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I recently lost my job & therefore I registered myself with ArbeitAgentur for unemployment benefits. The benefits will start from the next month. I've been working for the past 4 years as regular employee.

They've been sending some potential job pamphlets which I'm not really interested in since the jobs are not close to my skill set. I want to become a freelancer in Germany (I'm allowed to do that since I've Niederlassungserlaubnis).

My question is, can I register as a freelancer in Germany while receiving unemployment benefits - ALG1 or will the benefits stop soon after I register as a freelancer?

I'll have some freelance projects in August and therefore in August, I'd like to stop taking the ALG1 benefits before that I need the Alg1 benefits.

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When you're working as a freelancer you can't simultaneously get unemployment benefits. More precisely, you can do part-time work (less than 15 hours per week), but it will reduce your benefits if you make more than EUR 165 per month (profit, not revenue). If you temporarily want to do more freelance work, you can de-register as unemployed for those phases. Talk with your caseworker.

If you want to start a business (i.e. want to become permanently full-time self-employed) you may be able to get the Gründungszuschuss (ALG I + EUR 300 for 6 months). However, this requires a convincing business plan.

If you take on any work (also part time, also freelance), you must notify your case worker in advance. You also have to clearly document your earnings.

Aside from the ALG concerns, working as a freelancer in Germany involves a bit more bureaucracy. You have to determine whether your activities are freiberuflich or gewerblich, which can result in different taxes and formalities. Some businesses cannot be taken up freely but require permission first. In any case, you'll have to register with your Finanzamt, and will be required to file taxes in the future. You would likely do business as a sole proprietor (Einzelunternehmer). If this is just part-time work, you can likely opt into the Kleinunternehmer-Regelung which means you don't have to handle VAT/USt. While this is convenient for B2C services, you do need a VAT ID for B2B services when your client is in another EU country. Both Freiberufler and Kleinunternehmer benefit from simplified accounting requirements.

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  • Thanks for the detailed info. I just register as a freelancer for now & since I don't have any projects until August to work on as a freelancer, I want to keep the ALG1 benefits. I just want to register sooner so that I don;'t have to deal with bureaucracy later on. In August, I want to end the ALG1 benefit myself cuz I'll start working as a freelancer. Really looking forward to your response regarding this :) Apr 26 at 14:27
  • @user10286755 For ALG it doesn't directly matter if you're registered for freelancing, it matters if you work as a freelancer. I would try to see if you can register in advance of your actual freelancing activity, rather than registering and not doing anything. This might have consequences for health insurance, since full-time freelancers have to pay insurance premiums as calculated from a fictitious minimum income.
    – amon
    Apr 26 at 14:31
  • Thanks Amon. One last question, do you know how long does it take to register as a freelancer? I've heard that it takes longer to register as a freelancer & you;ve to do lots of paper work that can take weeks/months until you officially become a freelancer Apr 26 at 14:39
  • @user10286755 In principle you can start working as a freelancer and simultaneously do the registration, so you don't have to wait until registration is complete (assuming a Gewerbe – a Freiberufler should wait for confirmation). To minimize delays you should already register with the Elster electronic tax system (you need to wait for a letter with credentials). Later in the registration process, the Finanzamt will assign you a Steuernummer to use on your invoices. That can take a bit, especially if they have further questions. But everything can be completed within a month.
    – amon
    Apr 26 at 14:58

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