How is your Elterngeld calculated? The difference between employees and freelancers
Elterngeld is the parental allowance in Germany: an income replacement benefit from the state for parents who are either not earning anything or earning less because they are taking care of their baby.
But how is your Elterngeld calculated? And also, are there differences between the calculation for employees and for freelancers? What about Elterngeld for parents who have income from both employment and self-employment? The income taken into consideration to calculate your Elterngeld entitlement will indeed be different according to your employment status.
Elterngeld calculation basis for employees
As a rule, if you are employed, the monthly average your individual net income from the last 12 months before the birth of the child is taken into account to calculate your Elterngeld. The authorities will add up your payslips for these 12 months and divide it by 12 to have your monthly average.
This period for the calculation basis can be changed if:
- you received Kurzarbeitergeld due to the CoVid crisis in 2020 / 2021 / 2022
- you had a pregnancy-related illness
- you received Mutterschaftsgeld
- you received Elterngeld for an older child
In any of these cases, the relevant months can be taken out of the calculation and you can go further back in the past (don’t have to).
Example:
- Jody is employed as a marketing manager
- Her baby was born on January 13th, 2023
- Her calculation basis should be January 2022 to December 2022
- She gets Mutterschaftsgeld before birth from December, 2nd 2022
- Her calculation basis will therefore be December 2021 to November 2022
Elterngeld calculation basis for self-employed parents
If you‘re self-employed (as a freelancer or a self-employed owner of a business), the calculation basis will be the last fiscal year before birth (so if the baby is born in 2022, the fiscal year 2021 will be the basis for calculation). The authorities will take your net earnings for these 12 months and divide it by 12 to have your monthly average.
Exceptions are possible under certain circumstances, for example if:
- you suffered a loss of income due to the CoVid crisis in 2020 / 2021 / 2022
- your suffered a pregnancy-related illness
- you received Mutterschaftsgeld
- you received Elterngeld for an older child
In any of these cases, the relevant months can be taken out of the calculation and you can go further back one full fiscal year (don’t have to).
Example:
- Jamal is a self-employed DJ
- His baby was born on January 13th, 2023
- His calculation basis should be 2022 but many of his gigs got cancelled since Covid
- He therefore elects to take 2019 as the calculation basis for his Elterngeld
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Elterngeld calculation basis for parents with mixed income
If you have mixed income, meaning you have income from employment and self-employment in the last fiscal year prior to the child being born, the rules for your calculation basis for Elterngeld will be the same as if you had been self-employed only. This applies even if it would be more beneficial for you to have the last 12 months before birth taken into account.
Example:
- Mike was a self-employed teacher until February 2022, making ca. 1200€ net per month
- In January 2022 he started working in a school as an employed teacher with an average net income of 3000€ per month
- He stopped giving his private lessons in February 2022
- His baby was born on December 12th, 2022
- His calculation basis will be the fiscal year 2021 because his baby was born in 2022 and he had mixed income before birth, even though it would be more beneficial for him to have taken the last 12 months before birth.
Exception: if your income from self-employment did not exceed 450€ in the fiscal year, you can elect to be considered as an employee only and take the last 12 months as the calculation basis.
About Baby in Berlin
Baby in Berlin is a concierge service for young parents – for expecting international families in Germany who need assistance with the organization of their pregnancy and the paperwork related to baby and birth. Book your consultation today to make sure your Elterngeld application goes smoothly!