The European Commission has launched an initiative called the EU Startup Nations Standard (SNS), which is pressuring national governments to put in place more startup-friendly policies.

So far 25 European countries have signed up to it (with just Bulgaria, Hungary and Croatia the holdouts at the time of writing on Friday)

What does this really mean?

The SNS is calling on EU member states to change their local rules on issues such as startup visas and stock options — and giving them a road map of what to do.

Member states don’t have to sign up to this, but those that do will be expected to actually change their rules over time.

Why does this matter?

The issue is that today some countries have pretty horrible rules around tech and startups that are stuck in the 20th century — and holding the continent back in the global tech race.

For example, the ability for a high-growth but cash-poor tech company to attract talent through stock options is pretty limited in many countries, where options are a nightmare to issue.

If these could be changed in countries like Germany, Spain and Belgium that might help the whole European startup ecosystem develop.

What are the key details?

The proposals want national governments to change the rules to:

1. Ensure employee share options are not subject to capital gains tax until they are actually cashed in
2. Allow startups to issue stock options to employees with non-voting rights
3. Fast-track the process of creating a new company to within one day for €100
4. Accelerate visa processing for tech talent from outside the EU, and incentivise the return of EU tech-talent
5. Reduce regulatory red tape and create regulatory sandboxes

What are people saying about it?

The general view is that the SNS is great, but now national governments actually need to sign up to it.

Not Optional, a policy initiative funded by VC firm Index Ventures, this week published an open letter signed by many of Europe’s leading investors, welcoming the SNS. However, the group is also urging EU member states to turn the recommendations into actual national legislation, and not just stay on the books at the EU Commission.

Martin Mignot, partner at Index Ventures, said: “The Startup Nation Standard is a step in the right direction. We now need national governments to implement the measures urgently if we are to compete successfully on the world stage.”

Frederic Mazzella, founder of BlaBlaCar and co-president of France Digitale said: “Member states must urgently adopt the EU Startup Nations Standard and fix stock option policies across the continent.”

Constantijn Van Oranje, startup envoy for Techleap, said: “If I were a policymaker, changing the policy on the fiscal treatment of stock options would be on top of my list. An essential instrument for startups to attract and retain the best talent and to share wealth among many when a startup is successful.”

Roberto Viola, director general of the European Commission’s DG Connect, said: “Startups are key to Europe’s future economy and society. This was true before and during the Covid-19 crisis and will be even more so in the post-Covid-19 era.

He added: “The role startups can play in the recovery from the ongoing crisis and the establishment of a stronger green and digital economy and society cannot be understated: they have a proven capacity to develop breakthrough innovations in response to real world needs, create new jobs and build synergies with Europe’s strong traditional industries.”

Michael Stothard is Sifted’s editor. He tweets from @MStothard