EXPLAINED: what you need to know about Germany’s ‘Kurzarbeit’ job support scheme

During the pandemic, any international resident living in Germany will have become familiar with the words ‘pandemie’ (pandemic), ‘maskenpflicht’ (compulsory masks) and ‘impfstoffe’ (vaccines). You may also have heard ‘Kurzarbeit’ being discussed, especially if you're an employee.

EXPLAINED: what you need to know about Germany's 'Kurzarbeit' job support scheme
Photo: Getty Images
Together with the tax-filing app Taxfix, The Local presents answers to the key questions regarding what has become an important job-saving measure. Taxfix is also offering readers of The Local either a free or discounted tax return
What is Kurzarbeit’? 
Kurzarbeit, or ‘short work’, is far from a new idea in Germany – it became fully established in 1924 as a response to the economic crisis of the Weimar Republic. But it has risen to a new level of prominence during the Covid-19 pandemic. 
Essentially, in order to deal with a shortage of work, company employees are put on reduced hours. The federal government then steps in to pay around 60 percent of their salary for a set period of time – normally a year. This payment is known as ‘Kurzarbeitergeld’ (short-time worker payment) and is paid directly into your bank account. 
In 2020, 16 percent of the German workforce were on ‘Kurzarbeit’ as a result of the pandemic – that’s around 7.3 million people. 
Who is eligible for ‘Kurzarbeit’?
All full-time or part-time employees who have had their hours reduced, and that have not been made redundant can apply for ‘Kurzarbeit’. You must also be making contributions to social security, and the loss to your gross monthly salary must be over ten percent. 
Freelancers, interns, students and other types of workers are not eligible to receive ‘Kurzarbeit’. However, the federal government has other forms of aid available to these workers. 
Taxfix is offering a free tax return to those on Kurzarbeit, by clicking hereNot on Kurzarbeit? Taxfix is offering a 15% discount on your return when you use this link and the code ‘TX_Localtaxes’
Does the amount of Kurzarbeit vary? 
Yes. The monthly ‘Kurzarbeitergeld’ is normally calculated at 60 percent of your monthly net salary at the time it takes effect. 
However, there are some things that can alter the percentage. For example, parents with one child receive 67 percent of their monthly salary, and this percentage grows over the duration of ‘Kurzarbeit’. 
Photo: Getty Images
Can I take another job while I’m receiving Kurzarbeit?
If your job isn’t affected by workplace agreements, you can take a part-time job while on ‘Kurzarbeit’ to make up for the loss to your income. 
If you took on a part-time job during the crisis, you can earn up to the full amount of your previous monthly income. 
Just note that your main employer must agree to you taking a second job. The pay from your part-time job can also impact the amount of ‘Kurzarbeitergeld’ that you receive. 
What happens if I can’t live on ‘Kurzarbeitergeld’? 
Since the beginning of the pandemic, the government has loosened the requirements for benefits, meaning that there is no means testing, and you don’t even need to have made an in-person appointment to claim benefits. Talking to your local ‘Agentur fur Arbeit’ (Federal Work Agency) office by phone or website chat can give you a clear idea of what benefits you’re entitled to, and how to claim them.
Does ‘Kurzarbeit’ have any impact on the taxes I pay? 
Yes. ‘Kurzarbeit’ is available because almost everybody who works pays a form of social security, deducted from salaries at the source – meaning your workplace pays it to the government. This money is considered tax-free. 
If your tax rate changes because of going onto ‘Kurzarbeit’, you’ll almost certainly need to submit a tax return for 2020 – even if you don’t normally. If you don’t have a tax advisor – which probably means most of us – you’ll need to submit a tax return by July 31st, 2021.
There are many options available to those who wish to do their own taxes in Germany. These encompass paper kits, websites and, increasingly, user-friendly apps such as Taxfix. 
Taxfix is available via their website and their app, which can be downloaded here. It has the benefit of being designed for English-speaking expats, and the average return takes only 22 minutes to complete. Filing a return with an estimated refund of under €50 is free of charge, and there is a flat rate of €39.99 for other returns.
In support of those affected, Taxfix is offering a free tax return to those on Kurzarbeit, by clicking hereNot on Kurzarbeit? You can also benefit, as Taxfix is offering a 15% discount on your return when you use this link and the code ‘TX_Localtaxes’
For members


EXPLAINED: How do you close down a freelance business in Germany?

Leaving the country? Got a steady job offer you can’t say no to? Winding down your self-employment activities in Germany still requires taking a few bureaucratic steps.

EXPLAINED: How do you close down a freelance business in Germany?

Striking out on your own as self-employed is one of the scariest – and potentially most rewarding things – you can do. In Germany, it also comes with its own set of rules around tax and social insurance.

But there are times when – for whatever reason – it may be time to move on.

Whether it’s because you have an exciting new opportunity or things haven’t quite worked out the way you hoped due to economic pressures – winding down self-employment the right way is crucial to avoid gaps in your health and social insurance coverage in Germany.

The steps you have to take are also a bit different depending on if you are new self-employed (Freiberufler) or have a trade licence (Gewerbe) – with some steps not being necessary for new self-employed.

Trade licences are automatically cancelled if the licenced person dies or the company ceases to have financial assets.

Resigning the trade licence or declaring it dormant

New self-employed people like writers or speakers don’t need to go through this step, as they don’t need a trade licence.

Those who have a trade licence will need to contact their competent local authority and resign it, or declare it dormant (withdrawing the licence). If you’re only winding down temporarily, declaring your trade licence dormant instead of de-registering completely may save you a few headaches later.

You may have to do this in person at your local trade office – or Gewerbeamt – depending on whether your local authority allows online de-registration or not. You’ll need to bring your official ID, trade licence, confirmation of registration and possibly an extract from the trade register. Fees are dependent on your local authority and can range from being free to €25.

You can declare the date you intend to resign the licence – which can be in the future. To ensure no gaps in your social insurance protections, including health insurance, set this date for the day before whatever comes next. For example, if you’re starting a new job on January 1st set the date for your trade licence to expire as December 31st.

The trade office will typically notify your local tax office, so you won’t need to do this yourself.

Notifying your tax office

If you’ve had to resign your trade licence, you can skip this step as your trade office will do it for you. If you’re a Freiberufler without a trade licence you need to resign, you’ll have to notify your local Finanzamt, or tax office, yourself.

Luckily, this is a pretty easy step.

First, you need to decide whether you’re ceasing operations completely or wanting to continue them part-time. If you’re ceasing completely, you’ll end up surrendering your self-employed tax number.

You don’t have to do this though. If you think you may still carry on some self-employed business as a side gig, you can inform the tax office that you intend to do so and keep your number.

At that point, the tax office should treat you as a Kleinunternehmer – or a small business making less than €22,000 a year. Having this status means that you will not need to pre-pay taxes or charge VAT on your invoices for freelance side projects.

If you derive any income from your side gig in the future though, you’ll still have to file a tax return.

READ ALSO: Can I have a freelance side gig as an employee in Germany?

Notifying your health insurance

While different private plans in Germany may have different notification requirements, if you have public health insurance in Germany, you should notify them that you’re winding up your self-employed business. Specifically, advise them exactly what date you’re wrapping up.

Again, this should be right before you start your new job or leave the country, to ensure no gaps in your coverage.

If ending your self-employment in Germany, take care to ensure that there’s no gaps in your health insurance coverage, by giving the right date for when you’re ceasing activity. You don’t want to be caught without coverage. Photo by Stephen Andrews on Unsplash

If you are in an artistic profession and thus pay pension, health, and nursing insurance through the Artist Social Insurance Fund (KSK), you should also advise them as well. If you’re leaving self-employment completely, you can typically give notice to KSK as to when it’s ending.

If you’re not, and intend to still make money freelancing as a side gig, they should know this as well. In this event, you’ll no longer pay health or care insurance through KSK, as this is covered through your main job.

You may need to continue to pay pension contributions through KSK based on the amount of money you still make from self-employed activities — depending on how much of them you continue.

KSK: How creative freelancers can pay less for German health insurance