Taxes & business banking for the self-employed


Neustarthilfe Plus: information for freelancers and the self-employed

Kate Bailey

Freelance Editor

Sep 16, 2021

As the world continues to wait out the harmful possibilities of the Delta COVID-19 variant, and we here in Germany have seen a lukewarm economic reaction to ‘’re-opening’’ the financial crisis seems to loom as a more dire situation threatens nearly every industry. Thankfully, the German government has extended many key programs to ensure the financial stability of freelancers and self-employed persons. We are going to give you an overview, in English, in our blog article today. Now, of course, you may remember the first round of funding for those who could not access the Bridging Aid III - that was, of course, Neustarthilfe.

This ‘’Restart Aid’’ supported self-employed people whose economic activity is restricted due to Corona in the funding period from January 1 to June 30, 2021. It supplemented the existing security systems, such as the basic security like loss of employment income and similar. Self-employed persons who do not make use of the reimbursement of fixed costs under bridging aid III were eligible to receive 50 percent of a reference turnover generated in the comparison period as a one-off support service (restart aid). The restart assistance amounted to a maximum of 7,500 euros.

Now, in a joint offering from various departments of the German government, including the Ministry of Finance, they have expanded and improved the Neustarthilfe Plus program. The new Neustarthilfe Plus program will continue to support self-employed people, corporations, cooperatives, non-employed and short-term employees in the performing arts in coping with the economic consequences of the corona pandemic.

For this purpose, the advance payment (flat-rate operating costs) was increased to a maximum of 4,500 euros for self-employed persons and one-person corporations and to up to 18,000 euros for multi-person corporations and cooperatives over the entire reference period. Initially, the Restart Aid Plus can only be applied for by direct application in your own name. The application deadline is October 31, 2021.

An overview of what is funded, and why

The funding period for the Neustarthilfe Plus is July to September 2021. The Neustarthilfe Plus is a one-off 50 percent of a three-month reference turnover (special regulations apply to low turnover or income in 2019 due to exceptional circumstances such as interruptions to work due to care leave, illness or parental leave or for cases in who started business before November 1, 2020, but only after January 1, 2019). A maximum of 4,500 euros for self-employed persons and one-person corporations and a maximum of 18,000 euros for multi-person corporations and cooperatives are paid out as a Restart Aid Plus.

If the application requirements are met, the Restart Aid Plus is initially paid out as an advance payment. The amount of the Neustarthilfe Plus will only be calculated exactly after the end of the funding period - based on the final turnover from July to September 2021. 

As a general rule, you can keep the advance payment in full if you lost 60 percent or more of your sales. If sales have fallen by less than 60 percent during the funding period, part of the advance must be repaid so that Neustarthilfe Plus and sales in the funding period do not exceed 90 percent of the reference sales. Only when the drop in sales is less than ten percent ( ie sales in the funding period corresponds to more than 90 percent of the reference sales) does the entire advance have to be paid back. This is no different from the first version of the assistance funding.

How does this new form of funding assistance work with November and December Aid, the Bridging Aid II and the Bridging Aid III?

The three-month funding period of the Neustarthilfe Plus (July to September 2021) does not overlap with that of the Bridging Aid II (September to December 2020) or the November or December Aid (November or December 2020). The Restart Aid Plus can therefore be applied for in addition to these aids. The Restart Assistance Plus cannot be applied for in addition to Bridging Assistance III Plus.

However, if you have applied for Restart Assistance Plus, you can switch to Bridging Assistance III Plus after applying. Because in some cases the bridging aid III Plus can also be more advantageous for self-employed persons (and all other eligible applicants for the Neustarthilfe Plus) with little or no fixed costs. Conversely, self-employed individuals who, after applying for Bridging Aid III Plus, find that they receive less subsidy from Bridging Aid III Plus than with Restart Aid Plus, should be given the opportunity to switch to Restart Aid Plus.

It is planned that the right to vote can be exercised until the end of the application period.

The following groups can apply for Restart Aid Plus:

  • Solo self-employed with or without partnerships,
  • Corporations with one partner (one-person corporations),
  • Corporations with several partners (multi-person corporations),
  • Cooperatives as well
  • short-term employees in the performing arts and non-permanent employees.

To be able to apply for Restart Aid Plus, you must:

  • be self-employed, i.e. work freelance or run a trade ( possibly including your proportionate independent income from a partnership),
  • be self-employed as their main occupation, i.e. draw at least 51 percent of their income from this,
  • employ at most one part-time employee,
  • be registered with a German tax office,
  • have not made use of bridging aid III Plus and
  • have been self-employed before November 1, 2020

For all groups with the exception of self-employed people with partnerships, there are further specific conditions. You’ll need to research more based on your specific situations, but based on the two most common scenarios, here is how partnerships could play a role.

Corporations with one partner (one-person corporations):

For the one-person corporation, the corporation applies in addition to the conditions described above for an applicant who generates the majority of its sales (at least 51 percent) from activities that would be considered a professional or commercial activity for a natural person,

  • is held 100 percent by its partner and
  • the partner works for the company for at least 20 hours a week.

Corporations with several shareholders (multi-person corporation):

A multi-person corporation is eligible if it (in addition to the conditions described above)

  • generates the majority of its sales (at least 51 percent) from activities that would be considered a professional or commercial activity for a natural person and
  • is held by one of its partners to at least 25 percent and this partner works at least 20 hours per week for the company.

What about short-term workers or entertainment workers?

In principle, it also applies to short-term employees in the performing arts and non-permanent employees in all industries that they are eligible to apply for the Neustarthilfe Plus if 51 percent of the income comes from freelance or commercial income from self-employment. However, were are including this, because there is a catch.

The income from short-term employment relationships and non-permanent employment relationships in 2019 also apply to the examination of the eligibility to apply for Neustarthilfe Plus as income from self-employment if:

  1. it concerns short-term employment relationships of up to 14 consecutive weeks in the performing arts, i.e. the activities according to the classification of professions of the Federal Employment Agency under No. 94 ("Performing and entertaining professions") or under No. 8234 ("Professions in make-up art) or

    a. it is about non-permanent employment of less than seven consecutive calendar days, b. and the applicant did not receive any unemployment or short-time allowance for July 2021.

If these requirements are met, the non-self-employed income from these employment relationships is equated with self-employed income within the meaning of the Neustarthilfe Plus. If you have additional income from professional / commercial activity you can add the aforementioned non-self-employed income to your possible income from commercial and / or professional activity.

If the sum of this income amounted to at least 51 percent of your total income in the comparison period, you can apply for Restart Aid Plus. Even if you did not have any income from commercial or professional activities, you are eligible to apply if you have earned at least 51% of your total income with the above-mentioned non-permanent or short-term jobs alone. If, on the other hand, you received unemployment benefit or short-time work allowance for July 2021, the income from the above employment does not count as income from self-employment. This applies regardless of how long unemployment benefits or short-time work benefits have been drawn.

However, you can still apply for Restart Aid Plus if you had additional income from commercial and / or freelance work in the comparison period that accounted for at least 51 percent of your total income.

As freelancers and self-employed persons, we can find great relief at the efforts of the government especially when we compare our situation to other countries worldwide and also consider the unknown economic future is not our burden to bear alone. Hopefully you are now informed as to if you can access some of this help, and how, and what you might need to factor in before you do!