EU Commission wants to promote EU Inc. to simplify setting up a company - criticism of weakening plans

Brussels, Munich. Already in the spring, the EU Commission presented a law to simplify the establishment of companies in the European Union (EU). The European start-up scene welcomed the plan for the new legal form called “EU Inc.”. But now some member states want to significantly weaken the law.

In an interview with the Handelsblatt, EU Commissioner Ekaterina Zaharieva sends clear words to the European heads of government and Chancellor Friedrich Merz (CDU): “If you want to keep talent here and help them grow from Europe and become global, we have to get EU Inc. off the ground.”

In the future, with the legal form in the EU, anyone should be able to set up and register a company in the shortest possible time for a small fee - completely digitally, without a notary appointment and without minimum capital. To date, setting up a company in the EU has been considered complicated and raising capital difficult. The EU Inc. should change that and also create legal certainty in all member states.

“We delivered,” says Commissioner Zaharieva, who is responsible for start-ups, research and innovation, to the Handelsblatt. The heads of state and government asked the Commission to come up with an ambitious proposal. This would exist now.

Zaharieva also comments on the criticism. In Germany, for example, trade unions had warned of a weakening of collective bargaining rights and loopholes. “We are maintaining the high standards of social protection for employees that we are so proud of in the European Union,” says the Commissioner.

The final version should come “as close as possible” to the Commission’s proposal, she demands. Otherwise, the legal form could fail and not be used by founders in Europe.

More than 26,000 supporters had already called on their co-legislators not to weaken the Commission's proposal in a letter that Handelsblatt reported exclusively on.

Zaharieva shares the criticism and says: “If we create a regime that is cumbersome and expensive, companies and future founders simply will not use it.” The EU's goal is to catch up with the USA in global competition.

On average, venture investors invest around three times as much capital in the USA as in Europe. Only eight percent of global growth companies are based in the EU, while around 60 percent are based in the USA.

Many founders considered moving to the USA, says Zaharieva, “because it was easier”. The founders therefore waited for the new legal form. Zaharieva sees clear advantages with EU Inc. compared to setting up a company in the USA. It is completely digital and cheaper.

Nevertheless, she can understand the concerns of the critics. “I have heard from unions that this could be used to circumvent strict European labor laws,” says Zaharieva. However, the regulation does not change the labor laws of the member states. “Depending on where a company is founded, the respective national labor law applies.” Companies could already choose which member state they want to register in.

She continues: “If someone asks me about our labor laws, I say: We don’t want to change our high standards of protection.” The rights of European employees would not be affected.

At the same time, it sends a message to private investors. “There has never been a better time to invest in innovative European companies,” says Zaharieva. There are excellent European companies in every phase of development - from young companies to scale-ups. The interest from investors outside the EU is enormous, “and they are investing in these companies”.

Zaharieva's message is therefore: "If you want to strengthen European competitiveness, sovereignty and security, improve the lives of European citizens and at the same time do good business, this is the right way."

European champions such as the Swedish AI start-up Lovable and the German defense company Helsing received a lot of attention - not only from investors in the United States, but also from other parts of the world.

Especially in the growth phase, when large amounts of investment are required, the proportion of foreign investors increases because they usually draw from larger funds and can therefore write larger tickets. The companies want to stay in Europe and go global from Europe, says Zaharieva: “They are looking for European investors.”

The EU has been investing in innovation and innovative companies for decades through Horizon Europe. “We have supported these companies throughout the entire process and see the pipeline,” says the EU Commissioner. Major projects such as the Capital Markets Union urgently need to move forward. “But we also know that we can’t waste any time,” says Zaharieva. “We have to do something now so that these companies can grow from Europe.”

Public funding would never be enough for this. This is how the idea for the “Scaleup Europe” growth fund came about. With the scale-up fund, the EU is investing directly in start-ups for the first time. The EU wants to accelerate the development of promising companies in strategic sectors. The EU is focusing on sectors where Europe can still catch up or achieve a leading role.

The aim is to improve the financing situation for start-ups in the growth phase, i.e. when they need higher three-digit million amounts. In total, the fund should have a volume of at least five billion euros. The fund is managed by the Swedish financial investor EQT.

In an interview with Handelsblatt, the co-head of the Scaleup Europe Fund, Victor Englesson, said: His goal is to have the sum together by summer 2027 at the latest.

Zaharieva now announces in an interview with Handelsblatt that the goal could be achieved more quickly: “I hope that we will reach five billion euros by the end of the year.” There is great interest from the private sector. And further: “I think this is just the beginning,” says Zaharieva. "At the first closing, 2.3 billion euros were raised. Now it's up to the fund manager to raise the rest."

In addition, according to Zaharieva, the scale-up fund was recently able to attract a new investor: "The largest Dutch pension fund, ABP, has made an initial commitment of 250 million euros for the Scaleup Europe Fund. I think this is good and sends a positive signal to other institutional investors."