Alternative income sources: crucial information you should be aware of
In Germany, a significant number of workers supplement their income with additional jobs. According to data from the Federal Statistical Office, nearly 2 million individuals held multiple jobs in 2023, accounting for 4.5% of the workforce. This practice can be driven by financial necessity, personal enrichment, or skills development. However, there are legal and financial implications to consider when pursuing a second job, as explained below.
Freedom to work a second job is subject to conditions that do not interfere with the rights of the primary employer. Labor lawyer Jakob T. Lange from Wiesbaden emphasizes that employees should inform their employers about any additional employment, especially if the contract stipulates a requirement for disclosure. Employers may only refuse a secondary job if it conflicts with their own business interests.
Employers and tax authorities have roles in managing additional income. For example, if a second job could potentially affect the interests of the primary employer, workers should share information about their plans, employer, working hours, and extent of the job. This information enables the employer to evaluate whether the additional activity might disrupt their operations.
Secondary activities are subject to tax and social security contributions, with reduced deductions applying only to mini-jobs with a monthly salary of up to €556. In cases where a secondary job pays more than this amount, tax and social security obligations apply, and the employer must register the activity with the mini-job center. There are still financial advantages possible, as the employer may pay a higher share of social security contributions. However, only a mini-job offers tax benefits, with a lower tax rate of 2 percent and the option for the employer to pay the tax flat-rate, resulting in net payments equal to the gross salary.
When dividing working time efficiently between main and secondary jobs, consider private commitments, working hours, and legal requirements. This might involve working on weekends, scheduling the second job for late afternoons or early evenings, or pursuing a four-day week and working the extra hours on Fridays and Saturdays. Part-time employees tend to have more flexibility, but workers should prioritize increasing hours in their main job before taking on a second one to avoid higher tax brackets.
Overall, when considering a second job in Germany, it is essential to understand the legal requirements, tax considerations, and best practices for properly managing multiple employment arrangements while adhering to reporting and tax obligations.
Managing a second job in Germany requires adhering to the conditions that do not interfere with the rights of the primary employer, as employees are expected to disclose any additional employment to their employers, especially if the contract stipulates a requirement for disclosure. The income from secondary jobs is subject to tax and social security contributions, with reduced deductions applying only to mini-jobs, and in cases where a secondary job pays more than €556 per month, the full tax and social security obligations apply.
