What you should know about the Unternehmergesellschaft (UG)

Entrepreneurial company (UG) important basic data

Is it a non-domicile company?

No, a UG is not a non-domicile company because it has its registered office and business operations in Germany.

Is this legal form internationally recognized?

Yes, the UG is internationally recognized, but the legal form may be known under a different name in other countries (e.g. as Ltd. in England or as LLC in the USA).

What are the rules for dissolution or liquidation?

The dissolution or liquidation of a UG is essentially carried out in accordance with the provisions of the GmbH Act. There are various reasons and procedures for dissolution, including insolvency, a resolution by the shareholders or a court decision.

What are the requirements regarding the company structure and the managing directors?

A UG has a flexible company structure with one or more managing directors. The managing directors can be shareholders or third parties. At least one managing director must be a natural person.

What accounting and reporting obligations exist?

A UG has accounting and reporting obligations like any other corporation. This includes keeping proper accounts, preparing annual financial statements and complying with disclosure and publicity obligations.

Is it a legal entity and does it have limited liability?

Yes, a UG is a legal entity and has a legal personality. Limitation of liability. The liability of the shareholders is limited to their capital contribution.

How high should the share capital be?

Since 2008, no minimum share capital has been prescribed for the formation of a UG. The founders can determine the share capital according to their own needs and possibilities.

What does the foundation cost?

The formation costs for a UG can range between EUR 200 and EUR 1,500, depending on whether you opt for a standard or premium formation and which additional services you use.

Is such a company subject to corporation or trade tax? If yes, what is the percentage?

A UG is subject to both corporation tax and trade tax. The corporation tax amounts to 15% of the company's profit, and the trade tax varies depending on the municipality and is between 7 and 18 %.

How high is the VAT allowance for online trade, services and trade in tangible goods?

The Allowance for value added tax (VAT) in Germany is 22,000 euros for small businesses. This allowance applies to companies that generate an annual turnover of up to 22,000 euros. There are no separate allowances for online trade, services and trade in material goods.

Are any other taxes due?

In addition to corporation tax, trade tax and Value added tax a UG may also be subject to other taxes, e.g. solidarity surcharge and taxes on profit distributions to shareholders. It is advisable to consult a tax consultant for specific tax issues.

Is the company's income included in the managing director's income? If not, do the directors and employees only have to pay personal income tax on their own income?

The business income of a UG is not added to the income of the managing director. The UG itself pays corporation tax on its profits. The managing directors and employees only pay income tax on their personal income, such as salary or dividends.