What is the UG (haftungsbeschränkt) company in Germany?

updated on 20. January 2023 14 minutes reading time
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The UG is the legal form for founders who wish to establish a limited liability company but don’t have a lot of cash. Forming this entrepreneurial company requires just €1 of share capital. In this article, you can find out exactly what a UG is and other important facts about this legal form.



  1. What is a UG (haftungsbeschränkt)?
  2. The UG in Germany
  3. What does UG mean?
  4. Further designations for the UG
  5. Forming a UG
  6. UG legislation
  7. Unternehmergesellschaft mit Haftungsbeschränkung
  8. Choosing a company name
  9. Accounting and typical taxes
  10. Conclusion: Is the UG the right legal form for me?


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Andreas Munck

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I can help you start a UG company in Germany 


I’m Andreas. For over a decade years I have been advising companies on how to do business in Germany. I’d be happy to answer your questions about setting up a UG in a one-on-one consultation.


What is a UG (haftungsbeschränkt)?

The UG (haftungsbeschränkt), or UG for short, is a special form of a GmbH (limited liability company) and therefore also belongs to the group of corporations. That’s why the UG is also known as the Mini-GmbH or 1-Euro-GmbH.

Since the German Act to Modernise the Law on Private Limited Companies and Combat Abuses (MoMiG) was enacted in 2008, founders have been able to enjoy the low-cost ‘lite version’ of the GmbH. However, the number of shareholders for a UG is not limited.

As a rule, the rights and obligations of the UG shareholders are based individually on the participation of the individual shareholders. Insofar as the rights and obligations of each shareholder are in part determined by their individual share percentage. Alternatively, the rights and obligations of each shareholder can also be individually stipulated in the articles of association (Gesellschaftsvertrag) – independent of share percentages.

Our UG (haftungsbeschränkt) essential reading:

1. What is the UG (haftungsbeschränkt)?<<<
2. The UG corporation
3. The pros and cons of the UG (haftungsbeschränkt)
4. How to set up a UG company


What do the two legal forms have in common?

Both the GmbH and the UG belong to the group of limited liability companies. The UG is regarded as a small version of the limited liability company because its minimum share capital contribution is €1 per shareholder.

Both the UG and the GmbH legal forms are governed by the  German Limited Liability Companies Act (GmbHG). The corporate form of a UG – similar to a GmbH – consists of one or more CEOs (Geschäftsführer), shareholders (Gesellschafter) and, above a certain size, the supervisory board (Aufsichtsrat).

The biggest difference between these two legal forms is the amount of share capital. While a UG can be formed with a minimum of one euro, the formation of a GmbH requires €25,000. The lower equity capital must be increased annually via the creation of a reserve fund in the case of the UG.

What unites or distinguishes the two legal forms can be read about in detail here.

The UG in Germany

Similar to the Limited in Great Britain, the UG is a very popular legal form in Germany. 77% of our clients who formed a corporation in 2016 chose the UG. Of these, 70% were formed as one-person UGs.

What does UG mean?

UG stands for Unternehmergesellschaft – an entrepreneurial company. This can be one entrepreneur or several. With only one shareholder, a one-person UG is also possible.

Further designations for the UG

In many places, there are different, unofficial names for the Unternehmergesellschaft: Mini-GmbH, Small GmbH, 1-Euro-GmbH or even UGmbH. However, these designations are not legally anchored and should not be used for official purposes.

Forming a UG

Compared to the incorporation procedure of other corporations, the UG does not have any special features – except of course for the amount of the share capital.

One of the main features of the UG is that only a minimum share capital of one euro per shareholder has to be paid into the business account. The legal form UG proves to be a good option for young founders and entrepreneurs who simply cannot raise the €25,000 required share capital for a GmbH.

It’s important to note that although the share capital minimum is quite low there are still many other starting up costs to take into consideration such as notary fees, registration fees etc.

For the formation of a UG, you can either use the so-called Musterprotokoll or bespoke articles of association (Gesellschaftsvertrag). The Musterprotokoll is a standardised template and facilitates a quicker and more cost-effective start-up process. Forming with the Musterprotokoll, however, has certain restrictions:

  • Your company can only appoint one CEO and a maximum of three shareholders
  • The financial year cannot deviate from the calendar year
  • The shareholder is exempted from § 181 BGB, Insichgeschäfte, (German Civil Code)

Unlike the Musterprotokoll that cannot be altered, regulations such as profit distribution, succession or right of sale etc. can be shaped to fit your company’s particular circumstances in individual articles of association.

Therefore, consider carefully whether or not you want to take advantage of the simplified (and more favourable) procedure of a UG formation with a Musterprotokoll, because if you change something, you must have customised articles of association drawn up anyway- which will cost you more. For example, if it’s clear from the outset that several CEOs are to be appointed, it may make more sense to use customised articles of association.

At first, this may seem a little more expensive than forming a company with a Musterprotokoll, but in comparison to a later change, it would be more favourable. You can make further change requests at any time with a statute; however, a small notarial fee is incurred for this as well.

Note: Not every commercial register (Handelsregister) accepts a change of CEO regarding the exemption according to § 181 BGB in the model protocol (Musterprotokoll). Even if the former CEO had been released, this does not always apply to the successor. In this case, you must have an individual statute drawn up in which the new CEO is explicitly exempted from § 181 BGB.

You can find out more about the formation process, including all the different registrations, in our article here.

Got questions about how the UG?
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UG legislation

In 2008, German legislators introduced the UG in order to create a counter-model to the British legal form Limited. But where are the laws that regulate the corporate form of the UG? Since the UG is not a legal form in its own right but actually a special form of the GmbH, there’s no independent UG law. The legal framework of the UG is integrated into the German Limited Liability Companies Act (§ 5a GmbHG). In other words, the existing company law was simply adapted or extended to the UG.

Unternehmergesellschaft mit Haftungsbeschränkung

Unternehmergesellschaft mit Haftungsbeschränkung translates in English to an entrepreneurial company with limited liability. This means that the partners and the CEOs of the UG are only liable with the company assets – and not with their private assets.

This regulation does not apply in exceptional cases, for example in the case of negligent or actively harmful acts affecting the company.

Overall, however, the limitation of liability of an entrepreneurial company is a major advantage over other legal forms (such as sole proprietorships/Einzelunternehmen or the GbR), in which the partners are liable with all their private assets.

Choosing a company name

As long as the company name has not yet been assigned and is also not misleading (eg ‘Textile Max’ for a pipe cleaning company) and is not too similar to other companies, almost any name can be chosen for an entrepreneurial company. Fantasy names are also possible.

When forming a company through firma.de, the desired company name is submitted to the Chamber of Industry and Commerce (IHK) for examination. If the response is positive, then the desired company name is yours for the taking. Should your IHK have any objections, the name of the prospective company may have to be changed.

Does haftungsbeschränkt (limited liability) have to be written by the company name?

Yes. It doesn’t matter whether the “UG (haftungsbeschränkt)” or “Unternehmergesellschaft (haftungsbeschränkt)” variant is used; the appendix must be used for all official business, such as correspondence, invoices or the imprint of the website.

For advertising media, social media or similar, the business name is sufficient without specifying the legal form eg UG (haftungsbeschränkt).

Accounting and typical taxes

The UG is a corporation for which the regulations of the German Commercial Code (HGB) apply. Thus, a UG is obliged to keep double-entry accounts including the annual balance sheet.

It’s taxed in the same way as other corporations. A corporation tax (15%) plus a solidarity surcharge (5.5%) is applied. In the case of profit distributions to the shareholders, a final withholding tax (25%) again with a solidarity surcharge must be paid to the tax office.

Despite the legal form, the pre-tax or value-added tax (19%) is also relevant for an entrepreneurial company. If employees work for the company, wage tax, solidarity surcharge and (possibly) church tax must be considered.

Depending on the business venture, a holding structure involving one or more UGs could be a way to optimise taxation. 

Conclusion: Is the UG the right legal form for me?

Doe the UG make sense for your business? The entrepreneurial company is the right legal form for you if you want to set up a limited liability company for small amounts of money.

The costs for the formation of a UG are much lower than for the formation of other corporations, such as the GmbH which has a €25,000 minimum share capital requirement or the AG that mandates a minimum of €50,000. This entrepreneurial engineered company is therefore ideally suited for startups or young entrepreneurs who cannot afford the €25,000 for a GmbH but still want to benefit from a limitation of liability.

At a later point in time (ie when a share capital of €25,000 is reached through reserving funds), the UG can still be renamed a GmbH, whereby founders can benefit from its good reputation.


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Andreas Munck

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Got questions about setting up a business in Germany?

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.


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