How to Form a UG (haftungsbeschränkt) in Germany 2026: Step-by-Step Guide

The UG (haftungsbeschränkt) – often called the “Mini-GmbH” – is Germany’s most accessible form of limited liability company. With a minimum share capital of just €1, the barriers to entry are low. But like a GmbH, it comes with bookkeeping obligations, annual accounts, and tax filings. This guide walks you through every step of formation.

What Is a UG (haftungsbeschränkt)?

The UG (haftungsbeschränkt) is a special form of GmbH introduced in 2008. Liability is limited to company assets. The minimum share capital is €1 (vs. €25,000 for a GmbH). In return, a mandatory reserve applies: 25% of annual profits must be retained until share capital reaches €25,000 – at which point the UG can be converted into a full GmbH.

UG vs. GmbH: Which Should You Choose?

Choose a UG if: your starting capital is limited, you want to test a business concept first, or you plan to convert to a GmbH later. Choose a GmbH if: professional credibility matters from day one, you have €25,000 available, or you need bank financing or investor funding – banks and investors often prefer GmbH.

Forming a UG: Step by Step

The standard UG formation process:

1. Draft the articles of association (Gesellschaftsvertrag): With up to 3 shareholders, you can use the free standard template (Musterprotokoll) from the Federal Ministry of Justice – this significantly reduces notary fees. More than 3 shareholders or custom provisions require a tailor-made contract.
2. Notarisation: The articles of association must be notarised. Notary fees start at approximately €150–300 depending on share capital.
3. Pay in share capital: The full share capital must be deposited in a business bank account before the commercial register entry.
4. Commercial register entry (Handelsregister): Your notary files with the local district court. Cost: €150–250. Timeline: 1–4 weeks.
5. Business registration (Gewerbeanmeldung): Register with the local trade office after the Handelsregister entry. Cost: €26–65.
6. Tax registration (Finanzamt): Complete the tax registration questionnaire to receive your tax number and, if needed, a VAT ID.

Share Capital and the Mandatory Reserve

While the legal minimum is €1, in practice €500–2,000 is recommended – you’ll need funds to cover formation costs (notary, commercial register). Too little capital creates an immediate deficit on day one.

The 25% mandatory reserve is an important constraint: until share capital reaches €25,000, you must retain a quarter of all annual profits. This limits distributions to shareholders and is a key difference from the GmbH.

UG Formation Costs at a Glance

• Notary fees: approx. €200–400 (significantly lower with the standard template)
• Commercial register entry: approx. €150–250
• Business registration: €26–65
• Total formation costs (excluding share capital): approx. €400–1,000

Bookkeeping and Tax Obligations

Like a GmbH, the UG is subject to double-entry bookkeeping, must prepare annual financial statements, and publish them in the Federal Gazette (Bundesanzeiger). Key taxes:

• Corporation tax (Körperschaftsteuer): 15% on profits + 5.5% solidarity surcharge
• Trade tax (Gewerbesteuer): depends on the municipal Hebesatz (no tax-free allowance for corporations)
• VAT: standard regime or small business exemption (under €25,000 prior-year revenue)

With Norman, you automate your UG’s bookkeeping, prepare annual accounts, and file tax returns directly via ELSTER – without expensive external accountants for day-to-day operations.

Summary

The UG is a straightforward, low-cost path to limited liability in Germany. Key steps:

1. Prepare articles of association (Musterprotokoll recommended)
2. Notarise and file for Handelsregister entry
3. Deposit share capital and register the business
4. Register for taxes and set up bookkeeping

Further reading: GmbH Bookkeeping 2026 | Corporate Income Tax for GmbH and UG