absolutely want them.

Put tax and employment harmonization in special programs

We recommend doing them outside of the legal entity so that no reincorporation is needed and the entity itself can stay “for everyone”.

Eg special economic programs or sandboxes that people can apply for, qualify, join – and within those your company has all kinds of specific economic benefits. And once you no longer qualify, simply leave – disconnected from your legal entity.

Maybe these programs should include taxes, maybe special research grants, maybe employment harmonization, maybe easier procurement. Maybe they are for all startups, maybe only for specific industries or technologies the government wants to promote. Maybe more, maybe less, maybe everything.

We believe this would open up two opportunities.

It would allow us to decouple the topics and have two parts that can be easier discussed, adjusted for needs and quicker passed (i do not want to wait until all European countries agree on how to harmonize taxes).

And we could adjust those programs to be more specific what individual stages of startups or industries need.Without knee-capping everyone else. This also lets politicians address concerns more precisely — e.g. labor laws raised by unions. The EU-Inc will never override these; only new incentive programs or sandboxes with union-approved, negotiated terms for clearly defined groups and situations would apply.

When will we have the first EU-Inc? 2028

We are currently working tightly with the commission to make this pan-European legal entity into reality.

The ambitious goal is to have something to vote on by the end of 2025, and to have the first incorporation by late 2027, early 2028 – which, according to our policy team, is hyperspeed for government standards – especially at that level of complexity, involving that many countries and stakeholders.

What's now needed?

Ambition.

It's easy to want to cut corners.

“What if we just do a hack-solution… add asteriks the current entites? Keep them as is… with a modern 28th regime twist… Just hotfix all the local registries… can't be that hard to push them to digitalize and harmonize… even if they completely work differently or even define their role differently… just add hot-patch this here and there.”

“It looks good on paper. Let’s go. Yes, it won't really be a standard nor technological leap, but it's politically easier and will kinda have the same shape?”

This is a very common discussion we have. And if we disagree, frequently don’t get invited again for feedback ;)

But it makes sense from their POV. Anything that Brussels suggests has to pass the member states first. So these kinds of "patch" solutions feel naturally like allowing quick political wins.

Even if the end product misses the mark and wastes this once-in-a-lifetime opportunity

It's also easy to overscope.

“Let's add employment, let's add taxes, let’s remove GDPR, let’s remove redtape and regulation. Not in sandboxes but by default for everyone in the entity. Not in future, NOW!”

The effect of this would be that no member state would want to hand over authority – and as a result they will either have forever-negotiations or they will niche down access.

Overall, we advocate for a lean "no goodies" "tech-first" “boring” new legal entity that allows fast incorporation, investments, stock options and "goodies in niche programs". Both would use the 28th regime and be completely within the goal of the current commission.

Right now ambitious pro-European leadership is needed, not just in Brussels but in all the member-states too. Politicians need to want to do this with the startup ecosystem together. And they want to have a real European solution.

Network & Support

It's impossible for us to convince every member-state leader of the need for this.

If you have a strong network in your country we need you.

Promote EU-Inc please to your leaders please. This article or www.eu-inc.org and the Legal Poposal is likely a great start.

But more importantly, make them understand that scale and momentum are everything in startups and only standards across large regions is the way to get there.

Who is "we"

I keep saying "we" in this article. EU-Inc is a project by the startup community for the startup community.

The team is people who got together around this topic. Founders, Association-leads, Investors, Lawyers, Notaries. We are no association, no NGO, have raised no donations.

This is simply people doing this because it is important – and turns out, you can just do things.

The core team:

Simon Schaefer – Founder of Factory, President of Allied for Startups meta-association for startups

Vojtech Horna- VP Comms at Index Ventures, one of the most successful VC funds in the world, Creator of Not Optional, a benchmark for best-in-class stock option systems worldwide

Philipp Herkelmann – prev MD @ Entrepreneur First for Germany, Program Lead @ X – Google's Moonshot factory

Iwona Biernat – 7 years Global lead legal operations of EF, Expert for startup law

Luis Cerqueira da Silva – Manages all legal entities at Remote.com – potentially the (or a) world-leading expert for different legal entities globally Notary

Andreas Klinger (me) – prev Founding Team & CTO of Product Hunt, VPE AngelList, CTO On Deck, now Solo-GP / Angel investor via Prototype Capital

And countless more who are helping every day…

We are doing this because it's important.

Startups in Europe can't succeed without the needed infrastructure that supports scale.

Europe cannot compete globally if we do not have a functional tech innovation ecosystem that creates modern large companies.

Large companies that build premium products, people will pay premium prices for, financing premium jobs and hence the premium quality of life we Europeans are very much proud of. All of these large companies were created in the US and China in the last decades.

This needs to change. We need tech innovation to work here. Not only to keep the best founders, but also to build the next generation of GDP-defining companies – because sooner or later the big companies from the 80s in your country will disappear.

No country in Europe alone, no local startup ecosystem by itself – can compete against large unified blocks like the US, China or [in near future] India. Simply due to scale.

We need standard infrastructure that enables the scale and hence momentum that founders need.

EU-Inc could become one of those core pillars of modern infrastructure for startups.

If we all together, as European startup ecosystem, manage to get EU-Inc passed – cleanly implemented – without breaking its core goal – we would effectively unite the European startup ecosystems into one large block. An improvement for European founders that will be hard to beat in our lifetime.

We are so close to the finish line. The politicians want to do it. Now it’s about the implementation. Let's make sure we get this right.

Thanks for everyone in Brussel, who is taking this topic seriously and aims to create something with the startup ecosystem for the startup ecosystem. The goal is something that founders in Europe can actually use and hence adopt.

Thanks for reading! Andreas

PS: Sign www.eu-inc.org if you haven't already!