The EU Inc. could pose a challenge for social security systems.

The European Commission intends to introduce a new company form that would be uniformly recognised across all EU Member States and would be particularly easy to establish due to simplified administrative requirements and low entry thresholds. A corresponding proposal was presented by the Commission on 18 March.

The “EU Inc.” is intended to be managed entirely digitally – from incorporation throughout its entire lifecycle up to and including dissolution. The primary point of access is to be a new interface within the Business Registers Interconnection System (BRIS) operated at Union level, which consists of the Member States’ business registers, the central platform and the European e-Justice Portal, and which will be interconnected with the national registers. Alternatively, national business registers may also be used for registration, re-registration and liquidation procedures. Standardised digital processes, minimum capital requirements and flexibility regarding the choice of registered seat are intended to make the European company format particularly attractive for start-ups and scale-ups. In principle, however, the new legal form will also be available to already established undertakings.

Making the EU Internal Market More Attractive for Businesses

The overarching objective of the Commission initiative is to enhance the attractiveness of the internal market for innovative undertakings and to strengthen the competitiveness of the European Union. The EU Inc. is therefore intended both as a flagship initiative and as a vehicle of hope in an increasingly competitive global environment. Whether it will meet the high expectations placed upon it remains to be seen. There are, indeed, critical voices regarding the initiative (see DSV News 03/2026).

The German social security institutions view the Commission initiative with a certain degree of concern. In particular, trade unions have raised criticism that the new company form could be misused to circumvent social standards and optimise social security contributions. Within the register-based operational logic in which these new undertakings will function, they may develop a pace of structural change that could make it difficult even for social security institutions to keep up. This concerns above all enforcement and implementation rights, which are already difficult to assert effectively in cross-border situations today.

Enforcement Reaches Its Limits with the EU Inc.

The EU Inc. would significantly lower the barriers to establishment, restructuring and transfer of registered seat within the European Union. This entails the risk that employers may evade national enforcement measures before contribution arrears can be secured. Cross-border enforcement requests are already frequently lengthy, resource-intensive and only rarely successful. The risk of contribution losses is therefore likely to increase in the case of highly agile EU Inc. structures, particularly if the advantages of the new company form are misconstrued as an invitation to optimise social security liabilities.

Accelerated Liquidation Procedure Requires Reconsideration

Particular concern is caused by the accelerated liquidation procedure, under which an EU Inc. could be wound up within a short period of time and, in certain cases, even without the appointment of an insolvency practitioner. It remains unclear how the social security collection bodies would become aware of such proceedings and how contribution claims could be secured. Furthermore, the participation of social security institutions – including the possibility to consent to or object to the accelerated insolvency procedure – cannot realistically be achieved within the envisaged 30-day deadline. The introduction of such a procedure should therefore be reconsidered as a matter of urgency.

Addressing Abuse Prevention

The European legislator must recognise that the new Regulation on the 28th Regime entails risks for social security systems. It is therefore called upon, in the course of the further legislative procedure, to examine how accompanying measures aimed at preventing abuse and ensuring the effective cross-border enforcement of social security rights could be designed at both European and national level. An initial positive element in this regard can be found in the compromise on the revision of the coordination regulations of 29 April, which provides the legal basis for a standardised and uniform enforcement procedure.