For years, the story has been the same. Despite world-class entrepreneurs, engineering talent, and scientific research, Europe continues to lag behind the US and Asia in building and scaling global technology companies. Even tiny Israel seems to pack a bigger punch. Many of Europe’s most promising startups either relocate, flip their incorporation abroad, or sell out before they reach their full potential.

But something new is happening. It’s called the “28th Regime.” It’s a proposal to create an optional, EU-wide company status that startups can opt into from day one, letting them operate across all 27 member states under a single, unified set of rules. The European Commission is currently working on the details, which are expected to be unveiled in early 2026.

At first glance, Europe’s shortage of competitive startups is puzzling. The continent has no shortage of brilliant founders. Cities like Berlin, Paris, Tallinn, and Lisbon are alive with entrepreneurial energy. Europe currently produces one in every ten unicorns globally.

Yet when it comes to scaling, the challenges pile up fast:

• Regulatory Fragmentation: A startup expanding beyond its home country must navigate 27 different sets of laws, taxes, and administrative rules.
• Capital Markets Weakness: Europe accounts for only 5% of global venture capital, compared to 52% in the U.S.
• Exit Challenges: Weak IPO markets and restrictive M&A rules make it harder for founders and investors to realize returns and reinvest in the ecosystem.
• Administrative Friction: Opening offices, hiring talent, handling taxes, and complying with different laws across countries drains startup resources that should go into growth.

In contrast, US startups can immediately operate across all 50 states under one unified set of laws (Delaware is the favorite place of incorporation). In Europe, a founder faces a maze.

The result? Many of Europe’s best startups flip to a US corporation to fundraise and expand, taking jobs, IP, and innovation with them. UiPath and Booking.com are two major examples. Many more European startups move HQ functions or raise US venture capital and grow abroad — even if they don’t legally re-incorporate (think Spotify).

The 28th regime is designed to allow Europe’s startups to scale across the continent. Instead of being trapped in a thicket of national laws, startups that choose the 28th regime would:

• Incorporate once, and have that status recognized across the entire EU.
• Manage taxes, governance, and reporting through a single (ideally digital) system.
• Hire talent, issue stock options, and raise funds across borders without needing a new lawyer for every country.
• Scale without barriers, saving precious time, money, and energy for building, not bureaucratic firefighting.

In short, the 28th regime offers what startups in the US take for granted: one company, one set of rules across the continent. It’s what the EU was built to provide, but this time for startups and entrepreneurs.  Importantly, the 28th regime would remain optional. It’s not about forcing national company laws to disappear. It’s about giving startups a choice:

• Stay in one of the 27 national frameworks, or
• Opt into a new, fully digital, pan-European structure purpose-built for scaling (hence the ‘28th regime’ moniker)

For founders, it means starting European, not just local. For investors, it means investing with confidence across borders.

If the idea of a European company status sounds familiar, that is because it is not entirely new. Twenty years ago, the EU introduced the Societas Europaea (SE), a European public limited company intended to facilitate cross-border operations.

Yet for startups, the SE was, and remains, an impractical tool. It requires companies to have an established presence in multiple member states. It imposes rigid governance requirements and high capital thresholds that are out of reach for early-stage companies. Rather than simplifying operations, it layers complexity.

The 28th regime is different:

• It is built for startups and scale-ups from the ground up. Startups would be able to incorporate directly under the 28th regime, with no requirement for a multi-country footprint before formation.
• Setup and governance would be digital, allowing founders to establish and manage their company online, across borders, without getting trapped in country-by-country administrative hurdles.
• And crucially, the framework would bypass national divergence—unifying company law, reporting obligations, and key administrative procedures under a single EU-level statute.

What makes this moment truly different is that political momentum. Commissioner for Startups, Science, and Innovation, Ekaterina Zaharieva, committed during her parliamentary hearing to proposing the 28th regime. A dedicated Commission Working Group on Startups and Scaleups is driving the project forward. All of this is part of the broader push for European competitiveness.

Importantly, this is not just a top-down political project. It has been championed from the ground up by the startup community itself rallying around the idea of creating a “Single Market for entrepreneurs.” Hundreds of startup leaders back the 28th regime, signing a detailed petition that has influenced policymakers directly.

Global trade tensions, geopolitical instability, and a reordering of supply chains are reshaping the global economy. In this environment, Europe has a unique opportunity: to position itself as a stable, open, and innovative hub for the world’s best entrepreneurs. By creating the 28th regime, Europe would do more than remove friction for its own startups. It would send a clear signal to entrepreneurs everywhere: Europe is open for business.

Kayvan Hazemi-Jebelli (Kay) is Senior Director for Europe at the Chamber of Progress, a technology industry association based in the US. Kay has more than four years’ experience in digital policy and a decade of experience as a competition lawyer in private practice, in the European Commission Directorate-General for Competition, in academia, and as Senior Legal Counsel at a UK media and communications company.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.