With its latest proposal, the European Union has been making efforts to ease burdens on businesses to innovate, grow and operate across borders. This includes simplifying administrative processes.
The ETF is not against simplifying cross-border business and supports the ambition to support genuine start-ups and innovative companies to strengthen Europe’s competitiveness. But simplification becomes an issue when it comes at the expense of accountability, workers’ rights and effective enforcement. This is precisely where the proposed EU Inc. framework raises serious concerns.
Transport is not like other sectors
The proposal has largely been designed with innovative start-ups and scale-ups in mind. But transport is fundamentally different.
The sector is dominated by multinational operators working across multiple jurisdictions. Employers often combine headquarters in one Member State, operational management in another, workers based elsewhere and subcontractors operating across Europe. National authorities already face significant challenges in enforcing labour legislation, supervising operators and identifying the legally responsible employer.
In transport, corporate establishment is far more than a company law issue. It is decisive as it determines market access, operating licences, safety oversight, labour law enforcement, and ultimately legal responsibility. Any new corporate structure that adds another layer of legal complexity risks making enforcement even more difficult.
Europe has spent years solving these problems – now we risk exacerbating them
Over the past decade, the ETF and EU have worked hard to tackle letterbox companies, bogus establishments, regulatory arbitrage and weak enforcement. Legislative initiatives such as the Mobility Package were specifically designed to ensure that transport operators maintain a genuine establishment and cannot evade their responsibilities simply by choosing the most convenient legal jurisdiction.
The EU Inc. proposal risks reopening these very issues.
Without robust and binding safeguards, it could make it harder to identify the responsible employer, reduce corporate transparency, create new opportunities for regulatory arbitrage and social security fraud, facilitate social dumping through selective application of labour laws, and weaken collective bargaining and worker participation rights.
Practical consequences across transport
Our concerns are not theoretical, they reflect challenges already experienced across every transport mode. Some examples:
In road transport, national authorities rely on the principle of genuine establishment to supervise operators and grant licences. The proposal leaves fundamental questions unanswered: How will genuine establishment be verified? Which authority will supervise an EU Inc.? Which Member State will be able to suspend or withdraw licences when rules are breached? These questions should be resolved before introducing a new corporate regime.
The maritime sector provides another cautionary example. Flags of Convenience with little or no economic connection to the country of registration have demonstrated how fragmented legal responsibility can encourage social dumping, weaken collective bargaining and complicate enforcement. Europe should draw lessons from this experience rather than risk creating similar incentives through a new corporate framework.
In aviation, complex corporate structures, multiple Air Operator Certificates (AOCs) and wet leasing arrangements already create legal uncertainty regarding applicable employment law. At a time when the European Commission is reviewing aviation legislation to provide greater legal certainty, introducing EU Inc. could move policy in the opposite direction.
Logistics also present important concerns, particularly regarding the identification of the genuine employer. We see high risk that the EU Inc. May undermine the application of the Platform Work Directive in relation to identifying the real employer and tracing algorithmic control across borders.
A better way forward
ETF is not opposed to making it easier for innovative companies to establish themselves across Europe. But any new legal framework must preserve legal certainty and accountability.
If the EU chooses to proceed with the proposal, several safeguards are indispensable. The framework should be strictly limited to genuine start-ups. Genuine establishment requirements must remain fully intact, employer responsibility must remain clear, transport licensing and labour legislation must continue to apply without ambiguity, and collective bargaining and worker participation rights must be fully protected.
“Competitiveness requires trust,” ETF General Secretary Livia Spera said. “Europe’s competitiveness depends not only on reducing bureaucracy but also on maintaining fair competition, strong enforcement and confidence in the internal market.”
Read more about this in our position paper on the proposal.