Setting Up a Business When You Are Unemployed

If you are unemployed and interested in becoming self-employed, then you can apply for a start-up grant (Gründungszuschuss). You need to be officially unemployed and you need to be entitled to get “Arbeitslosengeld I”. In addition to the prerequisites specified under § 117 ff SGB III, you are entitled to Arbeitslosengeld I if you have worked as an employee in Germany at least 12 months in the past 2 years.  

If you don’t already have a good network of potential clients, then it might be a good idea to use the time of unemployment to dive into entrepreneurship.

You may obtain an additional income next to ALG I benefits, but you are not allowed to work more than 15 hours per week. 

Recipients of unemployment benefits can earn up to 165 euros per month without any deductions (cf. § 141 SGB III). Any further earnings lead to a loss of an equivalent amount of benefits.

The supplementary income limit is based on the net income (after deduction of taxes and advertising expenses or, in the case of self-employment, after deduction of the job-related expenditures).

Operating expenses can be written off in a lump sum of 30% of revenue.


Any secondary job needs to be reported to the “Agentur für Arbeit” immediately and without being prompted.  You can also cancel your registration at your local labor office (Agentur für Arbeit) during work periods.

If you deregister, you will not receive any benefits from the labor office and thus will not be subject to reporting obligations, but you have to insure yourself for that period of time. 

Source: Hubatscheck, Bernd: „Existenzgründung„, , retrieved December 2018.