Unemployment benefit in Germany is called “Arbeitslosengeld II”, commonly known as “Hartz IV”. Hartz IV should not be confused with Arbeitslosengeld I, whose rates are calculated on the basis of previous earnings and which is only paid to people who have paid unemployment insurance as part of their employment (which is, with a few exceptions, compulsory for practically every working person) – read here about the differences!
Arbeitslosengeld II is intended to provide people without work with a decent livelihood. Unemployed people have the possibility of adding a limited amount of money to their benefit. So what is the income limit (Hinzuverdienstgrenze) for recipients of unemployment benefit in Germany?
How much can be earned in addition to the unemployment benefit in Germany?
People who receive social unemployment benefit in Germany and who earn no more than 100 euros per month, do not have to worry about any cuts in benefits. This is so called basic tax free amount. This is the so-called basic tax-free amount (Grundfreibertag).
The situation is different if you receive unemployment benefit in Germany and earn more than 100 euros:
- Those earning between 100 and 1,000 euros can keep 20 percent of the amount earned
- If you earn between €1,000 and €1,200 you can keep 10 percent of what you earn.
The remaining part of your earnings, i.e. 80 per cent (those earning between €100 and €1,000) and 90 per cent (those earning between €1,000 and €1,200) respectively, is taken into account when calculating your unemployment benefit rate.
What does this mean in practice?
A person earning €450 as an unemployed person in Germany can therefore keep the first €100. without fear that this amount will be reduced by the value of the benefit. Of the remaining 350 euros, the beneficiary can keep 20 percent, or 70 euros. Therefore, the person will receive a total of 170 euros. The remaining 280 euros will be added to the benefit, so that the amount will be 144 euros, not 424 euros.
Below we present another example bill to help you better understand how to calculate the amount you will receive if you perform additional work while receiving unemployment benefit.
A person who is unemployed and collecting unemployment benefit in Germany earns 1.100 Euro per month. How much of this amount can he keep for himself?
Tax-free amount: 100 euros
20% of 900 Euro (= amount that lies above 100 Euro and below 1,000 Euro): 180 Euro
10% of 100 Euro (= amount that lies above 1,000 Euro): 10 Euro
As you can see from the above calculation, the recipient of the benefit can keep €290.