Many people dream of becoming self-employed. However, the path to self-employment can come with some challenges. One of the biggest hurdles is often financing. Fortunately, there are various funding programmes that can support founders. This includes the start-up grant (Gründungszuschuss) from the Employment Agency.

The start-up grant (Gründungszuschuss) is a monthly financial support for the first six months of self-employment. The amount of the grant depends on the founder’s individual situation and can be up to €2,900 per month.

In addition to the start-up grant, founders can also receive unemployment benefit I (ALG I). ALG I is a benefit from the Employment Agency for unemployed individuals who meet the relevant requirements.

However, both the start-up grant and ALG I have an additional earnings limit. This means that founders may earn extra income as long as their monthly profit does not exceed this limit.

The exact amount of the additional earnings limit depends on various factors. Below you will find out which additional earnings limits currently apply and what you need to consider if you wish to earn extra income.

Additional earnings limit for the start-up grant

During the first six months of self-employment, while you are receiving the start-up grant, you can earn as much extra income as you wish. The start-up grant will not be reduced, even if you make a high profit.

However, this only applies for the first six months. After this period, the same additional earnings limits as for ALG I apply.

Additional earnings limit for ALG I

The additional earnings limit for ALG I is currently €165 per month.

This means that you can earn up to €165 per month in addition to your ALG I without your ALG I being reduced.

If you earn more than €165 per month, your ALG I will be reduced proportionally.

The amount of the reduction depends on the amount of your additional income.

Important: The additional earnings limit only applies to secondary activities. If you carry out a full-time self-employed activity you are no longer entitled to unemployment benefit I.

Example:

• If you earn €200 per month in addition to your ALG I, your ALG I will be reduced by €35.
• If you earn €300 per month in addition to your ALG I, your ALG I will be reduced by €135.

Calculation of the additional earnings limit

The additional earnings limit for unemployment benefit I is calculated according to a fixed scheme. The amount of the additional earnings limit depends on your last net income before unemployment.

You can find the exact formula for calculating the additional earnings limit on the website of the Federal Employment Agency.

Exceptions to the additional earnings limit

In some cases, there are exceptions to the additional earnings limit. For example, you may earn money without it being counted towards the additional earnings limit if you:

• • have a marginal employment (e.g. mini-job)
  • Income from renting and leasing generate
  • income from capital assets generate (e.g. interest, dividends)

Tips for earning additional income

If you wish to earn money on the side, there are a few things you should bear in mind:

• Report your income to the Jobcenter.
• Keep records of your income and expenses.
• Make sure you do not exceed the additional earnings limit.
• Find out about the exact regulations in advance.

Conclusion:

The additional earnings limit for the start-up grant (Gründungszuschuss) and unemployment benefit I (ALG I) is an important factor you must consider when planning your self-employment.

Inform yourself thoroughly about the applicable regulations in advance to avoid any unpleasant surprises.

P.S.: In my blog, you will find more helpful tips and tricks on starting up and succeeding as an entrepreneur.