EÜR and GuV by Legal Form: Sole Proprietors, GmbH, UG, and Freelancers

EÜR and GuV by Legal Form: Sole Proprietors, GmbH, UG, and Freelancers

Your business legal form is one of the most significant drivers of your accounting obligations in Germany. Some business structures allow simplified EÜR accounting, others require full Bilanzierung, and a few are restricted to specific methods. This article provides a comprehensive roadmap of which accounting method applies to which legal form under German tax law.

Einzelunternehmen (Sole Proprietor)

Default Rule: EÜR if Below Thresholds

An Einzelunternehmer (self-employed person or sole proprietor) is the default legal form in Germany. You become one simply by starting a business without registering a formal entity. Unless you register as a Gewerbetreibender (commercial business) or Freiberufler (professional), you are an Einzelunternehmer.

As an Einzelunternehmer, you may use simplified EÜR accounting if you stay below both thresholds:

• Revenue (Umsatz) below EUR 600,000 in the prior year, and
• Profit (Gewinne) below EUR 60,000 in the prior year

If you exceed either threshold, you must transition to full Bilanzierung/GuV for the following tax year. This transition is mandatory, not optional.

Gewerbetreibender (Commercial Business Owner)

If your Einzelunternehmen is a Gewerbetreibender (a business engaged in commercial activity for profit), you must register with the Gewerbeanmeldung and are entered in the Handelsregister (commercial register). The same EÜR thresholds apply: EÜR below EUR 600,000 revenue and EUR 60,000 profit, Bilanzierung above those thresholds.

Key point: Gewerbetreibender status does not force Bilanzierung by itself. The revenue and profit thresholds still govern.

Freiberufler (Freelancers and Professionals)

EÜR Forever—No Threshold Ceiling

This is one of the most important and beneficial rules in German taxation. Freiberufler (professionals) are allowed to use EÜR regardless of how much revenue or profit they generate. There is no revenue ceiling, no profit ceiling. A Freiberufler earning EUR 10 million per year can still use simplified EÜR accounting.

Who qualifies as a Freiberufler? According to §18 EStG (German Income Tax Law), Freiberufler include:

• Aerzten, Zahnzaerzten, Tieraerzten (Physicians, dentists, veterinarians)
• Anwaelten, Notaeren, Patentanwaelten (Lawyers, notaries, patent attorneys)
• Ingenieuren, Architekten (Engineers, architects)
• Betriebsberatern, Steuereberatern, Wirtschaftspruefern (Business consultants, tax advisors, auditors)
• Aerzte and Psychotherapeuten (Medical doctors and psychotherapists)
• Erziehern, Lehrern, Lehrkraeften (Educators, teachers)
• Kuenstlern, Musikern, Schauspielern (Artists, musicians, actors)
• Journalisten, Autoren, Uebersetzer (Journalists, authors, translators)
• Fotografen, Filmproduzenten (Photographers, film producers)

The critical advantage: a Freiberufler can scale revenue and profit without being forced into the complexity and compliance cost of Bilanzierung. A law firm with EUR 5 million revenue can maintain simple EÜR accounting.

Mixed Status: Freiberufler with Commercial Activities

A Freiberufler who also engages in commercial (Gewebe) activities must split accounting. The professional services portion uses EÜR; the commercial portion may trigger Bilanzierung requirements if it exceeds thresholds. Example: a consulting engineer who also sells software licenses might need to separate accounting for consulting (EÜR) versus software sales (may require Bilanzierung).

Personengesellschaften (Partnerships)

GbR (Civil Partnership)

A GbR (Gesellschaft buerguerlichen Rechts) is a simple partnership agreement between two or more people for a shared professional or commercial purpose. GbR partnerships are not formally registered and have minimal formality.

Accounting rule: A GbR follows the same EÜR/Bilanzierung thresholds as an Einzelunternehmen. If the combined revenue and profit stay below EUR 600,000/EUR 60,000, EÜR is allowed. Otherwise, Bilanzierung is mandatory.

If the GbR is engaged in commercial activity and registered in the Handelsregister, it becomes an oHG (Offene Handelsgesellschaft) and is subject to Bilanzierung if revenue exceeds EUR 700,000 (higher threshold for partnerships).

oHG (General Partnership) and KG (Limited Partnership)

oHG (Offene Handelsgesellschaft) and KG (Kommanditgesellschaft) are registered partnerships with entries in the Handelsregister. These entities must keep full Bilanzierung/GuV accounting. No EÜR option exists, regardless of revenue size. Even a tiny 2-person oHG with EUR 50,000 annual profit must prepare a full balance sheet and profit/loss statement.

PartG and PartGmbB (Professional Partnerships)

Professional partnerships (Partnerschaftsgesellschaft / PartG and PartGmbB) are formed by Freiberufler (lawyers, doctors, engineers, etc.) to share practices while maintaining professional independence. A PartG or PartGmbB of Freiberufler retains the EÜR privilege: no Bilanzierung requirement regardless of revenue. This is a key advantage of the professional partnership structure.

Kapitalgesellschaften (Corporations)

GmbH (Limited Liability Company)

A GmbH (Gesellschaft mit beschraenkter Haftung) is a corporation with limited liability. All GmbH are required to maintain full Bilanzierung with Jahresabschluss (annual financial statements) including balance sheet and profit/loss statement. This is non-negotiable. No matter the size—even a micro-GmbH with EUR 10,000 profit—Bilanzierung is mandatory.

Reason: A GmbH is a Kapitalgesellschaft (capital company), and German corporate law requires Kapitalgesellschaften to prepare full financial statements. The requirement exists whether the GmbH is profitable, loss-making, or dormant.

Important: Even if the GmbH's sole shareholder is a Freiberufler, the GmbH itself loses the Freiberufler EÜR privilege. Incorporation converts the accounting requirement to mandatory Bilanzierung.

UG (Haftungsbeschraenkt) (Micro-GmbH)

The UG (auch Unternehmergesellschaft haftungsbeschraenkt) is a mini-GmbH variant designed for entrepreneurs with limited capital. Despite its lighter capital requirements, a UG is still a Kapitalgesellschaft and must maintain full Bilanzierung. No exceptions. If you incorporate as a UG, you must produce Jahresabschluss with balance sheet and P/L.

AG (Stock Corporation)

An AG (Aktiengesellschaft) is a public or closely-held stock corporation. AG status mandates full Bilanzierung and Jahresabschluss preparation. Additionally, AGs must comply with HGB (German Commercial Code) and, if publicly traded, DAX disclosure requirements. Bilanzierung is the least of the compliance burden for an AG.

Special Case: GmbH & Co. KG

A GmbH & Co. KG is a hybrid: a limited partnership (KG) where the general partner (Komplementaer) is a GmbH. The accounting structure is complex: the GmbH itself requires Bilanzierung, and the KG structure as a whole requires Bilanzierung. This hybrid form does not offer EÜR relief and is typically used only for specific succession or tax planning scenarios.

Comprehensive Accounting Requirements Table

Conversion Scenarios: What Changes When You Incorporate

Einzelunternehmen to GmbH

Many growing businesses convert from Einzelunternehmen to GmbH for liability protection. The accounting impact is severe: EÜR is no longer available. From day one as a GmbH, you must prepare full Bilanzierung with balance sheet, P/L, and potentially tax accounting adjustments.

The conversion also triggers asset transfer rules: assets moved from the proprietor's personal name to the GmbH may trigger tax events, depending on whether the transfer is a contribution (Einbringung) or a sale.

Freiberufler to GmbH

A Freiberufler converting to a GmbH loses the EÜR privilege entirely. A consulting engineer with EUR 5 million revenue can maintain simple EÜR as a sole proprietor; upon incorporation as a GmbH, she must shift to full Bilanzierung. The compliance cost and accounting complexity increase dramatically.

Key question for Freiberufler: Why incorporate? Common reasons include liability protection for high-risk consulting, investment structuring, or employee retention incentives. The EÜR loss must be weighed against these benefits.

Revenue Thresholds in Detail

The EUR 600,000 revenue and EUR 60,000 profit thresholds are 'bright-line' rules: exceed either, and Bilanzierung becomes mandatory for the next tax year.

• Revenue threshold: EUR 600,000 in the prior calendar year. This includes all gross revenue, not just profit.
• Profit threshold: EUR 60,000 in the prior calendar year. This is net profit after deductible expenses.
• Either-or rule: Exceed either threshold, and you trigger Bilanzierung. You do not need to exceed both.
• Transition year: If you exceed thresholds in 2025, Bilanzierung is required starting 2026. You have one final EÜR year (2025) at the threshold level.
• No reversal: Once forced to Bilanzierung, you cannot revert to EÜR if revenue or profit later drops below the threshold. You remain in Bilanzierung unless you explicitly apply for EÜR reinstatement (and this requires meeting the thresholds for multiple years).

Key Takeaways by Legal Form

• Einzelunternehmen and Gewerbetreibender: EÜR if below EUR 600k revenue and EUR 60k profit. Mandatory Bilanzierung above thresholds.
• Freiberufler: EÜR always, regardless of revenue or profit size. No threshold ceiling. §18 EStG protection is a major tax advantage.
• Partnerships (GbR, oHG, KG): GbR may use EÜR below thresholds; oHG/KG require Bilanzierung. PartG/PartGmbB of Freiberufler retain EÜR.
• Kapitalgesellschaften (GmbH, UG, AG): Always Bilanzierung. No exceptions based on size or profitability.
• GmbH & Co. KG: Hybrid structure requiring Bilanzierung; no EÜR option.
• Conversion to GmbH: Major accounting shift from EÜR to mandatory Bilanzierung. Freiberufler lose their EÜR privilege upon incorporation.

Your legal form is a critical decision lever for tax and accounting strategy. If you are a Freiberufler and above the EUR 600k threshold, you retain the EÜR advantage—a powerful competitive advantage over Einzelunternehmen or GmbH competitors at the same revenue scale. Plan accordingly with your Steuerberater.