A new optional EU legal framework, referred to as ‘the 28th legal regime’, will be proposed by the European Commission late 2025 - early 2026. This new regime will enable innovative startups and scaleups to operate across the EU under a single set of rules, eliminating the need to navigate and comply with different laws of the Member States. The 28th legal regime will aim to simplify applicable rules and reduce the cost of failure for companies, and will include aspects of corporate, insolvency, labour and tax law. The regime is envisaged to come into effect sometime in 2026 or 2027.

1.  The 28th legal regime

As part of the broader EU policy agenda for simplifications and competitiveness (see Section 3. Annex below), the European Commission is working on the creation of an alternative and/or optional 28th legal regime for innovative companies to benefit from a single, harmonised set of EU-wide rules in the fields of corporate, insolvency, labour and tax law.

The aim of this new regime is to help innovative small and medium-sized enterprises to scale up and grow by providing them with the possibility of operating under one single legal framework across the EU, instead of under 27 distinct legal regimes. Although the scope could be broader, it is expected that the ‘innovative companies’ covered by this EU regime, will be those which comply with certain criteria such as the qualifications of their workforce, R&D expenditure, and ownership of intellectual property rights.

The proposal for a 28th EU legal regime is based on the recommendations of the Letta and Draghi Reports and is part of the Flagship Actions Pillar 1 of the EU Competitiveness Compass (i.e. Closing the Innovation Gap).

Despite being mentioned in the European Commission’s Work Programme, the proposal for the 28th legal regime is not included in the list of new legislative initiatives for 2025 foreseen in the program’s Annex. Thus, it is reasonable to assume that the proposal will likely be published in 2026.  More information about the 28th legal regime is expected in the upcoming proposals for an EU Start-up and Scale-up Strategy (Q2 2025) and a European Innovation Act (Q4 2025 – Q1 2026).

While the concrete scope and main features of the 28th regime are not yet clear, we would expect the regime to be aligned with broader ongoing policy recommendations and developments. Below we set up what in our view the direction of travel could entail.

2. How can we help?

The introduction of a new 28th legal regime and the implementation of different measures to revise, amend, harmonize and introduce changes to already existing EU legal frameworks will have a significant impact on businesses operating with the Single Market.  

Our EU policy team will actively monitor all related developments related to the announced 28th legal regime and simplification measures to help you anticipate the impacts. We can provide comprehensive advice on their implications for your business. Our proactive approach ensures that you are not only informed but also prepared to respond effectively to any policy and legislative changes, thereby strategically positioning your business for success in an ever-evolving EU regulatory landscape.

If interested in our services, please feel free to contact one of our colleagues below.

3. Annex: The broader EU policy agenda for simplification and competitiveness  

Over the past few years, several legal measures have been implemented at EU level with the aim of creating a more cohesive EU legal framework that promotes the free movement of goods, services, capital, and people, while ensuring a level playing field within the Single Market. Even when these EU measures improved the legal regimes of the EU and its Member States, they have also caused unintended negative side-effects as they have significantly increased complexity and administrative burdens for citizens, businesses and governments in the Single Market. 

Despite the European Commission’s efforts to simplify EU legislation and reduce administrative burdens since 2015 (when the ‘Better Regulation’ agenda, updated in 2021, was first published), legislative proposals with a ‘simplification aim’ have been limited. The publication of the Draghi Report in September 2024, coupled with the shifts in geopolitical powers and the need for Europe to enhance its independence and self-sufficiency, have evidently been the wake-up call for the European Commission in relation to this matter.

The first concrete step of the European Commission’s to implement Europe’s renewed and broad simplification policy is the announcement of the so-called ‘Omnibus Simplification Packages’ (OSPs), which aim to revise, amend, harmonise and introduce changes to already existing EU legal frameworks applicable to different sectors. Among other things, these OSPs will aim to reduce reporting burdens by 25 % for all companies and 35 % for SMEs.

The first two OSPs focused on the fields of sustainable finance reporting, sustainability due diligence (CSRD and CSDDD) and taxonomy were published on 26 February 2025. Further OSPs are expected in Q2 2025 (e.g. proposal for a new category of company, small mid-caps, and on the removal of paper requirements) and Q4 2025 (e.g. legislative proposal to revise the Sustainable Finance Disclosure Regulation) respectively. For more information on the first two OSPs we refer to our web post of 5 March 2025.