Aiming to clear the air around what some call the '28th regime' corporate law proposal, European Commissioner Michael McGrath seeks to assure workers, tax authorities, and national institutions that the new EU Inc. framework respects existing protections rather than undermines them. This initiative, targeting mainly innovative companies, could stir strong reactions from trade unions, businesses, tax authorities, and national governments concerned about employment rights and fiscal discipline.
McGrath's statement comes in response to a parliamentary question by Anthony Smith of The Left, who warned that the 28th regime might harm workers' rights and facilitate tax avoidance. Smith's query reflects a broader debate within the European Parliament about balancing corporate growth incentives with social safeguards.
The Commission’s proposal, adopted on 18 March 2026, sets out a corporate legal framework but explicitly excludes changes to employment law or tax rules. McGrath emphasized that all existing standards on wages, working conditions, gender equality, and employee participation—including co-determination—remain fully applicable to EU Inc. firms. Similarly, mechanisms against tax avoidance and labour rule circumvention stay unaffected. Safeguards include preventive controls on company formation and enhanced information sharing between business registers, tax, and social security authorities to prevent fraud.
This policy orientation prioritizes facilitating cross-border business growth within a legally sound environment yet stops short of diluting national labour protections or tax oversight. The proposal leans toward streamlining corporate law at the EU level without extending EU powers over employment or taxation—a balance between encouraging economic innovation and preserving national sovereignty.
businesses might benefit from simplified cross-border structures, while workers retain their rights protections. However, trade unions and national authorities remain vigilant to ensure enforcement is not weakened in practice. The Commission's answer signals readiness for an ongoing dialogue with stakeholders, with institutional follow-up expected as this legal framework unfolds.