EU Inc vs UG (haftungsbeschränkt): Germany's 1-Euro Companies Compared

The UG (haftungsbeschränkt) already gives German founders limited liability from 1 EUR, but it keeps two formalities the proposed EU Inc is designed to reduce: mandatory notarial involvement and a statutory profit-retention scheme. The notarial act does not have to be in person: German law permits GmbH and UG formation by online video notarisation. EU Inc has no official launch date and is not yet law.

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, but an in-person appointment is not. § 2(3) GmbHG allows the articles to be notarised by video communication, including the simplified procedure and online model protocols. The Federal Chamber of Notaries' official portal provides this online route. 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.
• Statutory reserve. Under § 5a GmbHG, a UG must allocate 25% of the relevant annual surplus to a statutory reserve. Accumulating 25,000 EUR does not automatically turn it into a GmbH. The shareholders must resolve the capital increase and the change must be registered before the company can use the GmbH designation. Our UG cost breakdown prices the formation, the retention rule and the later conversion.
• 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
• A proposed fast track through the EU central interface within 48 hours and for no more than 100 EUR when the harmonised application form and EU articles templates are used
• Fully online preventive control, which may still be administrative, judicial or notarial under Article 14
• English-language documentation as standard
• One proposed legal form offered in every member state through national registers and BRIS; local operating obligations remain

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

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 in procedure 2026/0074(COD). The end of 2026 is a political target for agreement, not an adoption or launch date. The Commission text would apply 12 months after entry into force, but the final text and timing may change. Our timeline tracks every step.

A founder who needs a company this quarter should not wait for EU Inc. A founder with a longer horizon can monitor the file, but should not plan an incorporation around an unconfirmed date.

Verdict

For a Germany-focused business that needs to exist today, the UG remains the available low-capital choice. A later GmbH designation requires a shareholder decision, a capital increase to the statutory level and registration; it is not automatic when the reserve reaches 25,000 EUR. If EU Inc is adopted, it could reduce formation and capital-reserve friction. It would not remove local tax, payroll, employment, licensing or foreign-branch and registration duties created by actual operations in another member state.

Use our assessment tool to map your situation, see the full comparison of company forms, or read what a full GmbH costs to form and run.