Europe bets on the “28th Regime”
The UE unveils a new action plan to help its start-ups
The roadmap is “ambitious” and its targets are deliberately excessive. At the end of May, the European Commission unveiled an action plan titled Choose Europe to Start and Scale, intended to make the continent “the best place in the world to start and grow a business,” according to Ekaterina Zaharieva, the Commissioner for Start-ups, Research, and Innovation.
Beyond this headline announcement, one measure in particular has received strong support from the tech ecosystem: the “28th Regime.” This is a supranational legal structure designed to make it easy to set up a company that can operate across the entire continent. Brussels also plans to roll out a “blue carpet” to attract talent and unlock €10 billion to fill the funding gap for mature start-ups typically underserved by private capital.
48 hours
The “28th Regime” was requested at the end of 2024 by a petition signed by major tech players. It was also among the recommendations in recent reports on European competitiveness. “A real game-changer, allowing [companies] to finally tap into the full potential of the single market,” wrote former Italian Prime Minister Enrico Letta last year.
The Commission hopes that by early 2026, it will be possible to create a European company in just 48 hours, drastically reducing administrative procedures and costs for expanding operations continent-wide. Brussels also aims to harmonize aspects of labor law and taxation. However, its ambitions could quickly face opposition from member states. Twice before, efforts to establish a European company statute have failed due to lack of consensus.
On paper, the “28th Regime” is designed to help start-ups scale globally by leveraging a market of 450 million consumers — larger than the US market. While it may remove some barriers, this legal framework is no silver bullet. Europe remains a highly fragmented market, with 27 national regulatory systems. To mitigate this, the Commission recommends establishing a common “regulatory sandbox” across all member states to “develop and test new ideas.”
Yet this would only address part of the problem. There would still be 27 different tax codes and labor laws. Not to mention 24 official languages, along with widely varying cultures and business practices from one country to another. In contrast, US start-ups benefit from a truly unified domestic market.
Enough to close the gap with the US and China?
To attract and retain top entrepreneurs, engineers, and researchers, the Commission proposes harmonizing stock-option laws, simplifying tax rules for employees working remotely from another EU country, and creating a dedicated visa program.
Brussels also wants to address the “funding gap” that start-ups face when attempting to scale. In recent years, funding rounds exceeding €100 million — which are essential for high-risk, capital-intensive bets — have become increasingly rare. A fund of at least €10 billion, combining public and private investments, is to be established. Europe also hopes to encourage institutional investors to back start-ups, following the example of France’s Tibi initiative.
While the plan has been well received, it would be unrealistic to expect that it will enable Europe to close the gap with the US and China anytime soon. The continent lacks neither talent nor entrepreneurs, but it does suffer from serious structural shortcomings.
For instance, public administrations and large corporations are often reluctant to adopt new software solutions. Unsurprisingly, more European start-ups choose to launch in the US rather than in another EU country. Above all, the European tech scene sees few exits, especially IPOs, which are crucial to sustaining investment momentum. The most optimistic observers hope the Commission’s initiative will spark a new virtuous cycle.