Brussels, 23 June 2026
- TO: Competitiveness Council
- TO: Permanent Representatives (Coreper II)
- TO: Deputy Permanent Representatives (Coreper I)
- CC: Social Attaches
Dear Ministers,
Dear Ambassadors,
We are contacting you with an urgent request following the assessment of the Council Legal Service on the legal basis of the Commission proposal for a 28th regime / EU Inc.
The Council Legal Service has recently confirmed what trade unions have been saying all along: the Commission proposal for a 28th regime / EU Inc. is based on an incorrect legal basis.
If the co-legislators proceed on the basis of the current incorrect legal proposal, a annulment by the CJEU will be likely.
This means that the Regulation will increase legal uncertainty and litigation risks, and choosing the 28th regime / EU Inc. status would constitute a high risk also for companies.
A likely annulment of the Regulation would mean immense costs and economic damages, repeated changes to national systems and procedures, confusion for companies, national and enforcement authorities and stakeholders.
The Commission did not base its proposal on Article 50 TFEU, which was used in the past for company law legislation. The Commission relied on Article 114 TFEU, which is intended for harmonizing existing national laws, not to create a parallel, optional regime.
Also, Article 114(2) explicitly prohibits using this legal basis for acts relating to the rights and interests of employed persons. In addition, the Commission did not consult social partners, as required under the EU Treaties, before presenting the proposal,
which would have been necessary considering the impact on working people.
The Council Legal Service (CLS) concluded that the choice of the legal basis (Article 114 TFEU alone) is incorrect, and that a Directive on the basis of Article 50 TFEU would have been the appropriate legislative tool.
In its reasoning, the CLS pointed out the specific nature of Article 50 TFEU for provisions whose main objective and content relate to the freedom of establishment, as opposed to Article 114 TFEU. Most of the provisions in the Commission proposal concern
company law and should therefore be based on Article 50 TFEU, in line with the Treaties (including Paragraph 2 of Article 50 TFEU), legislative practice and the case law of the Court of Justice. The CSL correctly outlined that not a single piece of EU company
law legislation could be found that was not based on Article 50 TFEU.
The Council Legal Service also confirmed that if the 28th regime / EU Inc is based on Article 114 TFEU, the risk of it being declared null and void by the CJEU will be significant and high.
The importance of the opinion of the Council Legal Service cannot be overstated.
It would be irresponsible and against better regulation principles for the EU institutions to advance in the consideration of the Commission proposal following the assessment of the CLS.
The ETUC calls once more on the Council not to allow the Regulation to proceed in its current form.
The ETUC calls on the Council to:
- Publish immediately the Council Legal Service opinion;
- Ask the Commission to withdraw the proposal and revise it significantly to make it legally sound and based on the correct legal basis, and to introduce the necessary guarantees for workers' rights.
The speed at which the proposal is advancing only increases the risk of more mistakes in drafting and all of the negative consequences that will flow from that.
Trade unions will continue to follow closely the discussions and the positions of the governments in the upcoming debates, and will hold to account governments that will choose to risk legal certainty and the solidity of EU and national legal systems against
the advice of the Council Legal Service.
Looking forward to your reply, we remain available for any further exchanges on this very important matter.
Please find also attached our previous letter dated 15 May outlining our strong concerns and opposition to the Commission proposal for 28th regime / EU Inc.
Best regards,
Esther Lynch,
General Secretary of the European Trade Union Confederation
