EU Inc vs UG (haftungsbeschränkt): Germany's 1-Euro Companies Compared
Germany's UG offers a 1 EUR start but keeps the notary and a forced savings plan. How the proposed EU Inc compares on cost, speed, and cross-border growth.
The UG (haftungsbeschränkt) already gives German founders limited liability from 1 EUR, but it keeps two frictions the proposed EU Inc is designed to remove: mandatory notarization and a forced profit-retention scheme. Once EU Inc becomes available – 2027 remains the working assumption – the two forms will compete for exactly the same founder: someone who wants limited liability without 25,000 EUR of starting capital.
The comparison matters because the UG is not a niche vehicle. Since its introduction in 2008, it has become the standard German entry point for capital-constrained founders who are not ready for a full GmbH. EU Inc, proposed by the European Commission on March 18, 2026 as COM(2026) 321, targets that same entry point with a fundamentally different design.
Why the UG exists
Germany created the UG (Unternehmergesellschaft, haftungsbeschränkt) in the 2008 MoMiG reform of the GmbH Act, largely as a response to German founders incorporating English Ltds to escape the 25,000 EUR GmbH capital requirement. The UG is legally a GmbH variant under § 5a GmbHG, not a separate company form. It can be founded with as little as 1 EUR of share capital, which earned it the nickname "Mini-GmbH".
The design worked. The UG pulled founders back into German company law and remains the default for bootstrapped formations where the GmbH's capital requirement is the blocker.
What the UG still requires
The 1 EUR headline hides several structural obligations:
- Notarization is mandatory. Even with the simplified Musterprotokoll (limited to a maximum of three shareholders and one director), formation runs through a German notary. There is no notary-free path to a UG.
- Cash only. UG share capital must be paid in cash. Contributions in kind are not permitted.
- Forced savings. A UG must retain 25% of its annual profit in a statutory reserve until the reserve plus capital reaches 25,000 EUR, at which point it can convert to a full GmbH. Until then, that quarter of every profitable year is locked.
- The label. The company must carry the suffix "UG (haftungsbeschränkt)" in full. In German business culture the suffix openly signals low capitalization, which some counterparties and lenders read as a weaker covenant.
- One country. Like the GmbH, a UG is a German company. Expanding into other EU markets means foreign branches or subsidiaries, each with local formation costs and local law.
What EU Inc proposes instead
The Commission proposal takes the opposite approach to creditor protection. Instead of capital requirements plus forced retention, EU Inc relies on balance-sheet and solvency tests when value leaves the company. The headline terms, according to the Commission's March 2026 announcement:
- No minimum share capital and no statutory profit-retention scheme
- Fully online registration within 48 hours, for under 100 EUR
- No notary involvement – member states may not impose additional formalities such as a notarial deed
- English-language documentation as standard
- One legal form recognized across all 27 member states, registered through the existing BRIS infrastructure
The cross-border point is the structural difference. A UG that wants to hire in Austria or invoice from a French establishment runs into exactly the fragmentation EU Inc was proposed to eliminate.
Side by side
| Criterion | UG (haftungsbeschränkt) | EU Inc (proposed) |
|---|---|---|
| Minimum capital | 1 EUR | None |
| Notary | Mandatory | Not permitted as a requirement |
| Contributions in kind | Not allowed | Possible under the proposal |
| Profit retention | 25% of profit until 25,000 EUR | None |
| Formation time | Days to weeks (notary-dependent) | 48 hours (target) |
| Formation cost | Notary and register fees, typically a few hundred EUR | Under 100 EUR (target) |
| Geographic scope | Germany | All 27 EU member states |
| Status | Available today | Proposal stage, 2027 working assumption |
The catch: EU Inc is not available yet
The UG's decisive advantage is that it exists. EU Inc is a legislative proposal under active examination: the European Parliament backed the concept 492-144-28 in January 2026, the Council has been examining the text in working-party sessions since March, and EU leaders endorsed an end-2026 deadline for political agreement. First registrations in 2027 are a working assumption, not a commitment. Our timeline tracks every step.
A founder who needs a company this quarter should not wait for EU Inc. A founder planning a 2027 launch with cross-border ambitions has a genuine decision to make.
Verdict
For a Germany-focused business that needs to exist today, the UG remains the rational 1-euro choice, with the GmbH conversion as a built-in maturity path. For founders who can time their formation to 2027 and expect to operate in more than one member state, EU Inc is designed to make the UG's compromises – notary, forced retention, single-country scope – unnecessary.
Use our assessment tool to map your situation, or see the full comparison of company forms.
Editorial transparency
This article was researched and drafted with AI assistance and reviewed against the cited primary sources before publication. We disclose this openly so readers can assess the analysis in context. Read our methodology