Many employees in a full-time job are interested in boosting their income through an additional side job. In principle, this is possible, as long as certain legal aspects are observed, especially regarding different employee groups.
Side Jobs - a Definition
A side job is characterized by work performed next to the primary employment and this includes all paid activities beyond the main job. This entails a classic part-time job as well as self-employment, such as running an online store. What's crucial is that this is paid work performed in addition to an existing primary employment relationship.
Side Jobs and Employers
One of the most common sources of confusion is whether the supervisor's approval is required for the side job. In principle, the employer does not need to grant permission for a side job. It is conducted in the employee's free time and is considered a private matter.
While the employer cannot prohibit the additional job, they should still be informed about it. Also, the side job should not negatively impact the primary job and must not violate the interests of the employer. Additionally, the employee should not be overburdened by the additional work to the extent that they cannot adequately fulfill their primary job.
Side Jobs and Taxes
There are generally no restrictions on the amount of additional income, but it is relevant when it comes to taxes. If the second job does not exceed the limit of €450 per month (or €5,400 annually), it is exempt from both social security contributions and taxes and does not need to be reported in the tax return. Employers usually withhold a lump-sum tax in this case.
If the additional income regularly exceeds this amount, the side job falls under tax class VI and the additional earnings must be declared in the annual tax return.
Side Jobs during Short-Time Work
Having a side job during short-time work is allowed. The impact of additional income on the amount of short-time work benefits depends on when the secondary job begins.
If the additional employment began after the short-time work was already in place, the income will be taken into account as it constitutes an increase in earnings. However, if the secondary job existed before the short-time work, there will be no reduction in benefits, and the additional earnings will not be offset against the short-time work allowance.
Side Jobs for Students
Students can earn up to €450 per month tax-free or a maximum of €5,400 per year. In addition, there is an annual tax-free allowance (in 2021, it's €9,477). If students earn more than €5,400 per year, they must initially pay taxes but can claim them back through a tax return up to the tax-free allowance.
The so-called 20-hour rule is crucial. A job must not require more than 20 hours per week. Exceeding this limit could lead to the job taking precedence over studies, risking the loss of student status within the social security system.
Exceptions for Side Jobs
Civil servants have specific rules when taking on a secondary job. In the public sector, supplementary employment requires concrete information about the type, duration, and income provided to the employer. Depending on the employing authority, there may be a requirement for permission and the possibility of rejection. Details are stipulated in the regulations of individual federal states.
Seniors can top up their pensions with a secondary job of any amount, provided they have reached the statutory retirement age. In the case of early retirement, the earnings limit is €6,300 annually.
Individuals receiving unemployment benefits are required to report a side job to the Federal Employment Agency. They are allowed to work up to 15 hours per week and earn a maximum of €165 per month. If earnings from the side job exceed this amount, benefits may be reduced.
Home-Based Side Jobs
In Germany, there are some legal requirements to be aware of when engaging in a side job from home. Here are some essential points:
- Notification Requirement: If you have a side job, you usually need to register it with the tax authorities.
- Business Activity: If the side job constitutes a business activity, you may need to register a business.
- Insurance: You should inquire about whether you need insurance for the side job.
- Taxes: You must declare income from the side job in your tax return and potentially pay taxes on it.
It's also important to note that certain activities may require permission or approval, such as running specific businesses or selling certain products. Therefore, it's advisable to inform yourself with the relevant authorities before starting your activity.