Europe has a well-known structural problem with employee equity. Stock options work brilliantly in some countries (the UK's EMI scheme), acceptably in some (France's BSPCE), and painfully in others (Germany, historically, though improving). For a distributed European startup with team members in five countries, running one consistent option plan is genuinely hard today.

EU INC is being designed to change that. Here's how.

What the regime is aiming for

The stated design goal: a single, EU-wide employee stock option plan that:

  • Works for employees in any of the 27 EU member states without re-papering per country.
  • Has standardised, predictable vesting mechanics.
  • Handles grant, exercise, settlement and cash-less exercise uniformly.
  • Produces consistent reporting for the company — one option ledger, not 27.
  • Gives employees predictable tax treatment at the moments that matter (grant, vest, exercise, sale).

Some of this is set at EU level; some remains country-specific because tax law still lives at member-state level. The EU INC regulation can't override national income tax rules.

What will be EU-level

  • The option plan itself: a unified plan document and grant template.
  • Corporate approval mechanics: how options are authorised, how the option pool is reserved at company level.
  • Vesting mechanics: time-based, milestone-based, or hybrid, with standard "cliff" and monthly/quarterly vesting conventions.
  • Exercise mechanics: how employees exercise, including cash-less exercise and net settlement.
  • Option ledger: the corporate record of outstanding options, captured in the EU INC's registry.

What stays country-specific

  • Personal income tax on grant/vest/exercise/sale. These events are taxed according to the employee's country of tax residence.
  • Social security contributions, where applicable.
  • Withholding obligations on the company's side for the country in which the employee works.
  • Certain country-specific favourable regimes (EMI, BSPCE, etc.) — these continue to exist for national entities and in some cases for EU INC if the member state extends them.

The key insight: EU INC harmonises everything it can at EU level, and leaves tax at the personal/national level. That's actually the right boundary — companies don't benefit from EU corporate law overriding national tax choices, and member states would never accept it.

Why this is a big deal for European startups

Europe's employee-equity gap is one of the competitiveness themes in Draghi's report on European competitiveness.

1. You can recruit across the EU with real equity

A Berlin startup can offer the same option plan to a senior engineer in Madrid as to one in Warsaw — without redesigning the plan twice.

2. Equity culture scales

Europe's reputation for thin employee equity is partly legal and partly cultural. When the legal friction drops, the cultural shift accelerates.

3. Cap-table stays clean

One ledger, one set of outstanding options, one set of reports to investors — rather than a patchwork of national sub-plans stitched together.

4. International transfers stop breaking things

An employee who relocates from Lisbon to Amsterdam mid-vesting shouldn't need a lawyer. Under a unified EU INC plan, they don't.

Practical structure of an EU INC option plan

A typical EU INC option plan will have:

  • A pool size (e.g. 10% of fully-diluted shares at seed stage).
  • A vesting schedule (e.g. 4 years, 1-year cliff, monthly thereafter).
  • Exercise price based on fair market value at grant.
  • Expiry (typically 10 years from grant).
  • Good/bad leaver provisions.
  • Exercise window on leaving.
  • Change-of-control / acceleration provisions.

Everything above lives at EU level, in the plan document attached to the EU INC. Country-specific addenda handle local tax and withholding.

What to do now

  1. Don't over-engineer your current plan. If you need to grant options before EU INC is live, use a standard national plan. Re-papering into an EU INC plan later is manageable.
  2. Document promises. Any options you've promised but not formally granted — write them down. Converting promises into formal EU INC grants at launch will go smoothly if there's a clean record.
  3. Be realistic about tax. EU INC won't make a Portuguese employee's option tax situation identical to a German employee's. It removes corporate-law friction, not tax-law friction.
  4. Size the pool with a long-term view. 10% at seed, topped up at Series A, is a common European default. EU INC doesn't change the maths — it just makes administering it easier.
  5. Join the INC48 waitlist — the mechanics of the option regime are one of the areas evolving most in the draft regulation.

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