First, let’s get started with some basic terminologies that you should know before applying for parental allowance for your child. All explanations below are based on the family portal of Ministry of Family, Seniors, Women and Youth (https://familienportal.de) and being presented in a more understandable way. Please note that I don’t offer any legal/tax consultation or liability for information provided.
Parental allowance (Elterngeld) is a financial benefit for parents that is designed to enable them to care for their child during the parental leave. Currently in Germany, it ranges between 300€ and 1.800€ per month. This means that you will receive either (i) a basic parental allowance of a min. 300€ pM, even if you had no income at all before the birth, (ii) something inbetween depending on your income in the 12M reference period, (iii) or a max. of 1.800€ pM, if you earned at least 2.770€ net pM (or significantly more) before the birth. In general, the lower the income, the higher the replacement rate. NOTE: Maternity benefits (Mutterschutzgeld) that you receive for the same child for whom you receive parental allowance substitute your parental allowance benefits in the first two months (ie. 8 weeks) after birth. This is because these have the same purpose as parental allowance: they compensate for your loss of income.
You can receive your basic parental allowance (Elterngeld Basic) until your child turns 1 year old (or in a different period, if preferred), but you won’t receive any compensation payment, if you parental is shorter than this or ends earlier than planned. NOTE: you are entitled to receive a parental allowance (Elterngeld) only if you are officially in a parental leave (Elternzeit) – your parental leave (Elternzeit) may be longer than the period in which you receive your parental allowance (Elterngeld), but you won’t receive any Elterngeld, unless you are in Elternzeit.
With the partner months (Partnermonate) you can get two additional months of the basic parental allowance (Elterngeld Basic), if both parents apply for parental leave / allowance. NOTE: your partner needs to stay at least 2M in his/her parental leave. In total, you receive 14M of Elterngeld Basic (instead of 12M, which is the most common case). You can divide the total of 14M according to your preferences. NOTE: you can benefit from partner months, even if you are a single-mum / single-dad.
You may not work full-time and receive parental allowance (Elterngeld) at the same time, however you can be in Elternzeit, receive Elterngeld and work part-time (max. 32h pW). Please be aware that your part-time income will be accounted on your basic parental allowance and you will receive less Elterngeld benefit in the end. You may still wish to work part-time during your parental leave because the overall earning (part-time income plus parental allowance) are higher and needed in your situation – in this case, you should consider splitting Elterngeld Basic into Elterngeld Plus.
Parental allowance Plus (Elterngeld Plus) is nothing else than Elterngeld Basic split into half / two months. It ranges between 150€ and 900€ per month. For example, if your Elterngeld Basic equals to 1.800€ pM and you wish you receive it in two tranches instead of one, you can split it and receive it over two months: 900€ each. NOTE: the overall amount of parental allowance that you are entitled to receive won’t change by splitting it into more sections. In the end, the amount of money you receive stays the same. In other words, Elterngeld Plus is a simple way to manage your financial liquidity over time. For example, if you intend to take 2Y parental leave, you may feel more comfortable getting a smaller amount each month during the whole parental leave period, instead of receiving everything within the first year and nothing in the second. Alternatively, you may wish to take your parental leave slightly longer than a year, eg. 1Y3M, and so you can split 3 Elterngeld Basic months into 6 Elterngeld Plus months and have a financial coverage for the whole leave duration (in this example, you apply for 9M Elterngeld Basic and 6M Elterngeld Plus, which make up 1Y3M in total). NOTE: you don’t need to work part-time to recieve Elterngeld Plus.
The partnership bonus (Partnerschaftsbonus) is an option for parents who both want to work-part time during parental leave (or afterwards) and receive by this up to 4 additional months of parental allowance Plus (Elterngeld Plus). The requirement is that both parents use it at the same time (the idea behind the partnership bonus is to support parents who share their family and professional responsibilities between each other). During this time, you both need to work part-time, each of you between 24 and 32h pW on average during the reference month. NOTE: you can also benefit from partnership bonus, if you are a single-mum / single-dad working part-time.
If you are pregnant and already have one child living in the same household, you can receive the so-called sibling bonus (Geschwisterbonus), which adds 10% (or min. 75€) on top of your parental allowance for the second child. As you remember, the parental allowance ranges between 300€ and 1.800€ per month, and with the sibling bonus, you will receive between 75€ and 180€ extra each month as long as one of the following criteria is fulfilled: (i) the older child is not yet 3 years old, (ii) or there are at least two other children, both of whom are not yet 6 years old, (iii) or there is at least one other child with a disability (≥20%) who is not yet 14 years old. You fulfill the criteria? Great! Your new parental allowance equals to min. 375€ and max. 1.980€ per month.
>> Let’s now focus of the value of your parental allowance <<
If you didn’t have any income before getting pregnant, you may count on the generosity of Germany social system and receive the min. of 300€ pM. If you earned significantly more than 2.770€ net pM on average during 12M before the maternity protection period, your parental benefits are capped to 1.800€ pM and the gap between your old income and your parental allowance is unfortunately something you have to accept, even though it feels unfair. NOTE: The focus in on “average value” over the last 12M, this means that you don’t need to worry if you didn’t earn exactly same amount each month, as long as it is on average ≥ 2.770€ calculated over 12M relevant in your case. The average value refers to the salary component paid on a regular basis – one time payments, eg. performance bonuses, 13th salaries, holiday work compensation and Christmas bonuses are not taken into account even though they might be aligned in your work contract. Foreign income can be only considered if you pay taxes on this income in a country of the European Union or in Iceland, Liechtenstein, Norway or Switzerland. If you were earning between 300€ and 2.770€ net pM on average, you can maximize the value of parental allowance by an easy trick – changing your tax class. It is very simple and you will notice a real increase in the calculation of your parental allowance benefit using one of the online tools. Taxes are not your strength? No problem at all. Let me explain you shortly the background and you will understand the difference. Your tax class has impact on the amount of paid income taxes and social security contributions on a monthly basis, and thereby your monthly net income. By selecting a tax class that reduces your monthly taxes (eg. Steuerklasse V), you will fictively increase your monthly net income and thereby a higher value will be use for the calculation of your parental allowance! It is legal? Yes, it is! How does it work? To read further please get the Premium Access to my website for 89€.
In case you want to optimize your parental allowance for your second child, it’s good to know a trick that helps you move the reference period for the time before your first pregnancy. And no, it is not necessary to become pregnant quickly again, but of course you are free to do so, if you wish The standard reference period for a non-self-employed person is 12 calendar months prior to the maternity protection period (Mutterschutz). NOTE: Maternity leave begins 6 weeks before the birth and end usually 8 weeks after the birth, making up a total of 14 weeks. In special cases (eg. you expect twins or experienced a premature birth), maternity leave lasts 12 weeks after the birth, so the total leave period increases from 14 weeks to 18 weeks.
Everything is straightforward, if you have a well-paid full-time job and expect your first baby having a calm time to prepare your house for the new family member. But when you are caring for your first child at home with no grandparents around to support you, you can consider yourself lucky if you get a nursery place on the first attempt, before you can imagine working part-time / full-time at all. Depending where you live, the offer of nursery places for children below 2 years old may be very limited. In end, your mother heart may tell you to put your career ambitions on hold for a moment, until you find a sustainable solution for you and your little one. That’s fully understandable. So in case you plan to take 2Y parental leave and decide to get pregnant again after a year or so, you may realize that the new parental allowance for the second child will be significantly lower than the previous one in case you haven’t worked in meantime. Why? It’s because you can exclude max. 14M of parental allowance period from your new reference period. By working part-time your postpartum income in the new reference period will be automatically lower than prepatrum income, and if you can’t work at all, you will quickly collect months of no income bringing your benefits to the min. of 300€ pM. It doesn’t feel right, especially because taking care of a child is more intense than your full-time job? Well, there is a way to go around it by having a mixed income. To read further please get the Premium Access to my website for 89€.