If you're a European founder, you've probably heard of the Delaware flip. It's the process of creating a US C Corp — typically in Delaware — as a parent company above your existing European entity, so you can raise from US investors using standard US deal docs.
The unflip is the reverse. You create a new European holding company above the Delaware C Corp, swap shareholder equity into the new parent, and restore your corporate home to where your business actually operates.
Why founders flip in the first place
The reasons are well-known. US venture investors expect Delaware C Corps. Y Combinator requires it. Standard fundraising instruments like the SAFE assume Delaware law. Stripe Atlas makes it trivially easy to set up [1].
So European founders — teams based in Stockholm, Berlin, Amsterdam, Paris — create a Delaware shell they'll never visit, hire US lawyers they'll rarely meet, and start paying for a dual corporate structure they didn't need.
The flip costs €15,000–40,000 in legal fees upfront. But the ongoing operational cost — dual bookkeeping, dual tax filings, dual legal counsel — is what really adds up.
What an unflip looks like
An unflip typically follows this structure:
Form a new holding company in the EU country where your operations are concentrated — where your team, customers, and assets are.
Execute a share exchange: existing shareholders swap their Delaware C Corp shares for shares in the new EU parent, preserving the same ownership structure, share classes, and investor rights.
The Delaware C Corp becomes a wholly-owned subsidiary of the EU parent. It stays active for any remaining US obligations.
Migrate operational infrastructure — banking, payroll, insurance, contracts — to the EU parent over time.
The US entity doesn't die. It just stops being the parent. Your cap table, investor rights, and governance move to a European structure that matches where your company actually lives.
The tax question
The biggest concern founders have is tax. US tax law was designed to make it easy to bring companies into Delaware and hard to take them out.
Two statutes matter. IRC Section 7874 is the anti-inversion rule — it can treat your new EU parent as a US company if former shareholders own 80%+ of it [2]. But there's an exception: if you have substantial business activities (25%+ of employees, compensation, assets, and income) in the country of incorporation, the rule doesn't apply [3].
For a European startup with 70–90% of operations in one EU country, this test is straightforward.
The second statute is IRC Section 367(a), which creates a taxable event when US shareholders exchange US shares for foreign shares [4]. This affects US-resident shareholders only and scales with the company's fair market value. The earlier you unflip, the smaller this bill.
EU-resident shareholders generally owe nothing.
When to unflip
Timing matters more than most founders realise. The Section 367(a) tax is based on fair market value at the time of the exchange. Pre-revenue, that number is small. Post-Series A, it's your last valuation.
The optimal window is before or between funding rounds, when the gap between your last valuation and current fair market value is smallest.
Where EU-Inc fits
The EU-Inc, expected to launch in 2027 [5], will create a standardised European corporate form with 48-hour digital incorporation, harmonised stock options, and cross-border recognition across all 27 member states.
It won't change the US tax side — that's American law. But it eliminates the European complexity. Instead of choosing between 27 national company forms with different rules, founders get one entity that every European investor recognises.
The unflip gets you out of Delaware. The EU-Inc gives you somewhere better to land.