Establishing the 28th Regime in Europe: A Unified Legal Framework to Support Growth and Business

The European Union’s internal market is one of its greatest strengths. Yet, fragmentation in legal, tax and administrative frameworks continues to hinder companies that operate across borders. Divergent national rules create compliance costs and uncertainty, especially for SMEs and innovative firms. To address these challenges, the European Economic and Social Committee (EESC) commissioned a study from Ecorys and the Centre for European Policy Studies (CEPS) to explore the concept of a “28th regime” – an optional EU-level legal framework that coexists with, but does not replace, national laws.

Despite decades of integration, barriers to cross-border business remain high. Differences in company formation, taxation, labour, accounting and insolvency laws generate unnecessary complexity and cost. For SMEs, this can be a decisive obstacle to growth.

Previous EU attempts to introduce optional frameworks – such as the European Company (SE), the Pan-European Pension Product (PEPP) and the Common European Sales Law (CESL) – have shown both the potential and pitfalls of this approach. The 28th regime aims to build on these lessons, offering firms a voluntary, harmonised legal pathway for cross-border operations.

The study, led by Ecorys and CEPS for the EESC Employers’ Group, analyses the rationale, feasibility and design principles for such a regime. It proposes a layered, modular framework starting from business law, where the potential impact is greatest.

Key findings

Our research comprised an analysis of previous initiatives and stakeholder consultations. The main findings include:

• Fragmentation costs: Legal and regulatory differences within the EU impose tariff-equivalent costs of up to 45% for goods and 110% for services. These barriers discourage firms from expanding cross-border and limit the EU’s competitiveness.
• Optionality as a solution: A 28th regime would offer a single EU rulebook that firms could opt into voluntarily, simplifying compliance without requiring full harmonisation across Member States.
• A layered approach: The study proposes starting with corporate law as the foundation, covering company formation, governance and mobility, then expanding to tax coordination, accounting standards and insolvency law. Labour law, given its political sensitivity, could be addressed at a later stage.
• Governance and implementation: Piloting mechanisms such as the EU’s Competitiveness Lab could test components of the regime before a broader rollout. A digital “Business Single Entry Point” would enable multilingual registration and streamlined compliance.

The 28th regime offers a pragmatic path toward a more integrated and competitive single market. It balances legal diversity with the need for simplicity and growth. When carefully designed and politically supported, it can help European businesses scale, innovate and compete globally.