Repasi Draft JURI Report Introduces New EU Inc Safeguards - Excludes Low-Innovation Sectors
Analysis of MEP Repasi's draft JURI report proposing sector exclusions and enhanced safeguards for the EU Inc framework.
René Repasi's draft JURI report introduces significant safeguards to the EU Inc proposal, including the explicit exclusion of low-innovation sectors like construction, transport, and hospitality from the 28th regime framework. The report grants the European Commission power to maintain a list of non-innovative economic activities that should be excluded and allows member states to extend the 48-hour registration deadline to investigate potential fraud.
The draft report, presented by JURI Committee rapporteur René Repasi (S&D, Germany) in late June 2026, marks the European Parliament's first formal position on the EU Inc proposal introduced by the European Commission on March 18, 2026. According to Accountancy Europe, the report substantially modifies the Commission's original promise of 48-hour, €100 online setups by introducing new protective measures.
Key Provisions of the Repasi Draft Report
The draft report maintains the core architecture of the EU Inc framework while introducing several material changes to the Commission's proposal. According to Science|Business, Repasi emphasized that these modifications are designed to make EU Inc "a seal of quality" rather than a tool for regulatory arbitrage.
The report preserves the digital-by-default incorporation model using the Business Registers Interconnection System (BRIS) and maintains the maximum €100 registration fee. However, it introduces flexibility for member states to extend investigation timelines when fraud indicators emerge.
Worker Participation Rights
A central feature of Repasi's amendments concerns employee co-determination. The report stipulates that board-level worker participation rights must follow the place of employment, applying the highest national protection threshold across member states. This provision responds directly to concerns raised by labor unions and the EESC Workers' Group about potential social dumping.
The draft also broadens the scope of simplified winding-up proceedings to apply to all startups rather than solely "innovative startups," a change intended to support entrepreneurial recovery without creating arbitrary distinctions.
Sector Exclusions: Low-Innovation Activities Blocked
The most controversial element of Repasi's draft is the introduction of sector-based exclusions. According to Science|Business, the report grants the European Commission authority to maintain and update a list of non-innovative economic activities that are likely to be used to circumvent national labor laws and should therefore be excluded from EU Inc eligibility.
Repasi specifically identified examples of sectors that could face exclusion:
"Examples could be cleaning activities, hospitality services or residential care activities."
Source: René Repasi, MEP, July 2026
According to Accountancy Europe, the report excludes low-innovation sectors including construction, transport, and hospitality from accessing the EU Inc framework. This represents a significant narrowing of scope compared to the Commission's proposal, which made EU Inc available to any company regardless of sector.
| Feature | Commission Proposal (COM(2026) 321) | Repasi Draft Report |
|---|---|---|
| Sector eligibility | Open to all businesses | Excludes low-innovation sectors via Commission blacklist |
| Registration timeline | Fixed 48 hours | 48 hours baseline, extendable for fraud investigation |
| Worker participation | Country-of-origin principle | Place-of-employment principle with highest protection threshold |
| Scope of simplified winding-up | Innovative startups only | All startups |
| Anti-abuse measures | Basic identity verification | Enhanced AML, beneficial ownership, fraud checks |
Enhanced Safeguards and Anti-Abuse Measures
The draft report substantially strengthens anti-abuse provisions beyond the Commission's original proposal. According to the German Federal Chamber of Notaries, spokesperson Sophie Godt-Nordhues welcomed these changes, stating:
"We welcome the stronger emphasis on preventive controls, identity verification and anti-money laundering safeguards."
Source: Sophie Godt-Nordhues, German Federal Chamber of Notaries, July 2026
The report explicitly addresses risks including money laundering, sanctions evasion, concealment of beneficial ownership, and identity fraud. It introduces the possibility for member states to require additional checks during company formation, share transfers, and capital measures related to identity, legal capacity, beneficial ownership, and anti-money laundering compliance.
The draft also limits the country-of-origin principle to prevent corporate forum shopping. This modification responds to concerns from member states about regulatory arbitrage and the potential creation of "letterbox companies" that exist on paper in one jurisdiction while operating elsewhere.
Online Dispute Resolution
Repasi's report introduces a new swift online dispute resolution system for EU Inc companies. This mechanism aims to provide accessible, efficient resolution of cross-border corporate disputes without requiring founders to navigate 27 different national court systems.
The draft also expands the list of criteria the Commission must use to evaluate EU Inc's success, moving beyond purely quantitative metrics like registration numbers to include qualitative assessments of innovation support and competitive impact.
Implications for Startups and Stakeholder Reactions
Initial reactions to the draft report reveal significant divisions within the European startup ecosystem. Pascal Canfin, shadow rapporteur for the Renew Europe group, welcomed the report's attention to labor law and fiscal processes, stating:
"EU Inc should be a proof of strong European start-ups that wish to scale in Europe, not of letterboxed companies."
Source: Pascal Canfin, MEP, Renew Europe shadow rapporteur, July 2026
However, Canfin indicated he would submit amendments on topics including the sector exclusion provisions, suggesting inter-group negotiations may modify this aspect of the draft.
Repasi defended the decision not to limit EU Inc exclusively to startups, noting that "the risk of social dumping is not properly addressed by limiting the scope to startups since start-ups could potentially engage in social dumping." He warned that forcing founders to change corporate form during scaling could "slow down the scaling up massively."
The sector exclusions have raised particular concern among some startup advocates who argue that innovation can emerge from any sector. The construction sector, for example, accounted for 38% of SME real value added growth in 2025 according to the European Commission's Annual Report on European SMEs 2025/2026.
For specific country contexts, founders should review our analyses of EU Inc vs German GmbH, EU Inc in France, and EU Inc in the Netherlands to understand how these safeguards may affect incorporation decisions.
Next Steps in the Legislative Process
According to Agence Europe, Repasi was formally appointed as rapporteur on the Commission's EU Inc proposal by JURI coordinators on April 23, 2026. His draft report is expected for formal release on July 23, 2026, with the amendment deadline for shadow rapporteurs set for July 17, 2026.
The timeline for EU Inc negotiations remains ambitious:
- July 17, 2026: Deadline for amendments from shadow rapporteurs in JURI Committee
- July 23, 2026: Official publication of Repasi draft report
- September 2026: JURI Committee vote on negotiating mandate (sessions scheduled for September 7 and 28)
- October 2026: Plenary vote on Parliament's negotiating position (tentatively first October part-session, October 5-8)
- July-December 2026: Council Working Party on Company Law continues technical examination under Irish Council Presidency
- End 2026: Target for political agreement between Parliament, Council, and Commission
The Council Working Party on Company Law has scheduled sessions for July 2, 8, and 23, 2026 to continue technical examination of the proposal. Ireland assumed the Council Presidency on July 1, 2026, with the 28th regime identified as a priority file for delivery by year-end.
According to Matheson, Ireland's Presidency priorities include protecting the core architecture (optionality, digital-by-default, removal of national barriers), resolving sensitive issues early (employment safeguards, anti-abuse provisions), keeping the scope disciplined, and aligning with the European Parliament early to make trilogues realistic.
What This Means for Founders Now
Founders considering EU Inc should take the following immediate actions:
Assess sector eligibility carefully. If your business operates in construction, transport, hospitality, cleaning, or residential care, monitor the final list of excluded activities. The sector exclusion list will be maintained by the Commission and may evolve. Consider whether your business model includes innovative elements that could qualify you for inclusion despite operating in a traditionally low-innovation sector.
Plan for enhanced verification timelines. The 48-hour registration promise remains, but expect additional time if your incorporation triggers fraud investigation criteria. Budget for potential delays and prepare comprehensive documentation on beneficial ownership, funding sources, and business substance to expedite review.
Review worker participation requirements early. If you plan to employ staff across multiple member states, understand that the highest national co-determination thresholds will apply. This may affect board composition requirements and governance costs. Consult our guide to EU Inc for jurisdiction-specific thresholds.
Track amendment negotiations through summer 2026. The July 17 amendment deadline and July 23 publication date will clarify whether sector exclusions are narrowed, expanded, or removed entirely. Shadow rapporteurs from EPP, Renew Europe, and other groups have signaled they will submit modifications. Subscribe to updates on our timeline page for real-time legislative tracking.
Consider timing of incorporation decisions. If the final regulation maintains sector restrictions, companies in excluded industries should incorporate under national law. Those in eligible sectors may benefit from waiting for the final text before committing to national incorporation, as conversion mechanisms remain unclear. See our assessment tool to evaluate your optimal path.
For questions about eligibility under the emerging framework, consult our FAQ or use our eligibility checker. Companies already evaluating EU Inc vs Delaware LLC should factor these new safeguards into comparative analysis, as they may affect both timeline and compliance costs relative to US alternatives.
Editorial transparency
This article was researched and drafted with AI assistance and reviewed against the cited primary sources before publication. We disclose this openly so readers can assess the analysis in context. Read our methodology