Compare GmbH and UG (haftungsbeschrankt) side by side: minimum capital, tax burden, and take-home after dividends.
What is the difference between a GmbH and a UG?
The main difference is the minimum share capital: GmbH requires EUR 25,000 (at least EUR 12,500 paid in at formation), while a UG can be founded with as little as EUR 1. However, a UG must retain 25% of its annual net profit as a mandatory reserve until EUR 25,000 is accumulated, at which point it can convert to a GmbH.
Is the tax treatment different for GmbH and UG?
No, both GmbH and UG pay the same taxes: Korperschaftsteuer (15%), Solidarity Surcharge, and Gewerbesteuer. The only financial difference is that the UG must build a mandatory reserve from profits, reducing the amount available for dividend distribution.
When should I choose a UG over a GmbH?
A UG is suitable when you lack the EUR 25,000 minimum capital for a GmbH but want the liability protection of a corporation. However, the UG suffix may signal to business partners that the company has limited capital. Many founders start with a UG and convert to a GmbH once the reserve reaches EUR 25,000.
Disclaimer: These calculations are estimates based on 2025 German tax rules and should not be considered professional tax advice. Consult a Steuerberater for your specific situation.
Key differences in capital, costs, liability, and which is right for your business
What is the minimum capital for a GmbH vs UG?
A GmbH requires €25,000 in share capital (Stammkapital), with at least €12,500 paid in at registration. A UG (Unternehmergesellschaft) can start with as little as €1, though experts recommend at least €1,000 to €3,000 for credibility. The UG must save 25% of annual profits until it reaches €25,000, at which point it can convert to a GmbH.
How do setup costs compare?
A GmbH costs about €800 to €1,500 to set up including notary fees, Handelsregister entry, and business registration. A UG costs about €400 to €800. Both need a notarised Gesellschaftsvertrag. Using a Musterprotokoll saves notary costs — about €300 for a UG vs €500 or more for a custom agreement.
Is the tax treatment different?
No, both GmbH and UG pay exactly the same taxes: 15% Körperschaftsteuer plus 5.5% Solidaritätszuschlag and Gewerbesteuer. The combined rate is about 30-33%. Dividend distributions face the same 26.375% Abgeltungsteuer. The only financial difference is the capital requirement and the UG profit retention obligation.
How does liability protection compare?
Both GmbH and UG offer the same limited liability. As a shareholder, you only risk your invested capital. However, a UG with €1 capital has virtually no financial buffer — insolvency can happen very quickly. Failing to file for insolvency within 3 weeks of becoming insolvent is a criminal offence for the managing director.
Which should you choose for a startup?
Choose a UG if you have little starting capital and want to test a business idea with limited liability. Choose a GmbH if you have €25,000 available and want to appear more established to banks and investors. Many startups begin as a UG and convert to a GmbH once they accumulate enough retained earnings or raise funding.
What ongoing costs do both have?
Both have similar ongoing costs: Steuerberater for bookkeeping and annual accounts (€2,000-€6,000/year), IHK membership (€150-€500/year), business insurance, and bank account fees. The UG has no extra costs, but the 25% profit retention rule means less cash for distributions. Annual publication of accounts in the Bundesanzeiger is mandatory for both.
Bundesfinanzministerium-Aligned: Based on 2025 Bundesfinanzministerium rates and thresholds. For personal advice, speak to a qualified Steuerberater (tax adviser).
Disclaimer: This calculator provides estimates based on current German tax rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax adviser before making financial decisions. Read our terms
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