Side Business in Germany 2026: Part-Time Self-Employment Explained
Starting a side business in Germany 2026 is easier than it sounds – once you've handled registration, health insurance limits and the tax angle. Here's the playbook.
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Quick answer: going part-time self-employed
Here's how it works in 2026: you register the activity – as a liberal professional (Freiberufler) just with the tax office via the tax registration questionnaire, as a trade (Gewerbe) additionally at the trade office (€20–65). Your health insurance keeps running through your main job as long as you stay under 20 hours per week, your profit is smaller than your main-job income, and you earn at most 75 % of the reference figure (Bezugsgröße) – about €2,966/month in 2026. Side income is taxed jointly with your salary, so budget roughly 35–45 % for income tax. Up to €25,000 in revenue the small-business (Kleinunternehmer) rule applies and no VAT is due.
Registration is free or cheap and quickly done. The exact limits, a worked example and the common mistakes are below.
When does self-employment count as 'part-time'?
There is no fixed income threshold. What matters is the overall picture of time, income and economic weight. You count as part-time when all three apply:
- You work fewer than 20 hours per week self-employed
- Your profit is regularly lower than your main-job income
- Your main job remains your economic center of life
As soon as one of those flips, your insurer can reclassify you as primarily self-employed – with significantly higher contributions. See Freelancer vs. Trader for the boundary between liberal profession and trade.
Part-time vs. full-time: the 2026 limits
Your insurer checks against fixed reference values. The key one is the Bezugsgröße (reference figure), which rises to €3,955 per month in 2026. The main thresholds follow from it:
| Criterion | Part-time (nebenberuflich) | Primary (hauptberuflich) |
|---|---|---|
| Weekly hours | under 20 | 20 or more |
| Profit vs. main job | smaller | larger |
| Profit per month | up to 75 % of Bezugsgröße (€2,966) | above €2,966 |
| Health insurance | runs via the main job | own contributions on profit |
| Extra insurance cost | none | yes |
The 20-hour line and the 50 % rule (earning more than half the Bezugsgröße) are the most common tipping points. In the end it's the insurer's overall assessment that counts – when unsure, ask them in writing before you start.
Do you need your employer's permission?
There is no blanket approval requirement, but there are limits:
- Read your employment contract – many include disclosure or approval clauses for secondary activities.
- Non-compete: you can't run a competing activity. Coding for the same customer outside work, bypassing your employer, is off-limits.
- Working time act: combined hours with your main job can't exceed 48 per week on average (§ 3 ArbZG, measured over 6 months).
- Vacation rules: no gainful activity that undermines the rest purpose of paid leave (§ 8 BUrlG).
Your employer can only forbid the activity for good cause – for example if your main-job performance suffers or a genuine competitive conflict arises. Rule of thumb: telling your employer is always safer than starting in secret.
Registration: Trade or Liberal Profession?
Depends on the activity:
- Liberal profession (Freiberufler) – programmers, designers, coaches, copywriters, consultants: just notify the tax office via the tax registration questionnaire. Cost: €0.
- Trade (Gewerbe) – retail, sales, services outside the catalog: file a Gewerbeanmeldung at the trade office (€20–65 depending on the municipality). The tax office and chamber of commerce are notified automatically.
Mixed activity? You'll need both. After registering, the tax office sends you the questionnaire; you enter your expected profit there – estimate realistically, since possible prepayments are based on it. When unclear, call the Finanzamt – it's free.
Health insurance: the 20-hour rule and income limits
As long as the activity stays part-time, you pay no additional health or long-term care contributions on the profit – your cover runs through the main job. The 2026 thresholds that matter:
- Under 20h/week + profit smaller than the main job = part-time, your main-job insurance keeps applying.
- Family-insured (mitversichert), e.g. via a spouse? Then your profit from self-employment may not exceed €565/month (1/7 of the Bezugsgröße). For a minijob it's €603/month. Above that, you must take out your own membership.
- 75 % of the Bezugsgröße (2026: about €2,966/month) is the reference point for the primary-employment assessment.
Important: actively notify your health insurer when you start. Once your profit exceeds your main-job income, or you regularly hit 20+ hours, you can be reclassified as primarily self-employed – then you pay your own contributions, and back-payments are expensive.
Taxes: income tax, VAT and the small-business rule
Three things drive your tax bill:
- Income tax: both incomes are assessed jointly. Your side income lands in the top marginal rate of your main job – budget 35–45 %. You report the profit in the tax return: liberal professionals in Anlage S, traders in Anlage G, plus the Anlage EÜR. See estimated tax payments for the self-employed.
- VAT: if prior-year revenue was under €25,000 and current-year projected under €100,000, the Kleinunternehmer rule applies – no VAT on invoices, but no input deduction either.
- Trade tax (Gewerbe only): €24,500/year allowance. Most side businesses stay under it.
Unlike your main job, no wage tax is automatically withheld on side income. The tax office only assesses it with the notice, so set aside a share of every euro of profit – otherwise the year-end assessment hits hard.
The starter book for your self-employment
Free e-book: registration, accounting, your first invoice, and taxes, plus a tax calendar, deductions cheat sheet, and invoice template.
Worked example: what's left of your side income?
Say you earn €10,000 profit a year as a part-time liberal professional, your main-job salary puts you at a marginal rate of around 38 %, and you use the small-business rule:
| Item | Amount/year |
|---|---|
| Profit from side activity | €10,000 |
| VAT (Kleinunternehmer) | €0 |
| Extra health insurance (part-time) | €0 |
| Income tax (~38 % marginal rate) | – €3,800 |
| Net available | ≈ €6,200 |
The example shows: because health insurance and VAT drop out, income tax is the only large deduction. That's exactly why you should set aside roughly 35–45 % of the profit – the higher your main salary, the higher the marginal rate on your side income.
Bookkeeping – even a side hustle needs receipts
Side or full-time, every invoice must include the legally required fields. Since 2025, you must be able to receive structured e-invoices for domestic B2B. Receipts must be collected digitally per GoBD and kept 8 years. Excel ages out fast for a real side business – bookkeeping software with receipt scanning and an automatic EÜR is standard, and keeps side income cleanly separated from private money.
Common mistakes when starting on the side
- Not notifying the insurer – starting the activity is reportable; skip it and you risk retroactive contributions.
- Crossing the limits – permanently 20+ hours, or profit above your main job, tips you out of part-time status.
- Forgetting side income in the return – every profit belongs in Anlage S or G, even small amounts.
- No tax buffer – without a reserve, the first tax notice lands at full force.
- Wrong registration – a trade declared as a liberal profession (or vice versa); clarify with the Finanzamt when unsure.
FAQ
How much can I earn on the side tax-free? For regular side income there's no separate allowance – your profit increases taxable income. Only the general basic allowance counts, and that's usually already used up by your main job. In practice you tax every euro of profit at your personal marginal rate.
Do I have to ask my employer for permission? Usually you don't need explicit permission, but many contracts require disclosure. Your employer can only forbid the activity for good cause – e.g. direct competition or if your main-job performance suffers.
Do I pay extra health insurance as a part-time self-employed person? No, as long as the activity stays part-time. Your insurance runs through the main job and no extra contributions fall on the profit. Only once you're classified as primarily self-employed do you pay your own contributions.
Do I need a trade registration as a side hustler? Only if your activity is commercial. Liberal professionals (catalog jobs like programmers, designers, consultants) register only with the tax office. Retail, sales and services outside the catalog need a Gewerbeanmeldung.
What happens if my side income exceeds my main job? Then your insurer can classify you as primarily self-employed. You pay your own health and care contributions on the profit, and the cheap part-time status ends. Report such changes early to avoid back-payments.
Conclusion
Going part-time self-employed in Germany in 2026 is the most pragmatic path to a real business: low risk, salary backing, real market testing. Three routines do the heavy lifting – notify your insurer, keep an eye on the hour and income thresholds, run clean books from day one. Norman gives you free bookkeeping and invoicing – perfect for testing a side business without overhead.
Keep your side income cleanly separate – at no extra cost
Norman runs a dedicated set of books for your side business: scan receipts, send invoices and let the EÜR (cash-basis P&L) build itself. Your side income stays cleanly separated from your salaried job, and the year-end tax return takes minutes – invoicing and bookkeeping free forever.