EU aims to keep startups by easing expansion rules
The European Commission wants pan-EU rules for innovative firms to leverage EU single market
Published on January 22, 2025
The European Commission wants to stop innovative startups from moving to the U.S. by making it easier for them to grow within the EU. On Tuesday in Switzerland, Commission President Ursula von der Leyen announced plans for a special rulebook that would let startups operate across all 27 EU countries, avoiding complex national laws. Speaking at the Davos economic forum, she said this would help companies benefit from the EU’s large single market of 450 million consumers.
CO2 emissions and climate change
The initiative is part of the EU's efforts to keep innovative firms in Europe and stay competitive in future technologies, particularly those aimed at cutting CO2 emissions and fighting climate change. Many young European companies are drawn to the U.S. because it is easier to raise capital there, and products developed in one state can be sold nationwide without extra paperwork.
Bypass the need for all EU governments to agree
The plan would use the so-called 28th regime, a legal method that allows companies to bypass the need for all 27 EU governments to agree on complex financial, legal, and tax reforms. This approach has been discussed since 2010 in various EU policy areas and was recently highlighted in a report by former Italian Prime Minister Enrico Letta on improving the EU’s single market.
182,000 businesses
However, launching the 28th regime requires approval from EU governments and the European Parliament. The legal process could take at least two years, and its success is uncertain, as similar proposals have been blocked in the past. Given the urgency of keeping innovative firms in Europe, there is now a renewed push for an overarching 28th regime. The European Commission estimates that around 182,000 innovative small and medium-sized businesses could voluntarily join this framework to gain better access to the EU’s single market.
Startups call for new legal status to boost Europe's growth
EU Inc launched a petition to set up a new legal regime to foster startups’ growth. IO spoke with one of the initiators.