For members


Will freelancers benefit from Germany’s €300 energy allowance?

Germany's traffic-light coalition has unveiled two energy relief packages in as many months, but many self-employed people are wondering whether they'll end up slipping through the net. Here's what you may be entitled to as a freelancer in Germany.

A freelancer works on a laptop in a cafe in Hamburg
A freelancer works on a laptop in a cafe in Hamburg. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

It hasn’t escaped many people’s knowledge that energy prices are currently going through the roof, with many people facing short-notice cancellations of cheaper contracts or seeing their heating costs double overnight.

The war in Ukraine has exacerbated the energy crisis and with further sanctions expected to be levelled at Russia, the situation could be set to worsen yet again.

In an attempt to support struggling households, the traffic-light coalition of the SPD, Greens and FDP has compiled two packages of measures that includes tax relief, a €9 transport ticket, a Kinderbonus of €100 for parents, and much more.

The flagship measure that caught everyone’s eye in the latest package, however, was a €300 heating allowance for taxpayers.

For those in employment, receiving the money should be relatively simple: it will simply pay paid out by employers on top of the regular salary. It will therefore be subject to tax, meaning that those with higher incomes will ultimately benefit less than those on lower incomes.

READ ALSO: Who benefits the most – and least – from Germany’s energy relief measures?

For freelancers and self-employed people, however, the situation is a lot less clear. 

In response to a question on how freelancers could access the additional financial support, the Finance Ministry told The Local: “The details of the relief package agreed upon by the coalition committee at its meeting on March 23rd 2022 will be worked out between the respective ministries involved and responsible with the aim of implementing the envisaged measures quickly.”

In plain English: they’re still working on it. Nevertheless, here’s what we know so far. 

Will freelancers and the self-employed be entitled to the €300 allowance?

Yes! The measure is aimed at all taxpayers that fall into tax brackets 1-5, meaning freelancers as well as employees should be entitled to the money.

For those who pay regular advanced tax payments, the situation is relatively simple. As the resolution paper states: “Self-employed persons receive an advance via a one-time reduction of their advance income tax payment.” 

However, since the allowance is subject to tax, it’s currently unclear how this would be calculated to start with, though there are two likely options.

The first is that all freelancers who pay advanced tax receive the full €300 discount on one or more of their payments. This €300 discount will then be counted as a taxable income on their next tax return and may therefore lead to slightly higher tax payments for the following year (depending on earnings). 

The other option is for the tax office to factor in the corresponding tax based on the freelancer’s previous earnings in addition to the €300 and deduct this from the allowance before paying it out. This would mean substantially less relief up front for those who are in a higher tax bracket. 

READ ALSO: Cheap transport and tax cuts: What Germany’s energy relief package means for you

What if I don’t earn enough to pay tax – or don’t pay tax in advance? 

This is much less clear, and at the time of writing, the Finance Ministry hadn’t yet responded to a request to clarify this. 

We assume that for this group of people, the allowance would be paid out as a kind of tax rebate on the 2022 tax return. The upside of this is that lower-earning freelancers would still be entitled to the full amount; the downside would be that the money wouldn’t be paid out for at least another year or so.

The Elster tax return portal

The ELSTER German tax return portal. Photo: picture alliance/dpa | Marijan Murat

If low-earning freelancers or self-employed people also receive housing benefit or basic income support, it’s possible they will be eligible for the heating subsidy instead. This is a one-time €200 payment that will be paid out to recipients of certain social benefits such as income support, housing benefit and BAföG, which is expected to be paid out in the next few months.

At the start of next year, the government will then take a closer look at the amount of money that welfare recipients are given to see if this still matches the realities of the volatile energy market. 

What other measures could I benefit from as a freelancer?

It’s very important to note that the €300 heating allowance is far from the only measure that freelancers and self-employed people can take advantage of. The two mobility measures – the €9 monthly travel ticket due to come into force on June 1st and a reduction in fuel taxes for drivers – are designed to be applicable to most people, regardless of their income or employment status.

The same goes for a cut in the Renewable Energy Act (EEG) levy, which should shave a few cents off each kilowatt hour of energy from July 1st, and the Greens’ “climate money” policy, which should see households receiving a rebate on the CO2 tax through their tax ID at some point next year. 

Self-employed people with children will also be eligible for a €100-per-child Kinderbonus to help cover household bills.

There are also a number of tax relief measures in the pipeline, including:

For an in-depth look at some of the key tax rules that are changing this year, check out our recent article: 

Everything you need to know about your German tax return in 2022

Do you have any burning questions about the energy relief package and what you’re entitled to? Is the government doing enough for freelancers and the self-employed? Let us know by emailing [email protected]

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For members


Why German bank customers could soon pay less for their account

A major German bank is set to scrap fees on large balances - and a number of others look set to follow. Here's why people in Germany may be paying less for their savings or current account in the near future.

Why German bank customers could soon pay less for their account

What’s going on? 

Interest rates have been at rock-bottom levels for years, making it much harder for people to get returns on their savings.

In recent years, many banks have even been levying what’s known as negative interest rates on customers. If interest normally incentivises people to save by helping them to grow their money, negative interest basically does the opposite.

If you have a certain amount of money in the bank, your bank will charge you negative interest via a deposit holding fee, which will usually be a certain percentage of your balance.

With N26, for example, balances of over €50,000 are subject to a 0.5 percent fee each year. For a balance of exactly €50,000, that equates to €250 in bank charges just for keeping your money there. 

Some banks even charge a deposit holding fee for balances as low as €5,000 or €10,000 in a current account. 

On Tuesday, ING Deutschland became the first bank to announce that it would be scrapping negative interest rates for the vast majority of its customers.

From July 1st, new customers of ING will be able to deposit up to €500,000 in their account without being charged for it, while existing customers will automatically have the fee-free amount raised to €500,000 from the current €50,000. 

Now, it seems a number of other German banks are planning similar moves. 

Why is ING Deutschland ending the holding fee?

Not entirely out of the goodness of its own heart – though that doesn’t stop it being good news for customers.

The European Central Bank (ECB) is set to make a decision on interest rates in the bloc this July, and most people expect that the bank is poised to increase interest rates from minus 0.5 percent to zero. 

Since banks have basically been passing on the ECB’s fees to their own customers, a hike in the ECB’s interest rate would spell the end of most negative interest-rate accounts in any case. But ING Deutschland said it wanted to pass on the positive interest rate trend to its customers even earlier.

READ ALSO: EXPLAINED: How to save money on your taxes in Germany

“With the increase in the fee-free allowance for credit balances on the current and extra accounts, the deposit fee is no longer applicable for 99.9 percent of our customers,” said Nick Jue, chief executive officer of ING in Germany. “We were one of the last banks to introduce a deposit holding fee and one of the first to virtually abolish it.”

He added that the bank had already kept its promise to abolish the holding fee for almost all customers before the European Central Bank made its decision.

Does this have anything to do with that court decision on bank charges?

That’s definitely a factor. According to a decision in Germany’s Federal Supreme Court last year, credit institutions have to obtain the consent of their customers when making changes to their fees and conditions.

That means that financial institutions have to ask for consent to current fees retrospectively if they don’t want hoards of people trying to claim their money back.

If a customer doesn’t consent to the fees, the bank will usually close that customer’s account.

Man signs a contract

A man in a suit fills in an official form. Photo: picture alliance/dpa/Pixabay | hnw-Gruppe

According to ING Deutschland, the scrapping of negative interest rates on balances up to €500,000 may help to sway those customers who have not yet agreed to the latest terms and conditions – including the deposit holding fee.

Anyone who agrees to the Ts&Cs will automatically be given the higher allowance as of July 1st.

“ING Deutschland expects that the increase in the allowances will convince in particular those customers who have not yet agreed to the General Terms and Conditions including the holding fee, and that the bank will thus terminate fewer customers than last planned,” ING said in a press release. 


What other banks are planning to do this?

According to reports in Bild and Bialo, the other banks planning on ending negative interest rates (or raising the threshold for fee-free balances like ING Deutschland has done) include:

  • Deutsche Bank
  • Commerzbank
  • Deutsche Apotheker- und Ärztebank (Apobank)
  • Dortmunder Volksbank
  • Hamburger Sparkasse (Haspa
  • Frankfurter Sparkasse
  • Frankfurter Volksbank
  • Mittelbrandenburgische Sparkasse
  • Nassauische Sparkasse (Naspa)
  • Ostsächsische Sparkasse Dresden
  • Sparda-Bank München
  • Sparda-Bank Südwest
  • Sparda-Bank West
  • Sparkasse Hannover
  • Sparkasse Pforzheim Calw
  • Volksbank Stuttgart

What does this mean for my savings?

There’s good news and bad news.

The good news is that, from July, you’ll no longer have to pay exorbitant charges just to store your money in a safe place – and you won’t be penalised for saving more. The bad news, on the other hand, is that low interest rates aren’t going away anytime soon.

So while you won’t be losing money hand over fist, you won’t be earning much of a return on your savings either.

Banks in Frankfurt

Skyscrapers in the financial district of Frankfurt am Main. Photo: picture alliance/dpa/dpa-Zentralbild | Fernando Gutierrez-Juarez

“If the interest rate environment continues to develop positively, we will also let our customers participate in this development,” said ING Deutschland’s Nick Jue. “However, the low-interest phase will continue for the time being and broadly diversified investments will remain important.”

Getting a securities account where your money is invested is one way to try and grow your savings, as is investing in property.

Of course, people with mortgages and other loans benefit from the low interest rates – which could be why the German property market is currently booming. 

READ ALSO: Five ways Germany’s soaring inflation could affect your life