If Lithuania attracted at least 1 percent of them, 3,000 new companies would be established in the country – three times more than the entire current startup ecosystem. However, two conditions are necessary for this: the reform in Brussels must not be weakened, and Lithuania must support it and prepare for it.
The Ministry of Economy and Innovation, in its strategic “3i” plan, aims to increase the number of startups in Lithuania to 2,000 by 2028. – by successfully implementing the “EU Inc.” regulation, we could significantly exceed this indicator. Currently, the ecosystem already employs almost 20,000 highly qualified employees, whose average monthly salary reaches about 4,600 euros, and in 2025 alone, startups paid over 660 million euros in taxes to the budget.
Currently, negotiations in EU institutions are considering whether “EU Inc.” will remain a regulation establishing uniform rules across the EU, or will turn into a non-binding directive that would continue to allow states to apply different requirements. If the reform is weakened, Europe will not solve the problem of legal fragmentation, and Lithuania will lose the opportunity to become one of the biggest winners of this reform.
Legal Fragmentation: Why It’s Harder to Grow a Business in Europe
A US startup establishes itself in one state and can immediately operate across the entire enormous national market. European companies do not have such luxury – a unified European Union market de facto does not exist. A European company, wishing to expand across the entire EU, would have to repeat company establishment procedures 27 times, in each country separately, adapting each time to different corporate law, tax, and labor relations requirements. Such fragmentation complicates the attraction of capital and talent, incurs additional adaptation costs, and wastes time.
The aforementioned regulatory obstacles are particularly costly for Europe. In 2013–2022, European technology companies attracted about 1.4 trillion US dollars less in venture capital investments than US companies. In 2025, venture capital attracted by European startups amounted to 66 billion euros – just 22 percent of the US level, although the economic size of both markets is similar. The problem of European competitiveness is accurately summarized by former European Central Bank head Mario Draghi in his 2024 report “The Future of European Competitiveness”: “Over the past 50 years, not a single company has been created from scratch in the European Union whose market value today would exceed 100 billion euros. During the same period, six companies grew in the US, each of which is already worth over 1 trillion euros.”
“EU Inc.” – Uniform Rules for the Entire European Union
The “EU Inc.” regulation would eliminate legal fragmentation. Instead of 27 national company forms, there would be one – uniformly understood by company founders, investors, banks, and partners across the entire European Union. A company could be established online within 48 hours and for less than 100 euros, using uniform document templates in English and ensuring uniform rules for investment and employee stock options.
As negotiations on “EU Inc.” intensify, there is a risk that the initial proposal will be significantly weakened. Suggestions are emerging to apply the status only to companies of certain sectors or sizes, as well as to slow down the planned digital establishment deadlines.
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The biggest threat to the project would be changing its form from a regulation to a directive. In such a case, common rules would again be transferred to 27 national parliaments, and their differing implementation would maintain the current legal fragmentation. Every compromise that brings back national rules reduces the value of the reform.
In negotiations, this initiative is sometimes halted by unfounded arguments, claiming that the new status would become a legal loophole, enabling tax evasion or violation of labor law. “EU Inc.” is not a tax haven – companies pay taxes where they actually operate, and labor relations are governed by the law of the country where employees physically work.
Strategic Objectives for Lithuania
Lithuanian representatives in European institutions must actively strive for “EU Inc.” to remain an ambitious, open, and uniform-rules-ensuring regulation. At the same time, Lithuania must do its homework domestically.
Lithuania already has an example of successful regulation – the financial technology (fintech) sector. Having taken only its first steps in 2018, by 2025, this sector in the country already united about 250 companies and almost 8,000 highly qualified employees. The rapid growth of the sector was essentially driven by proactive decisions of the Ministry of Finance and the Bank of Lithuania in creating an innovation-friendly regulatory environment.
This success can be replicated in the startup sector. Although the regulation will set common minimum standards for the entire EU, states will compete on the speed and quality of implementation. Some EU countries will face long implementation processes, while Lithuania has the opportunity to prepare in advance: review related national legal acts, adapt the chain of institutional processes, and largely digitize public services today, making them directly accessible to business founders from any EU country – in English and without administrative friction from the first day the regulation comes into force.
A decade ago, Lithuania seized the fintech opportunity and became one of the most important jurisdictions in this sector in Europe. Today, we have a similar opportunity in the startup field. Our decisions will determine whether we will be among the states that gain the greatest economic value from this reform.
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