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With Recht 24/7 , you can set up yournon-profit UG quickly, easily and online. Directly from a lawyer and with no hidden costs. Since 2003, we have been helping founders to get their company off to a legally secure and bureaucracy-free start.
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The non-profit UG - the most important facts at a glance
Thenon-profit UG (or gUG) primarily has tax advantages. Non-profit status means that the company is exempt from corporation tax, trade tax, inheritance tax or the solidarity surcharge. In addition, the gUG can also be exempt from VAT in the non-profit sector or benefit from a reduced tax rate of seven percent.
The shareholders of the gUG are obliged to form reserves and allocate 75% of the profit to the charitable purpose. The remaining 25 percent is used exclusively to increase the share capital. If share capital of at least EUR 25,000 has been saved, the gUG can be converted into a GmbH. This offers entrepreneurs an easy way to transform their company into a larger and more profitable one while retaining its non-profit status.
The advantages of the gUG legal form
The legal form of a gUG offers many advantages for the founder. Firstly, the capital outlay is manageable, as only one member is required to company formation . This means that, unlike an association (at least seven!), no further co-shareholders are required and the formation process is much simpler than with an association. You can set up the gUG on your own!
As shown above, this legal form also offers tax advantages. These include the elimination of corporation and trade tax, which can lead to considerable savings for the company. In addition, each member is only liable to the extent of their capital contribution, i.e. they are not personally liable for the company's debts.
Finally, another advantage of this legal form is that its name immediately conveys its non-profit status. This can be an advantage for companies that wish to issue donation receipts or accept donations from other organizations or individuals.
Non-profit business purpose of the gUG
The gUG is a non-profit business entity that operates according to the principle of selflessness. This means that all profits must be used to fulfill the charitable purpose defined in the articles of association. This purpose may include projects that benefit society, such as the provision of educational or healthcare services. According to the principle of prompt use of funds, profits must be used promptly and 25% of profits are retained to increase the share capital until a share capital of EUR 25,000 is reached and the gUG can, but does not have to, be converted into a gGmbH.
The main aim of this type of organization is to provide services and resources to those who need them most without expecting financial gain. The company is not allowed to accumulate assets and all profits made must be used for the charitable purpose. This ensures that resources are used for a good cause and contributes to a fairer society by providing access to essential services for those who might not otherwise have access.
Tax advantages of a gUG
The tax advantages of a gUG are manifold. As a non-profit organization, the gUG is exempt from corporation tax, trade tax and VAT. This can be a great advantage for those who want to set up a company without having to worry about the taxation of their profits.
Overall, the tax benefits of a gUG are significant and should not be overlooked when considering setting up a business. The ability to avoid certain taxes can help businesses save money that would otherwise be spent on taxes and allow them to reinvest that money into their operations or other areas of their business. In addition, the reduced sales tax rate on certain sales can help businesses increase their profits while staying within legal limits.
What is the difference between gGmbH and gUG
The main difference between the gUG and the gGmbH is the amount of share capital required for the company formation of each company. For the company formation of a gGmbH, at least EUR 12,500 must be paid into the company's bank account. In contrast, only one euro is theoretically required for the company formation of a gUG (haftungsbeschränkt). In practice, however, notaries generally require EUR 500.00 as share capital.
Alternative to the non-profit association
The e.V. is the most commonly used legal form for non-profit projects in Germany. The company formation of an association is relatively simple, but requires at least seven founding members. An alternative to this is the gUG (Gesellschaft mit beschränkter Haftung), which can also be founded by a single person.
One advantage of an association over a gUG is that it can finance itself through membership fees. The main advantage of a gUG is the decision-making process, as its members are the shareholders and they have more control over the decision-making process. If you found alone, you decide alone! Ultimately, both organizational forms have their advantages and disadvantages and should be carefully weighed up before you decide on the right form for your project.
How does the gUG (haftungsbeschränkt) obtain its non-profit status
When the company formation , the tax office checks whether the charitable principles in the articles of association have been fulfilled and whether a beneficiary organization has been designated. To ensure that all requirements are met, it is important to seek advice from a lawyer specializing in non-profit law when drawing up the articles of association.
In order to obtain non-profit status, it must be ensured that all principles of non-profit status are fulfilled in the articles of association and that a beneficiary organization has been designated to receive the company's assets in the event of liquidation.
Our experienced lawyers will advise you comprehensively on all questions of non-profit status and structuring within the framework of company formation.
With Recht 24/7 , you receive all services at a fixed price, no hidden costs, no packages with additional costs. Our fixed-price offer includes everything you need for the professional, smooth non-profit company formation of a non-profit UG.
at a fixed price of 829.00 EUR net
Questions and answers on the company formation of a non-profit UG
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The main difference between the gUG and the gGmbH is the amount of share capital required for the company formation of each company. For the company formation of a gGmbH, at least EUR 12,500 must be paid into the company's bank account.
For the company formation of a gUG (haftungsbeschränkt), however, theoretically only one euro is required. In practice, however, notaries generally require EUR 500.00 as share capital.
The e. V. is the most common legal form for non-profit projects in Germany. It requires at least seven founding members for its company formation and can finance itself through membership fees without having to build up assets. This does not make decision-making any easier, as many decisions are taken by the general meeting.
An alternative to the e. V. is the gUG, the limited liability company. This can be founded by an individual and its members are shareholders, which means that decision-making is much more centralized than with an association. It can also be made by one shareholder alone. There is no "association bureaucracy" and everything is in your hands. However, the gUG does not have the same access to funding as an association through membership fees and instead relies on other sources of income such as donations or grants.
The tax advantages of the company formation of a gUG are considerable. Once the tax office has confirmed the gUG's non-profit status, it receives a notice of exemption confirming tax exemption for the specified assessment period. This means that the gUG is exempt from corporation tax, trade tax, the solidarity surcharge and property tax. In addition, many services in the non-profit sector are exempt from VAT and taxed at a reduced rate of seven percent. In contrast, sales in commercial business operations must be taxed at a regular rate of 19 percent.
A gUG is a legal entity that has unlimited liability towards third parties and is obliged to pay compensation in the event of liability. This means that the gUG and its management are jointly and severally liable for any damage caused by the company. In addition, the management is liable without limitation for damages caused negligently or intentionally - even with their private assets.
It is important to ensure that all decisions are made with due care, as any negligence or willful misconduct can lead to personal financial losses for those involved in the management of the company.
One of the most common risks is that an organization does not comply with the principle of altruism, which states that it must use all profits for charitable purposes and may not distribute profits to shareholders or other persons or institutions. In addition, excessive directors' salaries and incorrect directors' contracts can also lead to violations of the principle of non-profit status.
The shareholders of the gUG should be aware of these potential pitfalls in order to avoid having their non-profit status withdrawn.
The notary fees amount to approx. 800.00 - 900.00 euros, as the non-profit UG must be founded with the so-called individual articles of association. The fee for the registry court is approx. 300.00 euros.
The non-profit UG is obliged to inform the transparency register of the beneficial owner(s).
We would be happy to assist you with this and handle it for you. To do so, simply submit a request via the following link:https://dev-recht24-7.de/eintrag-transparenzregister/
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