Parental allowance for the second child

They are certainly the most common questions in the context of parental allowance:

• “How much parental allowance will I receive for my second child?”,
• “Will I receive the full parental allowance for my second child?” or
• “When is the best time to have a second child for parental allowance purposes?”.

Unfortunately, there is no simple or blanket answer to this question, because it depends – on your individual situation. In the following article, we explain how the parental allowance for your second child is calculated and give you tips on how you can even increase your parental allowance with your second child.

b) (partially) self-employed

In the case of self-employed persons, it is somewhat easier with the deferral facts, because they are always based on full calendar years. The facts are the same as for salaried employees. Let’s take our example from 2a):

The original comparison period would therefore be the last calendar year before the birth of child 2, i.e. January 2019 to December 2019. However, there are so-called exclusion and deferral events as follows:

The calculation of parental allowance for the second child depends very much on your individual situation. Especially in the case of self-employed persons, there are many design options. Therefore, take advantage of our free parental allowance calculator, which quickly and easily determines your comparison period and calculates your different parental allowance variants. This allows you to plan your parental allowance easily and clearly:

And best of all: Take advantage of our Parental Allowance Software the unique feature test of the most favorable assessment period (“Günstigerprüfung”) and let us determine the best comparison period for you easily and automatically. You just enter your data and our software will tell you which comparison period is best for you and of course apply for this for you.

If you have had your children “one after the other”, it may well be that your entitlement to parental allowance for child 1 collides with your entitlement to parental allowance for the second child. For example, if you applied for parental allowance plus for child 1 until month 22, and your second child was born one and a half years later, you may receive parental allowance “twice”.

Unfortunately, in these cases the parental allowance from the first child is reduced to the minimum amount (150€). Therefore, we do not recommend double receipt.

As a rule, you register a trade at the public order office of your city. Everything else is then initiated by the city. You formally notify the tax office of a freelance activity by completing the “Questionnaire for Tax Registration”. Please note that by registering a self-employment you have to fulfill partly complex tax obligations (e.g. tax return obligation). You are actively pursuing the activity at the moment when operating income is generated or operating expenses are incurred. If, for example, you register the freelance activity of a “writer”, it is theoretically sufficient to buy paper and pen to be actively self-employed.

Responsibility for the administration, determination and payment of parental allowance lies with the federal states, which regulate the responsibilities differently in some cases. In some federal states, the municipalities are responsible, in others, state authorities.

Not only, but certainly also because of this, there are in some cases large regional differences in how life situations are legally assessed in parental allowance law. When it comes to “registering self-employment for the next child” in order to obtain a more favorable assessment period, there are parental allowance offices that approach the whole thing soberly and pragmatically, while others decide unlawfully and against the official guidelines.

We would like to highlight the most common traps in this context here:

1. Self-employment is not recognized without a tax assessment

Parents most often encounter this problem. Logically, the income tax assessment with the self-employment income is not yet available when the application for parental allowance is filed. Often, self-employment is not registered until the year of birth.

Example:
Child 1 born on November 25, 2019. Parental allowance with parental allowance plus up to and including January 24, 2021 (month 14 of life).
Child 2 born on September 13, 2022. Self-employment started on 01 March 2022.

Parental allowance for child 2 is claimed on October 23, 2022. The income of the calendar months January to December 2018 should count as the assessment period due to the relevant deferral facts.

At that time, of course, there is no income tax assessment for 2022 (the tax return can be filed in March 2023 at the earliest; the parents, however, have significantly longer deadlines for filing their returns).

This case is clearly regulated by the guidelines to the Parental Allowance Act (Elterngeldgesetz):

Pursuant to Sec. 2s (2) Sentence 1 BEEG, income from profits is generally verified solely on the basis of the income tax assessment notice. In principle, the income tax assessment notice for the last completed tax assessment period is decisive. An assessment period is deemed to have been completed upon expiry of the last day of the assessment period and not only upon receipt of the tax assessment notice. This will often not yet be available when applying for parental allowance.

Then the income can be made credible in a simplified procedure by other documents, in particular by the last available income tax assessment. The parental allowance is paid provisionally on this basis until the relevant income tax assessment is subsequently submitted (§ 8 para. 3 ). (Guideline 2d.2.1 on § 2d BEEG)

In our example, the tax assessment for 2022 is not yet available. Therefore, the previous year’s tax assessment should be used as a basis, in the example the one for 2021. In this case, however, the self-employment has not yet been exercised, which is why this is not expedient. Alternative evidence of self-employment can be submitted as part of the simplified procedure and should also be accepted by the parental allowance office.

Alternative documentation may include:

• (Preliminary) Profit Calculation/BWA
• informal entrepreneur certificate from the tax authority
• informal tax advisor certificate
• Submission of business records within the meaning of § 22 UStG (outgoing, incoming invoices, bank statements, quotations, etc.).

However, in our opinion, the machine-generated notification of the allocation of a tax number from the tax office will regularly not be sufficient.

2. Profit motive is questioned

Rarely, but nevertheless already the one or other time experienced, the parents’ allowance office doubts partly arbitrarily whether the activity is exercised with profit-making intention. This happens when there is a tax loss (i.e. more expenses than income).

The problem here is that the determination of the intention to make a profit lies with the tax authorities and is definitely not within the competence of the parental allowance office.

3. Self-employment exercised too late

First of all, you usually have enough time to register/exercise the self-employment in order for it to develop the desired right to defer. Nevertheless, in some cases it may be too late. We explain the temporal and legal requirements in detail again here:

§ Section 2b BEEG regulates the assessment period that is to be used as the basis for determining the assessment income in accordance with section 2(1) BEEG.
Depending on the type of income, the determination of income is based on Section 2c BEEG (employee income) or Section 2d BEEG (profit income).

The determination of income from non-self-employment in mixed cases is based exclusively on the requirements of Section 2b(3) and Section 2b(4) (right of application for parents with low self-employment income).

§ Section 2b(3) BEEG is an exception to subsection 1 and regulates the assessment period for income from employment in cases where the entitled person has income from self-employment either in the twelve-month period under subsection 1 or in the assessment period under subsection 2 (so-called mixed income).

This is where the “problem” lies: “mixed income” in this sense is had by anyone who either

earns income from profits in the assessment period pursuant to Section 2b (1) BEEG, i.e. in the 12-month period prior to the birth (but note: exclusions may apply!)

or

earns income from self-employment in the assessment period under para. 2, i.e. in the last completed assessment period before the birth.

4. Estimation of income in the reference period

In this context, it is regularly questionable what happens to self-employment after childbirth. As a rule, self-employment is suspended after childbirth in favor of childcare and childrearing. Suspension in the sense of parental allowance means no working hours, no income and no expenses during the reference period.

Parents often experience that parental allowance offices do not “accept” the suspension and assume profits from self-employment in the reference period by estimating profits as a general rule.

Parents should take legal action against this, because if it can be credibly shown that the activity is dormant, there is no legal basis for the estimate. If the activity is not dormant, the income and (if applicable) expenses must be forecast informally. This informal forecast has to be followed by the parental allowance office as long as there are no obvious reasons against the credibility. A request for the forecast on the parenting allowance office’s own forms lacks any legal basis – parents should also defend themselves against this.