German GmbH or UG: Which Should Danish Businesses Choose?

Germany is Denmark’s largest trading partner. Many businesses therefore consider setting up a German company to sell closer to their customers.

GmbH vs. UG

| | GmbH | UG (haftungsbeschränkt) | |---|---|---| | Minimum capital | €25,000 | From €1 | | Reserve requirement | None | 25% of profits allocated to a reserve | | Reputation | Strong | Seen as a "mini-GmbH" |

Company Formation

Both require a notary, registration in the Handelsregister (commercial register), Gewerbeanmeldung (trade registration) and registration with the Finanzamt (tax office). A German bank account is needed to deposit the capital.

Tax

The combined corporate tax rate is typically around 30%: corporate income tax (15% + solidarity surcharge) plus municipal Gewerbesteuer (trade tax).

Alternative: A Branch Office

If you simply want to sell in Germany, a branch office or just German VAT registration may be enough. See our guide to branch office vs. subsidiary.

Frequently Asked Questions

Is Germany a low-tax option?

No, the overall tax burden is higher than in Denmark. The decision is about market access.

Do I need a German address?

Yes, the company must have a business address in Germany.

Can I start with a UG and switch later?

Yes, a UG can be converted into a GmbH once its capital reaches €25,000.

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