How to Form a UG in Germany 2026: Costs, Process and Difference from GmbH

The UG (haftungsbeschränkt) — often called the mini-GmbH — is Germany's most accessible limited liability company structure. Unlike the GmbH, which requires a minimum of €25,000 in share capital, a UG can be founded with as little as €1. That makes it attractive for early-stage founders testing a business idea — but it comes with the same bookkeeping obligations as a GmbH from day one.

What Is a UG (haftungsbeschränkt)?

The UG is a special form of GmbH under §5a GmbHG. As a Kapitalgesellschaft (capital company), it provides full limited liability — creditors can only pursue the company's assets, not your personal assets. The minimum share capital is €1 instead of €25,000.

There's an important catch: the UG must retain 25% of its annual profit as a statutory reserve (Thesaurierungspflicht) until the share capital reaches €25,000 — at which point it can convert to a full GmbH.

UG vs. GmbH: Key Differences

Both structures offer limited liability and are taxed the same way. The key differences:

• UG: from €1 share capital, 25% profit retention required, slightly weaker market reputation
• GmbH: €25,000 minimum capital, no retention requirement, stronger credibility with banks and investors

Choose a UG if you don't yet have the capital for a GmbH or want to test your business model first. Choose a GmbH if you need maximum credibility from day one.

How to Form a UG: Step by Step

1. Draft the articles of association: Use the simplified Musterprotokoll (up to 3 shareholders) or a custom agreement.
2. Notary appointment: The articles of association must be notarized.
3. Pay in share capital: Transfer the full amount to the company's bank account before the commercial register entry.
4. Commercial register entry (Handelsregister): The local court (Amtsgericht) registers the UG. It's legally formed only from this point.
5. Register the trade (Gewerbeanmeldung): At your local Ordnungsamt — unless your activities are purely freelance.
6. Tax registration: Submit the Fragebogen zur steuerlichen Erfassung to the tax office.
7. Open a business bank account: Required as a separate legal entity.

Costs of Forming a UG

Gewerbeanmeldung cost Germany 2026

The Gewerbeanmeldung is usually one of the smaller formation costs, but the fee is set locally and varies by municipality. Budget it separately from notary fees, commercial register costs, tax registration, bank setup and bookkeeping setup so the total UG formation cost is not underestimated.

• Notary (Musterprotokoll): approx. €100–300
• Notary (custom agreement): approx. €500–1,500
• Commercial register entry: approx. €150–200
• Trade registration: €15–60
• Total from approx. €300–500 (using Musterprotokoll)

Tip: The Musterprotokoll saves notary costs and works well for simple structures with up to 3 shareholders. For more complex arrangements, a custom shareholders' agreement is worth the extra cost.

Bookkeeping and Accounting Obligations

As a Kapitalgesellschaft, the UG is required to maintain double-entry bookkeeping and prepare annual financial statements (balance sheet + P&L) from day one — regardless of size or revenue. Results must also be disclosed in the Bundesanzeiger.

Ongoing obligations:

• VAT advance return (Umsatzsteuervoranmeldung) — monthly or quarterly
• Corporate income tax return (Körperschaftsteuererklärung) — annually
• Trade tax return (Gewerbesteuererklärung) — annually
• Annual financial statements and disclosure in the Bundesanzeiger

Taxes for a UG

A UG pays the same taxes as a GmbH:

• Corporate income tax (Körperschaftsteuer): 15% of taxable profit
• Solidarity surcharge (Solidaritätszuschlag): 5.5% of Körperschaftsteuer
• Trade tax (Gewerbesteuer): approx. 7–17% depending on the municipality's multiplier

As managing director, you'll also pay income tax (Einkommensteuer) on your salary drawn from the UG.

Conclusion

The UG is a legitimate, cost-effective way to enter the world of limited liability companies in Germany. Just be aware that from the very first day, you're subject to the same accounting and tax rules as a GmbH. Getting your bookkeeping and tax filings right from the start saves a lot of trouble down the line.

Norman supports UG and GmbH founders with AI bookkeeping, VAT returns and tax filings — fully digital. Learn more: AI Bookkeeping and Taxes for GmbH and UG.