Citizen’s benefit (Grundsicherungsgeld) for the Self-Employed in Munich: A Guide for Full-Time and Part-Time Entrepreneurs

Are you receiving citizen’s benefit (Grundsicherungsgeld, formerly Bürgergeld) in Munich and would like to start start a self-employed activity at the same time? While this is generally possible, it requires a precise understanding of the applicable rules and framework conditions. In this informative article, we explain the most critical points for two typical scenarios:

1. Self-employment as a side job
(gradual transition and supplementing your income)

2. Self-employment as a main job
(full-time occupation with the goal of financial independence)

Overview: What does citizen’s benefit and self-employment mean in Munich?

The basic income support for job seekers according to the German Social Code, Book Two (SGB II), is designed to secure a person’s livelihood if their own income and assets are insufficient. Many people in Munich would like to be self-employed while receiving this support, either to improve their financial situation or to pursue a business idea. However, different rules apply depending on whether the self-employment is just a side job or serves as the main source of income.

Get professional advice!

Advice from Munich’s Business Startup Office (Münchner Gründungsbüro)

The Munich’s Business Startup Office answers your basic questions about starting a business, informs you about the most important steps involved, and connects you with the right contacts for further questions.

Take advantage of our two-step consulting process:

  • Step 1: Attend the webinar (get an overview)
    Before booking a personal consultation, please attend our compact online seminar: “How to start a business in Munich”. Here, you’ll gain a comprehensive overview on formalities, business plan, legal forms, taxes, social and business insurance, and financing options.
  • Step 2: Book an individual consultation (clarify specific questions)
    Once you have acquired the necessary basic knowledge in the online seminar, we will address your individual questions in the next step. You can request a free consultation appointment online, which can take place either by phone or via video conference.

Advice from Jobcenter München

Before starting your self-employment, you should always consult with your Jobcenter first. Get advice from the Jobcenter on which rules apply regarding citizen’s benefit (Grundsicherungsgeld) when pursuing self-employment. It is crucial that you strictly follow the respective requirements to avoid risking any financial disadvantages or repayment demands. The Munich Jobcenter offers consultations on-site, by phone, or via video call:

1. Self-employment as a side activity while receiving citizen’s benefit in Munich

What are the rules?

If you’d like to engage in self-employment while receiving basic income support, you must speak with your case manager at the Jobcenter before you start. The Munich Jobcenter offers consultations on-site, by phone, or via video call:

Important Income Limits and Regulations:

Your profit from self-employment will be offset against your citizen’s benefit (Grundsicherungsgeld).  However, allowances apply according to § 11b Abs. 3 Satz 3 SGB II (deductible amounts):

  • Basic allowance of 100 euros per month:
    Your benefits will not be reduced up to this limit. However, since the Jobcenter adds up all monthly income, you are required to report any additional earnings – even for amounts under 100 euros.
  • Tiered allowances above 100 euros:
    If you earn more than 100 euros, a tiered deduction applies. 20 percent of your profit between 100 euros and 520 euros remains exempt from deduction. In the range from 520 euros to 1,000 euros, 30 percent remains exempt, and between 1,000 euros and 1,200 euros, 10 percent is exempt. (The upper limit for the allowance increases to 1,500 euros if you live with at least one minor child in a benefit community / Bedarfsgemeinschaft). The remaining amount will be deducted from your citizen’s benefit.
  • Consult with your benefits case manager at the Jobcenter München:
    Upon starting self-employment, the Jobcenter will recalculate your entitlement to citizen’s benefit based on a preliminary six-month income forecast. It is crucial that you speak with your benefits case manager in advance to coordinate the process. Familiarize yourself with the application form Anlage EKS (Income from Self-Employment) and the corresponding instructions.

What to Keep in Mind?

  • Disclosure and Proof of Income:
    You are required to regularly report your self-employment income to the Jobcenter München. Keep accurate financial records to prove your earnings. Business expenses may be approved after a review by the Jobcenter, provided they are necessary and reasonable.
  • Exceeding the Allowances:
    If your income exceeds the allowances, the excess amount will be offset against your basic benefits. This will result in a reduction of your citizen’s benefit.
  • Working Hours and Scope:
    As a general rule, self-employment is considered a side activity if you work no more than 15 hours per week on it. Therefore, if you are self-employed as a side job, you must generally remain available to the job market and for job placement offers. For this reason, always discuss the weekly time commitment of your business startup individually with your assigned contact person at the Jobcenter München in advance.

What Documents Do I Need for the Jobcenter Benefits Department (Leistungssachbearbeitung)?

  • Application for Continued Benefits (Weiterbewilligungsantrag)
  • Estimated Self-Employment Income Statement (Form Anlage EKS – Declaration of Income from Self-Employment)
  • “Self-Employment” Questionnaire (Fragebogen „Selbständigkeit“ – was mache ich?)
  • Proof of Business Expenses (for example, a commercial lease or rental agreement)

Advantages and Important Information

Self-employment as a side job can help improve your financial situation without completely giving up your basic benefits. However, if you are self-employed on the side, you are not eligible for support from the Jobcenter in the form of an “Einstiegsgeld” (start-up allowance) or integration benefits for the self-employed.

It is highly recommended to seek professional advice early on to clarify your individual situation. The Munich’s Business Startup Office provides guidance on general startup topics, while the Jobcenter advises on benefit entitlements and questions on citizen’s benefit (Grundsicherungsgeld).

Generally, part-time self-employment is subject to the exact same legal and tax regulations as a full-time business. You must register your business with the business licence office (Gewerbeamt) and the Tax Office (Finanzamt), handle your taxes and bookkeeping, and comply with all legal requirements relevant to your industry. Additionally, you must look into business insurance and social insurance requirements at an early stage.

Our 10-point checklist for self-employment outlines the key steps from your initial idea to the actual launch. Furthermore, a solid business plan will help you gain a clear overview of necessary investments, ongoing operating costs, pricing, and the overall workload involved in running a business.

 

2. Self-employment as a main activity while receiving citizen’s benefit in Munich

By taking the step into self-employment, you can end your unemployment. However, during the startup phase, you may not have enough income to to be financially independent. If you are receiving citizen’s benefit (Grundsicherungsgeld), the Jobcenter may support you in certain cases (the official term is “fördern”). Your employment caseworker (Integrationsfachkraft) at the Jobcenter will decide whether you meet the requirements. Please note that you have no legal entitlement to this support.

Possible Support Benefits:

  1. Potential funding for startup coaching via an Activation and Placement Voucher (Aktivierungs- und Vermittlungsgutschein AVGS). The Jobcenter will determine whether you qualify for an AVGS voucher.
  2. Potential funding through an initial grant (Einstiegsgeld). The amount and duration of the initial grant depend, among other factors, on your personal circumstances.
  3. Potential funding through integration benefits for the self-employed.  This financial support is generally provided as a loan. A non-repayable grant is only possible in exceptional cases. The Jobcenter will decide if this option is available in your situation.

What is the initial grant (Einstiegsgeld)?

The initial grant (Einstiegsgeld) is a potential funding benefit provided by the Jobcenter, designed to ease the transition from basic benefits to full-time self-employment as your primary source of income. The goal is for you to become completely financially independent within 12 months. By that time, you should be able to fully cover your living expenses and social security contributions on your own using the profits from your self-employment..

Requirements for the Initial Grant (Einstiegsgeld):

To qualify for the initial grant, you must meet the following requirements:

  • You are currently receiving citizen’s benefit (Grundsicherungsgeld).
  • You have not yet started self-employment as your primary occupation.
  • You plan to start full-time self-employment that will completely cover your living expenses within 12 months and remain sustainable in the long term.
  • You have a convincing and detailed business plan with realistic income and financial projections over three years, including a capital requirements plan, a profitability forecast, and a liquidity plan.
  • You can provide a positive viability certificate (Tragfähigkeitsbescheinigung) issued by a qualified expert body.

Important: The Viability Certificate (Tragfähigkeitsbescheinigung)

The Jobcenter München will only approve funding if a qualified expert body officially confirms the financial viability of your business idea. To obtain this so-called “viability certificate” (Tragfähigkeitsbescheinigung / expert opinion), your plan must be reviewed by an authorized expert organization. The Munich Jobcenter decides which specific expert body you must contact to obtain this viability assessment. Please note that the City of Munich, as the governing body for the Jobcenter, approves funding but does not act as an expert body itself. The Munich Business Startup Office is part of the City of Munich.

How Do I Apply for the Initial Grant (Einstiegsgeld)?

You must apply for the initial grant directly at your Jobcenter. Your employment caseworker (Integrationsfachkraft) will decide if you meet the requirements. Please note: You have no legal entitlement to the initial grant. It is a discretionary benefit (Kann-Leistung), meaning the Jobcenter reviews every case individually based on the financial viability of the business. Before submitting your application, you must have an in-depth consultation with the employment assistance department (Markt und Integration) of Jobcenter München. The agency offers consultations on-site, by phone, or via video call.

What Documents Do I Need for the Munich Jobcenter?

1. Documents for the Benefits Department (Leistungsbearbeitung)

  • • Application for Continued Benefits (Weiterbewilligungsantrag)
    • Estimated Self-Employment Income Statement (Form Anlage EKS – Declaration of Income from Self-Employment)
    • Self-Employment Questionnaire (Fragebogen „Selbständigkeit – was mache ich?“) of the Jobcenter
    • Proof of Business Expenses (for example, a commercial lease or rental agreement)

2. Documents for the Employment Assistance Department (Markt und Integration)

  • Detailed and compelling business plan
  • Capital requirements plan (necessary investments for the launch)
  • Profitability forecast for 3 years
  • Cash flow statement for 3 years
  • Viablity certificate (Tragfähigkeitsbescheinigung) for the business plan issued by a qualified expert body

Advantages of the Initial Grant (Einstiegsgeld)

  • Financial Safety Net: It covers your personal living expenses during the often unpredictable initial phase of starting a business.
  • Stable Foundation: It provides important support to establish a stable foundation for self-employment and reduce the risk of having to return to receiving basic income support.

Important Obligations During the Funding Period

  • Disclosure and Proof of Income: You must fully document all business income and expenses and submit them to the Jobcenter on a regular basis. Keep accurate financial records to prove your earnings. Business expenses may be approved after a review by the Jobcenter.
  • Loss of Eligibility: If you fail to meet the requirements or if the business is deemed not financially viable, the initial grant can be discontinued and/or a repayment can be demanded.

Advantages and Important Information

The initial grant (Einstiegsgeld) provides a valuable financial bridge to take the leap into full-time self-employment and permanently end your reliance on citizen’s benefit. It is highly recommended to seek professional advice early on to clarify your individual situation. The Munich’s Business Startup Office provides guidance on general startup topics, while the Jobcenter advises on benefit entitlements and questions on citizen’s benefit (Grundsicherungsgeld).

Tips for Your Financial Planning

When self-employment is your primary job, a key part of your planning revolves around the question of whether you can earn enough money as a self-employed person to fully cover your living expenses. The answer to this question comes from solid financial planning in your business plan. That’s where you start by calculating your living expenses. A major component of your living expenses is your social security contributions. As a rule, you must pay the full amount of your health insurance premiums, as well as your statutory pension and, if applicable, accident insurance premiums, since no one covers the employer’s share for you.

Health Insurance Example: For statutory health and long-term care insurance (Krankenkasse and Pflegeversicherung), the monthly contribution for self-employed individuals starts at approximately 20 percent of their business profit. Depending on your income, this amount generally fluctuates between 280 euros and 1,250 euros per month. Choosing the ” sick pay” (Krankengeld) option can help cushion your loss of income during a prolonged illness.

Pension Insurance Example: For statutory pension insurance (gesetzliche Rentenversicherung), the full monthly contribution for self-employed individuals is 18.6 percent of their business profit. This amount typically ranges between 113 euros and 1,600 euros per month, depending on your earnings.

Formalities and next steps

You must register your business with the business licence office (Gewerbeamt) and the Tax Office (Finanzamt), handle your taxes and bookkeeping, and comply with all legal requirements relevant to your industry. Additionally, you must look into business insurance and social insurance requirements at an early stage.

  • Our 10-point checklist for self-employment outlines the key steps from your initial idea to the actual launch.
  • A solid business plan provides you with a clear overview of required investments, ongoing operating costs, as well as potential revenue and profits. Additionally, business insurance and social insurance requirements are core components of this plan. Ultimately, the business plan serves as proof for the Jobcenter that your self-employment can sustainably secure your livelihood in the long term

Conclusion: Citizen’s benefit (Grundsicherungsgeld) for the Self-Employed in Munich – A Guide for Full-Time and Part-Time Entrepreneurs

Combining self-employment with citizen’s benefit is generally possible in Munich. However, it requires careful planning, a precise understanding of legal regulations, and close coordination with the Jobcenter. Get advice from the Jobcenter München and the Munich’s Business Startup Office.

Advice from Munich’s Business Startup Office (Münchner Gründungsbüro)

The Munich’s Business Startup Office answers your basic questions about starting a business, informs you about the most important steps involved, and connects you with the right contacts for further questions.

Take advantage of our two-step consulting process:

  • Step 1: Attend the webinar (get an overview)
    Before booking a personal consultation, please attend our compact online seminar: “How to start a business in Munich”. Here, you’ll gain a comprehensive overview on formalities, business plan, legal forms, taxes, social and business insurance, and financing options.
  • Step 2: Book an individual consultation (clarify specific questions)
    Once you have acquired the necessary basic knowledge in the online seminar, we will address your individual questions in the next step. You can request a free consultation appointment online, which can take place either by phone or via video conference.

Advice from Jobcenter München

Before starting your self-employment, you should always consult with your Jobcenter first. Get advice from the Jobcenter on which rules apply regarding citizen’s benefit (Grundsicherungsgeld) when pursuing self-employment. It is crucial that you strictly follow the respective requirements to avoid risking any financial disadvantages or repayment demands. The Munich Jobcenter offers consultations on-site, by phone, or via video call: