If you’re self-employed and have a side job in Germany, your health insurance status can get complicated. This guide explains how to assess your main income type, what rules apply, and how to make sure you’re properly insured.
Summary
Whether you’re classed as full-time self-employed in Germany affects your insurance obligations. Health insurance funds decide this based on your working hours and income share from self-employment. Generally, if your business takes up most of your time or income, you’re considered full-time self-employed.
Contents
Classification for compulsory insurance is often difficult
It is often not easy to classify a person as an employee or a self-employed person. But this distinction is important because it determines whether the person must have insurance coverage as an employee or is free to take out private health insurance. The distinction is particularly difficult because social insurance law doesn’t provide a legal definition for full-time self-employment. This decision is, therefore, left to the health insurance funds 💬Krankenkassen, each of which has its own criteria for assessing whether insurance is compulsory.
For a long time, health insurance funds considered the non-self-employed activity in such a situation as their main activity. But, nowadays, things have evolved and assessing whether someone is full-time self-employed or not is more nuanced.
What points to full-time self-employment?
It is often difficult for health insurance funds to determine exactly if a self-employed person is full-time self-employed and is therefore obliged to be insured. The main things they look at are “time spent” and “proportion of income from employment“. In other words, full-time self-employed persons are those whose self-employed activity is the centre of their working life, i.e. the income and effort from the self-employed activity outweigh those from dependent employment. Part-time employment is therefore not as economically relevant to the person as self-employment.
According to the health insurance fund AOK, if the self-employed activity exceeds the employed activity by at least 20% per criterion, it can generally be assumed that the person is self-employed on a full-time basis. However, this 20% is not a fixed value but only a guideline.
Self-employed with employees
If one or more persons are employed in any capacity, this should not lead to a blanket assumption of full-time self-employment, regardless of the amount of personal work involved. Nevertheless, hiring employees is an indicator of full-time self-employment. In the case of several employees, earnings are added together as a factor for the extent of self-employment.
In the case of self-employed without employees, it is mainly the extent and the income that is used to assess more precisely whether a person is full-time self-employed.
Who qualifies as full-time self-employed?
You are regarded as full-time self-employed if any of the following criteria apply:
- You work more than 30 hours per week in your self-employment and earn at least 50% of your total income from it.
- You work between 20 and 30 hours per week on your self-employment and earn more than half of the monthly reference amount for social insurance (for example: €1,557.50 in the new federal states and €1,645 in the old federal states in 2021).
- You work fewer than 20 hours per week, but your self-employment generates at least 75% of the monthly reference amount.
If you meet any of these thresholds, health insurance funds generally classify you as full-time self-employed, which means you are not subject to compulsory statutory health insurance. Even if you also have a part-time job, you can work up to 20 hours per week in employment and still be considered fully self-employed.
Only individuals who do not meet any of these criteria are classified as part-time self-employed.
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Presumption of full-time self-employment
If you’re self-employed and also have a part-time job, the so-called presumption rule applies. For liberal professionals 💬 Freiberufler and commercial traders who work at least 20 hours per week in their part-time job and earn at least 50% of the monthly reference amount, the law assumes the following:
full-time self-employment is ruled out, because the working hours suggest that there is simply not enough time left for full-time self-employment.
The reverse is also true:
If you work less than 18 hours per week in your employed job and earn more than half of the monthly reference amount, you are presumed to be fully self-employed.
This presumption is rebuttable. You can overturn it if you provide convincing evidence that your actual circumstances differ (for example, if your self-employment still plays a dominant economic role).
If neither the criteria nor the presumption rule provide a clear result, the authorities conduct an overall assessment. This involves comparing both the economic weight (income from self-employment vs employment) and the time spent on each activity. The goal is to determine which activity is substantially predominant and whether your self-employment can be considered full-time.
What happens if I’m full-time self-employed but also a part-time employee?
People who are self-employed on a part-time basis in addition to their main job are generally exempt from compulsory statutory social insurance on their self-employed income. Although full-time self-employed persons are exempt from social insurance, they are not necessarily exempt from pension insurance. For some groups, pension insurance may still be compulsory.
For the full-time self-employed, it is not possible to switch from private health insurance back to
statutory health insurance solely because they take up a part-time employed position.
Similarly, part-time self-employed who are also employees cannot simply switch to private health insurance on this basis. However, they still benefit from the fact that they only have to pay the remaining social security contributions in their role as employees.
No more social insurance loopholes
Since health insurance for the self-employed can be more expensive than statutory health insurance, some particularly cost-conscious self-employed persons have in the past taken up a midi-job (monthly salary of €450.01–1,300) or similar employment just above the marginal earnings threshold in order to benefit from cheaper insurance cover.
By revising the criteria for classifying full-time self-employment, lawmakers aim to prevent the self-employed from unduly benefiting from reduced insurance contributions. As a result, more people are now treated as full-time self-employed and therefore exempt from social security contributions in this role, closing earlier loopholes in the system.
Full-time self-employment & mini jobs
If you have a mini-job in addition to your full-time self-employment, you should be aware that a mini-job with an employer who used to employ you full-time may look like ‘bogus self-employment’. Be careful, as bogus self-employment is not legal and comes with consequences.
In the case of a mini job alongside self-employment, the employer pays the flat-rate income tax, including church tax and solidarity surcharge. Self-employed persons declare the income from the mini-job in their personal income tax return.
For self-employed persons, the mini-job can also be exempt from social security contributions by waiving the obligation to pay pension insurance. This means that the mini-job is also exempt from health, long-term care and unemployment insurance. This makes it easy to supplement self-employed income. This can be particularly advantageous at the beginning of self-employment.
Conclusion
Being full-time self-employed often means exemption from statutory insurance but possible pension insurance obligations. Combining self-employment with a mini job or part-time work doesn’t automatically change your status, but it can raise red flags for bogus self-employment. Always clarify your classification with your Krankenkasse to avoid legal or financial issues.
