Yes, because Germany already has a “LLC”, its GmbH. but if you have less than 25k you have to call yourself “UG (haftungsbeschränkt)”, which, in the end, has the same meaning, only spelled out…

it’s like a warning message or something

UG also stands for unlautere Geschäfte, dishonest dealings ;)

Exactly, it's like the government decided to mark all low-/entry-level entrepreneurship as potentially fraudulent - or urge towards that 25K deposit.

In practice it becomes an invisible glass ceiling, you just work/pay your way through it when it's time, otherwise keep playing in the shallow end for as long as you want.

Win-win, surely, but patronizing nevertheless.

it's more like a glass bottom, and for good reason because corporations in Germany (also in the Nordics) have a stabilizing social function. Firms exist to consolidate towards higher productivity. The idea is to avoid an army of one-man businesses without healthcare or insurance or any significant output.

I don't think that there is a difference in terms of liability: Both UG and GmbH are limited liability companies. However, my understanding is that an UG is obligated to retain a quarter of its annual profits as reserves until it has reached the capital requirements of a GmbH, at which point it can be converted.

IMHO, UG are a fudge. They recognised that the barriers to GmbH formation are high but at the same time did not want to drop them so they created something new that allows people to start a company before being able to afford a GmbH.

This contrasts to, for instance, the UK where limited companies (Ltd) are extremely easy and cheap to create and maintain (£1 capital and about £15 cost) so that there is no need for multiple types.

The 25k is not the problem, having to spend 3000€ on setting up the GmbH is.

3k is very steep AND so is 25k.