Elterngeld: The family allowance in Germany

• Definition, Explanation
• Tips, Checklist

Parents with children born after January 1st, 2007 have a right to receive parental allowance. This right is applicable for biological parents, adoptive parents or foster parents. The individual looking after the child from birth on and is therefore unable to generate personal income receives parental allowance. This right holds benefits for people in paid work, clerks, freelancers, unemployment persons, students and trainees. Further effects of parental allowance are:

• Generally, 67 percent of the current net income is granted as parental allowance. This amount ranges from 300 to the maximum of 1.800 Euro per month. The allowance for employees is calculated on the basis of the average net income of the last 12 months, that is, income minus income tax, social insurance contributions or Christmas bonus. One-time bonus payments such as a 13th monthly salary or Christmas bonus are not taken into account. With freelancers, the profit of the fiscal year before the child was born is utilized as basis of calculation. No allocation with other aid money payments such as ALG 2 is taking place. In terms of low-income earners with an income of less than EUR 1.000, the parental allowance rate will be extended. Parents who have not been working before the child was born such as housewives, unemployed persons or students receive the minimum amount of EUR 300. When twins were born, another EUR 300 will be granted.
  You can calculate your personal amount of parental allowance using our Parental Allowance Calculator
• In general, the duration of availability is 12 months. If both parents care and look after the child, the duration of availability will be extended up to 14 months. The parents are responsible for the partition of these 14 months among themselves. They are, however, allowed to stay at home together for 7 months. Parental allowance can also be extended up to 28 months if only half of the guaranteed monthly amount is paid. When it comes to divorced or separated parents with joint custody, 2 so-called “partner months” can be demanded by the father
• When receiving parental allowance working is only allowed up to 30 hours per week. The income generated by these part-time jobs will be taken into account when calculating parental allowance. As soon as you work more than 30 hours per week, your parental allowance will be cancelled
• If there is a child that is 3 years of age in the same household, parental allowance will be adjusted by 10 percent. This is also valid for 2 siblings if they are under 6 years of age
• The duration of receiving parental allowance will be taken into account as so-called „Kindererziehungszeit“ when it comes to calculating your pension payments
• While receiving parental allowance, your health insurance including all services remains valid. You will not have to pay insurance contributions during this period. As private insurant, however, you will still have to pay contributions yourself and without pro rata payments by the employer
• Parental allowance is free of taxes and charges. However, it will be added to income according to progression proviso
• Child benefit and parental allowance are two different things. Also, paternity leave remains the same, being limited to 3 years

• Make sure allowances are registered on your income tax card as early as possible, that is, at the latest during pregnancy. These allowances may include travel expenses, advertising costs, living payments, child care expenses or costs for real estate. With tax allowances you will increase your net income. Consider if switching tax code might be a good idea
• If you want to work part-time during paternity leave, you should in the forefront calculate if this could be beneficial for you
• Apply for paternal allowance at your local authority within 3 months after your child was born. Specify which parent is demanding parental allowance for how many months. Changing this later on is only possible in hardship cases. Make sure both parents sign the application!
• For your application you will need:
  • Certificate of birth, handed over to you by your civil registry office
  • Income certificates: payrolls or (with freelancers) tax assessment
  • Employer’s work certificate for part-time for the period of paternal allowance
  • Certificate of your Health Insurance Agency about maternity allowance
  • Certificate about employer’s contribution to maternity allowance
  • Single parents only: Certificate of exclusive child custody and a confirmation that the other parent is not living in the same house or flat
• If you wish to take your parental leave at the same time as your partner, you will have to inform your annuity insurance office about which partner should receive parental allowance payments. You have to do this within 2 months
• Please take into account that you might have to pay back duty due to parental allowance