Is a UG the same as a GmbH?

A UG is a sub-type of the GmbH with the same limited liability, but it can start with just EUR 1 instead of EUR 25,000 and must build reserves toward that amount over time. Once reached, it can convert to a GmbH.

Why does "haftungsbeschränkt" appear in the name?

German law requires the UG to spell out "(haftungsbeschränkt)" - limited liability - so third parties are aware the company has minimal capital backing it.

UG (haftungsbeschränkt)

The UG (haftungsbeschränkt) is the "mini-GmbH" - a German limited-liability company that can be formed with as little as EUR 1 of share capital, aimed at startups and small founders.

Like a GmbH, a UG is a separate legal entity whose owners are liable only up to their contribution. The trade-off for the low entry capital is that a UG must retain a quarter of its annual profit each year until its reserves reach the EUR 25,000 GmbH minimum, at which point it can convert into a full GmbH. The "(haftungsbeschränkt)" suffix is mandatory in the company name.

When such a company operates in the United States it forms a separate US entity (usually an LLC or corporation) exactly as a GmbH would; the UG form itself exists only under German law.

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Frequently asked questions

Is a UG the same as a GmbH?: A UG is a sub-type of the GmbH with the same limited liability, but it can start with just EUR 1 instead of EUR 25,000 and must build reserves toward that amount over time. Once reached, it can convert to a GmbH.
Why does "haftungsbeschränkt" appear in the name?: German law requires the UG to spell out "(haftungsbeschränkt)" - limited liability - so third parties are aware the company has minimal capital backing it.