The EU "28th Regime" (EU-INC): What Cyprus Founders And Investors Should Know

The European Commission President, Ursula von der Leyen, recently referred to a planned "28^th Regime" for innovative companies. The 28^th Regime is an EU-wide legal framework that would sit alongside the national company-law regimes of the 27 Member States and would be available to companies that choose to adopt it. The policy objective is to make it easier for startups to incorporate and operate across the Single Market without having to repeatedly reform their legal set-up for each jurisdiction. The President also referred to an ambition for digital-by-default formation within 48 hours, although any such timeline will ultimately depend on the final legislative text and the implementation mechanisms adopted at EU and Member State level.

The initiative is still at the proposal stage, and the final content will be determined by the legislative text and the relevant negotiations. However, EU institutional materials already provide a useful indication of the direction of travel, and allow founders, investors and advisors in Cyprus to identify the areas most likely to be relevant from a company-formation and structuring perspective.

1. What is meant by the "28th regime"?

In EU policy terminology, a "28th regime" generally means a legal framework that is additional to national law and that can be selected as an alternative route, rather than replacing Member State regimes across the board. The European Parliament Research Service describes it as potentially covering a company's lifecycle, from the establishment, the governance, the operational features and the strike-off of the companies, aimed at companies seeking to scale across borders.

For Cyprus, it suggests that the classic incorporation routes under Cyprus law are not being "abolished". The Regime will be an additional EU-level option available for certain companies.

2. What key features are being discussed?

Public briefings and EU materials consistently point to simplification, digitalisation and cross-border usability as the core drivers.

Firstly, the initiative is framed as a response to the reality that early-stage companies expanding across the EU can face repeated administrative friction. The 28th regime is positioned as a way to reduce that friction by offering a single corporate "toolkit" designed to be recognised across the Union.

Secondly, the initiative is closely linked to "digital-by-default" formation and administration. In public communication around it, the objective of very fast incorporation has been mentioned, together with modernised digital processes. Whether and how this is implemented will depend on the legislative instrument and the supporting infrastructure, but the direction is consistent with broader EU policy on digitalisation of corporate processes.

Thirdly, EU-level discussion recognises that company-law simplification alone may not address all "scaling barriers" if other legal areas remain fragmented. EU materials therefore often reference, in the broader policy conversation, topics such as insolvency, labour and taxation. The practical implication is that even if an EU-INC form is introduced, it may not create a single, uniform legal environment for all aspects of running a business across the EU, rather, it may meaningfully standardise certain corporate-law elements, while other elements still require multi-jurisdictional analysis.

3. How does this sit alongside existing Cyprus structures?

From a Cyprus corporate law perspective, it is useful to separate two layers. The first layer is the corporate vehicle and governance rules. Cyprus remains a widely used EU jurisdiction for corporate vehicles due to its established corporate framework and professional ecosystem. In that context, a 28th regime would primarily be relevant as an alternative corporate vehicle for founders who want an EU-wide form instead of a Cyprus company.

The second layer is the operational footprint. Even where a company is incorporated in one jurisdiction, the legal and regulatory position for operations, employees, consumer-facing activity, regulated services and local establishment can vary substantially across Member States. The EU-INC conversation acknowledges this gap and seeks to lower it, but it should not be assumed that a new corporate form automatically removes the need to consider local legal requirements where the company actually operates.

4. Current status and indicative timeline

EU institutional trackers and briefings indicate that the Commission has been preparing the initiative and that a legislative proposal is expected early this year. The European Parliament's Legislative Train file for the "28th regime for innovative companies" references a scheduled Commission proposal date in March 2026. Once the Commission proposal is published, it will enter the ordinary legislative process, meaning it will be negotiated between the European Parliament and the Council, and the final text may differ materially from early policy messaging.

While the details will only be clear once the Commission's draft is published and negotiated, Cyprus founders and investors can already prepare by tracking eligibility, governance mechanics and the practical interface with national law. As the framework develops, Cyprus remains a well-positioned jurisdiction for EU-oriented business establishment and investment structuring, supported by a stable corporate legal framework and a network of experienced practitioners.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.