What is a sideline or part-time start-up?
Self-employment as a employee or student, while caring for family, as a pensioner or while unemployed
In this case, founders may already be employed at a company and self-employed as a form of secondary employment or sideline work (“Nebenerwerbsgründung”). Part-time start-ups and self-employment are also popular, for example while studying, in training, caring for a family, or during retirement. The benefits of this model include the chance to test your business idea without financial pressure, flexibility regarding time, lower initial financing needs compared to a full-time start-up, and ideally an additional source of income. Sideline self-employment is subject to the same rules as a full-time start-up. Particular issues apply regarding employment law, social insurance, and tax requirements (“Kleinunternehmerregelung” or “provision for small businesses”).
CCI guide “Nebenberuflich selbstständig”www.ihk-muenchen.de
Information „Teilzeit- und Kleinstgründungen“www.existenzgruender.de
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.
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 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. Most are holding a residence permit for the purpose of studying according to §16 Residence Act. If it is so, you are allowed to take a job 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.
Taking up a self-employed activity while studying in Germany is also possible under the Residence Act (§ 21 (6) Aufenthaltsgesetz). However, the foreigner’s office (Ausländerbehörde) must authorize the self-employed activity separately. This activity can only be permitted if it is basically structured like dependent employment, for example as a “Honorarkraft” (contract work for your university) or a “studentische Hilfskraft” (student assistant at your university). This can be permitted within the framework of the 120-day regulation. It is important that your self-employed activity must not hinder the success of your studies and be related to the field of your studies. Contact the foreigner’s office to learn more.
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.
Legal requirements for side jobs for international students in Munichstadt.muenchen.de
Step-by-step-guide for international students arriving in Munichstadt.muenchen.de
Contact Munich’s Foreigner’s Officeservice.muenchen.de
Make it in Germany: Student jobs and internshipswww.make-it-in-germany.com
Residency and Social Security Law for International Studentswww.studentenwerke.de
Starting self-employment as a studentwww.existenzgruender.de
Do you receive unemployment benefit (“Arbeitslosengeld I”) 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.
Do you receive unemployment benefit in the form of “Arbeitslosengeld II” 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.
CCI guide “Existenzgründung aus der Arbeitslosigkeit”www.ihk-muenchen.de
Information “Gründung aus der Arbeitslosigkeit”www.existenzgruender.de
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.
Starting a business under the age of 18Information in English
IHK Offenbach: Gewerbeausübung durch MinderjährigeInformation in German
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.
German Statutory Pension Insurance Scheme [Deutsche Rentenversicherung (DRV)]www.deutsche-rentenversicherung.de
City of Munich’s Insurance Office
Versicherungsamt der Stadt Münchenwww.versicherungsamt-muenchen.de