Business immigration to Germany on a small budget: why a €1 UG is not enough for a residence permit
A UG can be formed with share capital starting at one euro, but this amount neither determines the relocation budget nor entitles you to a residence permit. The entrepreneurial route depends on the viability of the project, secured start-up financing and funds for the applicant’s living costs. No single amount guarantees approval. Legal bases: §21 AufenthG and §5 AufenthG.
Current as of 12 October 2026. This article focuses on budgeting for a small business. The general preparation and application process is explained in our guide to business immigration to Germany.
- First check whether you need a residence permit for self-employment
- What UG share capital starting at one euro means
- Divide the calculation into three parts
- Worked example for a small project
- Matching a small budget to the requirements of section 21
- What to check before registering a UG
- FAQ
- Discuss the budget before committing to initial expenses
- Sources
First check whether you need a residence permit for self-employment
EU citizens exercising their freedom of movement to work on a self-employed basis in Germany do not obtain a section 21 residence permit for this purpose. They are subject to the rules of §2 FreizügG/EU, while registration, tax and professional requirements continue to apply.
For third-country nationals, ownership of a share in a UG and the right to work personally in Germany are assessed separately. A passive investment alone does not authorise relocation or management of the company from Germany. Actual powers, the person’s role in the company and the conditions of any existing residence permit matter. Not every Geschäftsführer, or managing director, is automatically classified as self-employed. These distinctions are explained by IHK Elbe-Weser.
Build the financial model after checking the appropriate immigration route. Otherwise, you may pay to form a company that does not meet your relocation needs.
What UG share capital starting at one euro means
A UG (haftungsbeschränkt) is a variant of the German GmbH subject to special rules. With a single founder, share capital of one euro is theoretically sufficient. The declared capital must be paid in full in cash before applying for registration. When forming a UG, a laptop or another contribution in kind cannot replace this payment. See §5a GmbHG and IHK Chemnitz explanation.
The company must also build a statutory reserve: one quarter of its annual net profit after deducting any loss carried forward from the previous year. This affects the amount available for distribution. Accumulating the reserve does not by itself turn a UG into a standard GmbH; the share capital increase procedure matters. Legal basis: Section 5a(3) and (5) of the Limited Liability Companies Act.
One euro in the bank does not cover notary work, registration, accounting or company operations. The chamber of commerce recommends matching capital to the business’s actual needs and warns of insolvency risks if funding is inadequate. Low share capital does not remove a director’s obligations. IHK Halle-Dessau.
Divide the calculation into three parts
1. Forming and launching the company
Obtain estimates for notary costs, register fees and required registrations. Add translations, advice, banking, an address or premises, equipment and permits where your activity requires them. Check whether each quote includes taxes and additional work.
A UG remains subject to accounting and reporting obligations, including double-entry bookkeeping and annual financial statements. Budget for these even if turnover is modest. The general obligations are described by IHK München.
2. Funding until revenue becomes reliable
Calculate recurring payments for rent, software, communications, insurance, accounting, purchases, contractors, advertising and debt servicing. For planned employees, include the full cost to the employer.
Schedule payments month by month. A completed order may be profitable, but the customer may pay after your contractor’s bill falls due. A liquidity plan addresses precisely these gaps. Account separately for tax payments and VAT according to your tax arrangements. A method for distinguishing profit from cash movement is set out in the IHK Ostwürttemberg guide.
3. Personal living costs and relocation
Prepare a separate budget for housing, food, transport, health insurance and other obligations. Add travel, temporary accommodation, a rental deposit and relocation administration costs. If you are moving with family, recalculate the entire household budget.
A secured livelihood is generally one of the conditions for issuing a residence permit. The law includes adequate health insurance in this requirement and provides statutory exceptions concerning the use of public funds. Legal bases: §5 Abs.1 AufenthG and §2 Abs.3 AufenthG.
Worked example for a small project
Assume one founder plans to provide services to businesses, works without employees, already owns the main equipment and finances personal living costs separately. To test resilience, the founder budgets for the first six months without customer receipts.
All figures below are invented solely to demonstrate the method. They are not market prices, a RelocationDE offer or a budget sufficient for a residence permit. Six months is not a universal requirement imposed by the authorities either.
| Item | Illustrative calculation | Amount |
|---|---|---|
| Formation and one-off start-up costs | Assumption | 2 000 € |
| Recurring company payments | €600 × 6 months | 3 600 € |
| Additional work needed to launch the product | Assumption | 1 000 € |
| Company contingency reserve | Assumption | 1 400 € |
| Total for the business | 2 000 + 3 600 + 1 000 + 1 400 | 8 000 € |
| Relocation and one-off personal payments | Assumption | 2 500 € |
| Personal living costs, including health insurance | €1,700 × 6 months | 10 200 € |
| Total personal costs | 2 500 + 10 200 | 12 700 € |
| Overall funding requirement in this example | 8 000 + 12 700 | 20 700 € |
If EUR 1,000 from the business budget is paid in as share capital, do not add that same amount again to the EUR 20,700 total. Share capital is a source of financing, while the table shows how funds are used and the contingency reserve. How the remaining funds are contributed and costs paid should be agreed for the chosen structure.
The example assumes actual payment amounts including applicable taxes; a possible VAT refund is not treated as money available in advance. It includes no loans, employees or director remuneration paid by the company. If these are added, the calculation must be revised to include the associated taxes and contributions.
If no revenue arrives for another three months, recurring costs add a further EUR 6,900: EUR 2,300 per month for the company and personal living costs. Check the remaining business funds and personal funds separately. This test shows where a shortfall will arise even if the start-up costs have already been paid.
Matching a small budget to the requirements of section 21
The general entrepreneurial route under section 21(1) assesses economic interest or regional need, expected positive effects on the economy, and financing secured through equity or a confirmed commitment to lend (Kreditzusage). The assessment considers the viability of the idea, entrepreneurial experience, investment, effects on employment and training, and contributions to innovation and research. §21 Abs.1 AufenthG.
The law does not set a universal minimum investment or a mandatory number of jobs to create here. This does not mean that every small project qualifies. Decisions are made individually with input from competent bodies, including the chamber of commerce for relevant businesses. IHK Elbe-Weser.
With a limited budget, it is especially useful to explain each assumption: why no office is needed, where the first orders will come from, when payments will arrive and what happens if sales are delayed. Confirmed arrangements and specific supplier quotes make the calculation verifiable.
What to check before registering a UG
- Compare expenses with available funds and confirmed financing. Do not count the same bank balance as both a company reserve and money for personal living costs.
- Replace the illustrative figures with quotes for your project and city. Record the date of the calculation and how long each quote is valid.
- Distinguish between a signed contract, a letter of intent and a sales forecast. Specify the expected payment date for each receipt.
- Model a delayed launch and weak sales. Check which payments can be postponed without breaching your obligations.
- Check the document list with the competent consulate or immigration authority: there is no universal list covering every case. Make it in Germany.
FAQ
Financing options exist, but their terms depend on the programme and the applicant. In your initial calculation, account for the decision status and conditions for releasing the funds. A submitted application is not the same as available financing. Official overview: Make it in Germany.
Yes, if the work genuinely qualifies as a liberal profession. There is a separate route under section 21(5), and any necessary professional authorisations must have been granted or their grant promised. Classification depends on the substance of the work. §21 Abs.5 AufenthG.
The purchase itself does not confer a right of residence. Your basis for residence, role in the company and actual project must be assessed. The purchase price must also be included in the financial model. The conditions for the entrepreneurial route are explained on Make it in Germany.
Adequate provision for old age is generally required. Its acceptability is assessed for the individual applicant; low share capital does not resolve this issue. See §21 Abs.3 AufenthG and guidance on supporting documents.
Not always. First check whether your current status permits the planned activity. Section 21(6) allows self-employment to be authorised while retaining another purpose of residence, subject to its conditions. You cannot assume that every residence permit automatically permits business activity. §21 Abs.6 AufenthG.
That depends on the payment model. If the UG remunerates its director, the company budget includes the full associated cost, while the personal budget uses the amount available after deductions. The same expenses should not be funded twice from two sources. Check the remuneration and contribution model with a tax adviser.
Discuss the budget before committing to initial expenses
In a RelocationDE consultation, you can discuss your business idea, preparation of a financial model and the sequence of company registration and relocation. Start with a description of the activity, city, family members and available budget. Request a consultation.
This article provides general information. The legal and tax issues of a specific project require individual assessment. The competent German authorities decide on visas and residence permits; company registration and support services do not guarantee approval.
Sources
Checked on 12 October 2026. German legislation and official guidance were used for the legal requirements.
- Limited Liability Companies Act, section 5a: rules for a UG.
- Residence Act, section 21: self-employment.
- Residence Act, section 5: general conditions for issuing a residence title.
- Residence Act, section 2(3): livelihood and health insurance.
- Freedom of Movement Act/EU, section 2: EU citizens’ right of entry and residence.
- IHK Chemnitz: forming a GmbH or UG.
- IHK Halle-Dessau: GmbH and UG, February 2026 edition.
- IHK Munich: forming a UG and its obligations.
- IHK Elbe-Weser: self-employment by foreign nationals.
- IHK Ostwürttemberg: business financial planning.
- Make it in Germany: residence permits for entrepreneurs and supporting documents.
- Make it in Germany: visa for self-employment.
- Make it in Germany: financing and support.
