A group of thirty European tech start-ups have warned that the European Union’s “inconsistent and often punitive rules” employee ownership rules are hindering their businesses.

The entrepreneurs, which include the founders and chief executives of iZettle, TransferWise and Delivery Hero, stated that laws across the continent make it costly for employers to give out stock options to employees.

The result is “a brain drain of Europe’s best and brightest”, they said.

The warning to EU policymakers, in an open letter, comes as research by venture capitalists Index Ventures finds that employees own only 10 per cent of late-stage start-ups in Europe, because of limitations brought about by regulations. However in the US it is 20 per cent.

The letter by the tech founders claims the regulations makes it hard for talented workers to give up their current careers, usually at big tech companies, to join new start-ups.

In some countries, like Belgium, taxes are paid on stock options when they are granted, rather than when they acquire the shares. If the start up fails, staff could end up paying for nothing.

Rules in some countries are “so punishing that they put our startups at a major disadvantage to their peers in Silicon Valley and elsewhere, with whom we’re competing for the best designers, developers, product managers and more,” the CEOs wrote.