GmbH vs UG (haftungsbeschränkt).
Which legal form fits in 2026.
Same liability shield, same tax, different capital and signalling. The two differences that actually matter, plus the seamless conversion path.
UG and GmbH share almost everything by design. Both sit inside the same statute (GmbHG), both give you the § 13 (2) GmbHG liability shield, both are taxed at identical corporate rates, both follow the same governance rules. What differs is the upfront capital entry and a statutory profit-retention duty that sunsets once the UG reaches GmbH-level capital.
The 60-second answer
Pick GmbH if you have €25,000 to park and want banking and VC credibility. Pick UG if €25,000 is painful now, and convert under § 5a (5) GmbHG when reserves accumulate.
Capital: €25,000 vs €1
§ 5 GmbHG: GmbH minimum Stammkapital €25,000, with €12,500 paid in at registration (§ 7 GmbHG). § 5a GmbHG: UG minimum €1, but 100% paid in (no half-rule), and in-kind contributions are not allowed.
The 25% profit-retention rule
§ 5a (3) GmbHG requires 25% of UG annual profit to be allocated to a statutory reserve. It cannot be distributed to shareholders; it can only be used to (a) increase capital toward GmbH level, (b) cover losses, (c) cover carry-forwards. The rule ends the moment reserve + capital ≥ €25,000.
Tax: identical
Both forms are corporate taxpayers. Körperschaftsteuer 15% + Solidaritätszuschlag 5.5% on KSt (= 15.825% federal). Gewerbesteuer at the municipal Hebesatz. Combined approximately 28 to 33%. Distributions to natural-person shareholders: § 43 EStG Kapitalertragsteuer 25% + Solz. § 8b KStG 95% participation exemption: both qualify. See our tax guide.
Banking signal
Banks discount UG balance sheets. Credit lines are smaller or not offered. Large-counterparty procurement often sets "GmbH or equivalent" minimums. For VC-track startups, the UG is rarely acceptable; most convert or form fresh as GmbH.
Conversion path (§ 5a (5) GmbHG)
When reserve + capital reaches €25,000: shareholder resolution, amended Satzung, Handelsregister filing. Same HRB number, same tax number, same bank account. Not a merger, not a re-formation, a statutory status change. Typical conversion: 2 to 4 weeks, €1,200 to €2,000 legal.
Cost comparison
UG formation: €900 to €1,500 all-in (our legal) + €300 to €900 pass-through (notary + HR + IHK). GmbH formation: €1,800 to €3,500 legal + €700 to €2,900 pass-through. UG → GmbH conversion: €1,200 to €2,000.
Side by side
| Aspect | UG | GmbH |
|---|---|---|
| Statute | § 5a GmbHG | §§ 1-84 GmbHG |
| Min capital | €1 | €25,000 |
| Paid-in at registration | Full | €12,500 |
| In-kind contributions | Not allowed | Allowed (Sachgründung) |
| Profit retention | 25% of profit | None |
| Musterprotokoll | Yes (up to 3 shareholders) | Yes (same cond.) |
| Liability shield | § 13 (2) GmbHG | § 13 (2) GmbHG |
| Corporate tax | ~28–33% | ~28–33% |
| Dividend withholding | 25% + Solz | 25% + Solz |
| § 8b KStG Holding exemption | Yes | Yes |
| Bank credibility | Discounted | Standard |
| VC acceptance | Rare | Standard |
| Formation cost | €300–900 + legal | €700–2,900 + legal |
| Formation timeline | 2–4 weeks | 3–6 weeks |
Frequently asked questions
What is the minimum capital to form a UG (haftungsbeschränkt)?
€1 under § 5a GmbHG, paid in full at registration.
Can I form a UG with just one euro and zero other funding?
Legally yes. Practically you need enough capital to cover formation costs and early operational burn; single-euro UGs are rare.
Is a UG less liable than a GmbH?
No. Identical liability shield under § 13 (2) GmbHG. Director personal liability for breaches (§ 43 GmbHG) applies equally.
Why do banks look skeptically at UGs?
Thin capital signal. Credit lines sized smaller, sometimes denied. Not a legal judgment, a risk-pricing judgment.
Can a UG hold shares in another company (as a Holding)?
Legally yes, and § 8b KStG applies. Practically the thin-capital signal hurts the Holding structure. Use a GmbH as Holding.
What is the 25% profit retention rule and when does it end?
§ 5a (3) GmbHG. Ends when reserve + capital reaches €25,000.
How does a UG convert to a GmbH?
§ 5a (5) GmbHG: shareholder resolution, amended Satzung, HR filing. Same HRB number, same tax ID, same bank account.
Do VCs invest in UGs?
Rarely. Most institutional investors require GmbH or AG form before terms.
Is there any tax advantage to a UG over a GmbH?
No. Identical corporate tax treatment.
How much does it cost to form a UG vs a GmbH in 2026?
UG: €900-1,500 legal + €300-900 pass-through. GmbH: €1,800-3,500 legal + €700-2,900 pass-through.
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