The US Limited Liability Company is one of the most copied structures in the world. It’s flexible, cheap to form, widely understood, and it produces clean asset-protection without requiring complex governance. Ask any American founder what to set up and the default answer is “an LLC” before anyone has asked what the business actually does.
In Europe, there hasn’t been a clean equivalent. The closest analogues — Germany’s UG, France’s SAS, the Netherlands’ BV, Estonia’s OÜ — each have their own quirks and none of them work cleanly across all 27 member states. EU INC is trying to be the European answer. But it’s not a clone of the LLC, and understanding why requires understanding what an LLC actually is.
The LLC: a US tax fiction, not a legal primitive
A US LLC is a hybrid creature. At state level it’s a real legal entity with limited liability. At federal tax level it’s, by default, nothing — a disregarded entity (if single-member) or a partnership (if multi-member) that “checks the box” up to the tax treatment the owner wants. You can elect to be taxed as an S-corp or a C-corp. If you don’t elect, you’re a pass-through.
That flexibility is the LLC’s killer feature. A two-founder US consulting firm can form an LLC, file a partnership return, and each founder picks up their share of income on personal 1040s. No double taxation, no corporate-level return, no corporate-level tax planning. It’s genuinely elegant for small owner-operated businesses.
European company forms don’t work this way. Every EU corporate form — GmbH, SAS, BV, OÜ, SRL, and the forthcoming EU INC — is a separate taxpayer. It pays corporate income tax on its profits, then owners pay personal tax when profits are distributed as dividends or realised as capital gains on share sales. There’s no “check the box” equivalent. You can’t make an EU INC into a pass-through.
That difference — pass-through vs corporate — drives almost every practical distinction between the two wrappers.
Tax: the core divergence
US LLC (default, no election)
- Single-member LLC: disregarded entity for federal tax; the LLC’s income flows directly onto the owner’s personal return.
- Multi-member LLC: taxed as a partnership by default; files Form 1065, issues K-1s to members, members pick up their share on personal returns.
- With S-corp election: pass-through with payroll tax savings on distributions (within limits).
- With C-corp election: identical to a C-Corp — corporate tax at 21% federal, then dividend tax at owner level.
EU INC
- Single tax treatment: corporate tax at the rate of the member state where economic activity sits — current headline rates range from 9% in Hungary to ~25% in Germany and 25.8% in France (France’s 2025 exceptional contribution on large companies pushes the effective rate up to roughly 36% for groups above €1bn turnover).
- Dividend or share-sale tax at owner level when profits are realised.
- Participation exemption often applies for intra-EU corporate shareholders, reducing double-tax leakage at holding level.
Neither form is a tax avoidance vehicle. A US LLC isn’t magic — it pays tax where its owners live. An EU INC isn’t magic — it pays tax where its economic activity sits. The difference is structural, not rate-based.
Liability protection: same goal, same outcome
This one is easy. Both LLCs and EU INC provide limited liability to their owners. A creditor of the company can’t go after the owners’ personal assets (barring piercing the veil in extreme cases of fraud or undercapitalisation). From an asset-protection perspective, the two forms are functionally equivalent.
Governance flexibility
This is where the LLC shines. An LLC can be member-managed (owners run it), manager-managed (appointed managers run it, owners hands-off), or any hybrid. The operating agreement is a private contract among members and can say almost anything. Voting, profit-distribution, admission of new members, dissolution — all customisable.
EU INC is more standardised, in line with the rest of EU corporate law. There’s a board/directors model, shareholder meetings, articles of association that must include certain statutory minima, and a bounded envelope of permitted variation. That’s a feature, not a bug: standardisation is what makes the form pan-European. But it means you can’t write an operating agreement as freewheeling as a typical Delaware LLC agreement.
Cap table, SAFEs and VC investment
For a company that intends to raise venture capital, this is the decisive comparison — and the LLC loses badly.
US VCs almost universally don’t invest in LLCs. The reason is boring: US-taxable investors (pension funds, foundations, endowments) can’t receive unrelated business taxable income (UBTI) from pass-through entities. An LLC pushes income out to its investors in a form these LPs can’t eat. Hence the default path for any venture-scale startup is to either form as a Delaware C-Corp from day one, or convert from LLC to C-Corp before a priced round.
EU INC has the opposite design. It’s built around the instruments VCs use — preferred shares, SAFEs, convertible notes, liquidation preferences. European VCs can invest into EU INC directly, without tax-structure gymnastics. See our deeper look at fundraising with an EU INC.
So: US LLC is founder-friendly but investor-hostile for venture capital. EU INC is investor-friendly from day one. If you know the company will raise a priced round, this consideration alone resolves the choice.
Employee stock options
US LLCs can grant “profit interests” — a partnership-tax equivalent of stock options that, done right, avoids phantom income at grant. They work, but they’re fiddly, and employees find them harder to understand than standard C-Corp ISOs or NSOs.
EU INC is designed with a harmonised ESOP framework as one of its headline features. Cross-border option grants (a long-standing pain point in European startups with distributed teams) become much cleaner. If you’re hiring engineers in three different EU countries, EU INC makes ESOP administration easier than the LLC-profits-interest approach by an order of magnitude. See EU INC stock options.
Geography: single-state vs pan-EU
A US LLC is registered in one state. If you operate in another state you typically register as a “foreign LLC” there — mostly administrative. The 50 US states do not provide the same level of cross-state legal harmonisation you get in the EU; but for most LLCs, intra-US multi-state operation is mostly a matter of a few annual filings and a registered agent in each state.
EU INC is registered in one member state and automatically recognised as a native entity in the other 26. No “foreign registration” required. This difference matters more for EU operations than the parallel question matters for US operations, because EU member states have very different languages, legal traditions and commercial laws. The single EU-INC wrapper genuinely collapses that.
Formation cost and complexity
US LLC formation is famously cheap and fast. Delaware LLC: $110 to file, plus a $300 annual franchise tax, and you can be live in a few hours. Wyoming and New Mexico are cheaper. Registered agent fees run $50–$150/year. You will probably want a lawyer for a first-time formation (and a founder agreement if there are multiple members), but plenty of solo founders use online services and never speak to a lawyer.
EU INC formation is designed to be low-friction by EU standards — digital-first registration, no minimum share capital, standard articles — but not as trivial as a Delaware LLC. The state registration fee is capped at €100 by Article 16(2) of the proposal; expect €400–€1,200 all-in for a basic formation including registered office for year one. See our costs breakdown.
The small extra friction buys you a lot of structural simplicity for pan-European operations. For a US-only business, it’s irrelevant.
When each wrapper wins
Use a US LLC if:
- You’re a solo operator or a small partnership based in the US.
- You’re not raising venture capital and don’t plan to.
- You want pass-through taxation to avoid the double-tax layer.
- Your business is primarily US-facing.
- You value operating-agreement flexibility over standardisation.
Use an EU INC if:
- Your market is Europe or increasingly global.
- You intend to raise venture capital.
- You hire or will hire across multiple EU member states.
- Enterprise procurement or regulation prefers an EU-domiciled entity.
- You want a single clean legal form across the 27.
The edge case: a US founder building for Europe
What if you’re a US founder but the business is European? The cleanest structure is usually EU INC as the operating company, with the US founder holding shares personally. You pay corporate tax in Europe (where activity happens), personal tax in the US (where you live), and rely on the US-EU tax treaty to resolve double-tax. Forming an LLC on top as a personal holding rarely helps — it creates more complexity than it removes. See EU INC for non-EU founders for the longer version.
The structural takeaway
LLC and EU INC look superficially similar because both are limited-liability wrappers with digital-first formation. Underneath, they’re different species. The LLC is a pass-through creature of US federal tax design. EU INC is a corporate form designed for the EU single market and venture-scale capital.
You’ll know which one you need the moment you answer two questions honestly: (1) Where is the business actually going to operate? (2) Will you raise venture capital? If the answers are “US” and “no,” an LLC is perfect. If they’re “Europe” and “yes,” EU INC is much closer to what you want.
Frequently asked questions
Is EU INC the same as a US LLC?
No. A US LLC is a pass-through (or elective) tax creature at federal level. EU INC is a corporate-tax entity, like every other EU company form. The LLC is flexible and founder-friendly; EU INC is standardised, pan-EU and investor-friendly.
Can US VCs invest in an EU INC?
Yes — and more easily than they can invest in an LLC. EU INC is designed around investor instruments (preferred shares, SAFEs, convertible notes). LLCs, by contrast, generate pass-through income that US tax-exempt LPs (endowments, pensions) generally can’t hold.
How much does a Delaware LLC cost?
The state filing fee is $110, plus a $300 annual franchise tax and $50–$150/year for a registered agent.
Can an EU INC elect pass-through taxation like an LLC?
No. There is no “check-the-box” election in the EU. An EU INC is always a corporate taxpayer in its member state of residence.