Sideline Business

First check whether your employment contract or any collective agreement says anything about “secondary employment”. These documents determine whether you must inform your employer or even ask for their permission before starting a sideline business. That is often the case. Special rules apply to civil servants (“Beamte”).

You should also talk to your health insurer. If you have statutory health insurance, your status is crucial: As long as your health insurer classifies your self-employed activity as a sideline business, nothing changes for you. But if your health insurer decides that your business is your main occupation, you will in future have to pay for your own health insurance. That may be the case if you spend more time on your self-employed activity (or earn more money from it) than your regular employment.

Statutory pension insurance and/or statutory accident insurance are compulsory in some occupations even as a sideline, although in some cases you may be able to apply for an exemption.

People who are on parental leave have the right to work for up to 30 hours a week, including as self-employed persons (Section 15 of the Parental Allowance and Parental Leave Act (BEEG)), as long as their employer agrees to it. So you should check whether your employment contract or collective bargaining agreement includes a “sideline job clause” (“Nebentätigkeitsklausel”). This determines whether your employer must be informed or give consent before you take on secondary employment. This is usually the case.

Do you receive parental allowance? Then you should be aware that your income from self-employment will affect the amount of parental allowance you get. Use the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth’s (BMFSFJ) parental allowance calculator for an initial calculation. Note also the combination of parental allowance (“Elterngeld”), parental allowance plus (“Elterngeldplus”), and the partnership bonus (“Partnerschaftsbonus”).

Many parents are covered by “family insurance” as part of their statutory health insurance and so do not have to pay contributions. This remains the case as long as the time spent on and income earned from self-employed work is not more than the applicable tax exemption limit. For an analysis of your individual case please contact the respective statutory health insurance provider.

Some self-employed persons are obliged to contribute to the public pension scheme, including in the case of sideline self-employment. Such persons include teachers, artists, and journalists. A list of self-employed professions which are obliged to contribute can be found in Section 2 of the German Social Code (SGB) VI. If your income from self-employed work does not exceed the relevant monthly tax-free allowance you can apply for an exemption.

Students from the European Union, Iceland, Liechtenstein, Norway and Switzerland enjoy unrestricted access to the German labor market and have practically the same rights as German students. Just like German students you should also talk to your health insurer. If you have statutory health insurance, your status is crucial: As long as your health insurer classifies your self-employed activity as a sideline business, nothing changes for you. But if your health insurer decides that your business is your main occupation, you will in future have to pay for your own health insurance.

For students from other countries, special legal regulations apply. Are you holding a residence permit for the purpose of studying according to §16 Residence Act? Then you are allowed to take a job as a salaried employee and work for 120 full or 240 half days during the year without the need for approval by the competent authority, the Federal Employment Agency.

Are you an international student who would like to work as a self-employed person while pursuing academic studies? Being a third-country national you need to obtain approval from the competent Foreigners Office. In Munich the Munich Foreigners Office (“Ausländerbehörde”) at the District Administration Service (Kreisverwaltungsreferat, section KVR-II/351) is exclusively responsible for issuing residence permits for international students and handles the whole application process. Please check our page “Residence permit” for further information.

Students who receive educational funding BAföG are advised to contact their „Amt für Ausbildungsförderung“ (Office for Educational Funding) or the Studentenwerk (Association for Student Affairs). Those who receive child benefit “Kindergeld” or are pursuing a “Zweitstudium” (second course of study or second academic program) should talk to their local “Familienkasse” at the Federal Employment Agency.

Do you receive unemployment benefit (“Arbeitslosengeld”) and would like to go self-employed in the form of sideline employment? This may well be possible after you have discussed it with the Federal Employment Agency. The main requirement is that your sideline job does not exceed 15 hours a week. The profit from your self-employed work will be offset against your unemployment benefit after the deduction of a tax-free allowance. Are you planning to start a full-time business to end your unemployment? The Federal Employment Agency can help you with a start-up grant (“Gründungszuschuss).

Do you receive unemployment benefit in the form of “Bürgergeld” and would like to go self-employed in the form of sideline employment? Your Job Center will advise you on what is required and how the earnings from your self-employed work will affect your unemployment benefit. Are you planning to start a full-time business to end your unemployment? Get advice on possible financial assistance from the Job Center. One such form of assistance is the grant known as “Einstiegsgeld”.

You must inform your statutory health insurance provider when starting self-employed work. Some self-employed persons are obliged to contribute to the public pension scheme, including in the case of sideline self-employment.

Persons under the age of 18, also referred to as minors, are considered to have limited legal capacity. Minors are generally only allowed to enter into contracts or transactions within the specifications of the so-called pocket money paragraph (Section 110 BGB). This means that minors cannot enter into work or rental contracts as pocket money is not intended for this purpose. The German Civil Code (BGB) sets out the terms on which a minor may take up self-employment.

The minor requires authorization, i.e. permission from their legal representatives. In most cases the legal representatives are the minor’s parents or, if they are not authorized to represent the minor, an appointed guardian. This authorization must be approved by a family court. The judicial officers will carefully check whether the minor is able to take full responsibility for the legal transactions and decisions required for the future business. The family court may request an additional statement from the local Chamber of Commerce and Industry. A fee is normally charged for a family court review. The fee is based on the Law on Court Costs in Family Matters.

Good to know: Minors are usually insured collectively through family insurance at no cost with one adult being in the statutory health insurance. Please check with your insurance provider if this status can be maintained.

Anyone who receives a regular pension or an early retirement pension is allowed to earn additional money as a self-employed person without limitation.

If you receive a reduced earning capacity pension or bereavement benefit, such as in the case of widows/widowers or orphans, there is a tax-free allowance and an individual upper limit for additional earnings. Some self-employed persons are obliged to contribute to the public pension scheme, including in the case of sideline self-employment. Make sure to get advice!

You must inform your statutory health insurance provider when starting self-employed work.