General – founding & basics · 1.3
UG or GmbH: What is the Difference?
The UG (haftungsbeschränkt) is not a standalone legal form, but a GmbH subject to special rules. You can incorporate it with as little as 1 € in share capital. In return, it must retain a portion of its annual profits and carry a mandatory name suffix. Taxes and liability are identical for both.
Key points
| UG (haftungsbeschränkt) | GmbH | |
|---|---|---|
| Stammkapital (share capital) | from 1 € | at least 25,000 € |
| Payment upon incorporation | in full, cash only | at least half, contributions in kind possible |
| Company name | “UG (haftungsbeschränkt)” mandatory | “GmbH” |
| Reserve | 25% of annual net profit | no obligation |
| Taxes | Körperschaftsteuer (corporate income tax), Gewerbesteuer (trade tax), Umsatzsteuer (VAT) | identical |
| Liability | company is liable | identical |
If the UG increases its Stammkapital to 25,000 €, the special rules no longer apply. It is permitted to retain its name.
Important: A UG with 1 € capital quickly runs into distress. Contribute enough capital to cover initial costs. If insolvency threatens, the managing director must convene the shareholders' meeting immediately.
Figures & thresholds (as of November 2026)
- UG reserve: 25% of the annual net profit, reduced by any loss carryforward, until 25,000 € Stammkapital is reached
- GmbH: at least 12,500 € paid in upon registration
Legal basis
§ 5 GmbHG§ 5a GmbHG§ 7 GmbHG§ 57c GmbHG
Continue
- Next video: How Do I Form a UG or GmbH? Step by Step
- Related: Why must a UG build up reserves?
Pluto takes the statutory reserve into account in your UG's annual financial statements.
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