EU proposes new business rules to simplify company formation across member states
European Commission President Ursula von der Leyen announced the EU’s plan to simplify business registration, allowing company formation online in under 48 hours for less than €100.
Ursula von der Leyen emphasised the need for harmonised business rules to reduce bureaucracy, aiming to boost innovation and competitiveness across the EU’s fragmented market.
Three institutions will adopt their positions on the EU Inc. proposal before negotiating a common stance to publish as law in the official gazette.
Briefing summary
European Commission President Ursula von der Leyen announced the launch of EU Inc., aimed at streamlining business formation across Europe, enabling company setup in under 48 hours.
Concerns have been raised regarding the proposal’s broad eligibility, with experts suggesting it should target only new businesses to enhance competitiveness and avoid system overload.
Following the adoption of individual positions by the three institutions, they will negotiate a common stance, ultimately publishing the new laws in the official EU gazette.
‘48 hours and €100’: EU presents sped-up business registration law
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“With EU Inc., we are making it drastically easier to start and grow a business all across Europe”, European Commission President Ursula von der Leyen said in a statement on Wednesday.
For the time being, the rules remain optional but could serve to incentivise companies who might have previously moved abroad or based their operations outside the EU.
According to the initial proposal, individuals would be able to start a company in any of the 27 member states in less than 48 hours, fully online and with less than €100.
Von der Leyen highlighted that companies face “more than 60 national company forms,” when attempting to launch a company.
Europe is widely perceived as being less business-friendly due to the fragmentation of its legal framework and complex bureaucracy, with experts regularly warning of the immense administrative barriers for companies to grow.
Many years in the waiting
The harmonisation of rules for businesses at the EU level is a long-standing issue.
“Major reforms that were tried in the past didn’t really work in terms of incentivising enough companies to apply. The system proposed was quite a complex system and in practice, only large companies could really deal with it”, Bruegel senior fellow Reinhilde Veugelers told EU News.
Veugelers refers to the European Company law known with its latin name “Societas Europaea” that entered into force in 2004 with the aim to reduce administrative costs, offers a cross-border legal structure, and helps companies navigate the EU’s different legal systems.
“It completely missed the target in terms of ensuring that we get a much more innovative and competitive European economy, with new companies being able to grow to critical scale sufficiently fast”, the expert said.
Most of the issues regarding corporate laws are connected with member state’s reluctance to give up sovereign core issues such as bankruptcies, taxation and employment laws.
For this reason, the 28th regime will not be a legislation replacing national frameworks, but rather an additional regime, the 28th, to provide founders an easier way to open a business.
Wrong target?
In the current proposal all companies, including already existing businesses in Europe, can be eligible for the new regime.
Veugelers assessed this approach as too broad, saying that the legislation should target only new, young companies.
“The target should be young companies with bright new ideas that can truly satisfy the competitiveness of Europe in the longer term, and be able to scale up sufficiently fast”, he continued.
Veugelers argues that not limiting it to young innovative companies can overload the system, making it eventually less attractive.
Next steps
Once they adopt their own position on the file, the three institutions will negotiate a common position, to then publish it as law in the EU’s official gazette.