EU Inc: making life easier for start-ups via easier stock options rules
Europe creates more startups than the United States, but struggles to make them grow and scale them.
Worse, one third of European unicorns relocated outside the EU between 2008 and 2021 (the majority to the US). Spotify, Klarna and BioNTech all left for the US.
Today, the Commission presented its proposal to create a European company status where in each European country, entrepreneurs will be able to register an "EU Inc." (short for “incorporated”, indicating a business is legally formed as a corporation). This new status will be an EU-wide legal regime that will not substitute the 27 existing national company law but exist along side them and be optional, hence its name “28th regime”.
Renew wholeheartedly welcomes this proposal which will allow incorporation of an EU-wide company under 48 hours, fully digitally, and with no minimum capital requirement.
One of Renew Europe’s key priorities will be to enshrine a harmonisation of stock option schemes.
Context: one of the way start-ups can attract talents is to offer them discounted stocks that they will be able to sell much more when the start up succeeded (ex: Facebook first employees bought stock for 0,75$ and they are now worth 640$, so 850 times they worth). Problem: Member States don’t have the same rules for that system.
Pascal Canfin, our Renew point person on company law matters, says: “A French start-up wanting to implant itself elsewhere in Europe cannot offer stock options to its employees in, say, Belgium, Spain or Poland to attract the best talents in the country. This impedes their ability to grow in Europe and as a result, they often settle or sell to US companies with deeper pockets. We cannot allow Europe to become an incubator for future American champions !”
Ľudovít Ódor, who helms the discussion in the economics affairs committee and the taxation sub-committee, says : “Apart from company law, innovative companies often cite complex and fragmented taxation regimes as major obstacles for their scale-up strategies. Among them tax treatment of employee stock options is a substantial one. We should make sure that in the 28th regime those options are treated as capital gain and taxed only at realisation.”
