Is the startup grant taxable?

No. The Gründungszuschuss is tax-free under §3 No. 2 EStG — and unlike unemployment benefit, it is also NOT subject to the progression clause (Progressionsvorbehalt). So it raises neither your tax nor your tax rate. Only the income from your new self-employed activity is taxable.

How high is the startup grant?

In the first phase (6 months) you keep your existing unemployment benefit (ALG I) plus a flat €300 per month for social security. In the second phase (a further 9 months), another €300 per month can be paid on application if your business activity is proven.

What requirements must I meet?

You must be receiving unemployment benefit (ALG I) with a remaining entitlement of at least 150 days, take up a full-time self-employed activity, and present a viable business plan. The viability must be certified by an expert body — such as the chamber of industry and commerce, chamber of crafts, or a tax advisor.

Do I have to declare the startup grant in my tax return?

Since it's tax-free and has no progression effect, you don't have to tax it as income. It does no harm to mention it for information. Your self-employment income, on the other hand, you record normally via Anlage S or G and the EÜR.

Startup Grant & Tax 2026 (Gründungszuschuss Germany)

The step from unemployment into self-employment is risky — the startup grant (Gründungszuschuss) cushions it. And for tax it’s a rare stroke of luck: completely tax-free, with no progression effect. This guide shows how to get it, how high it is, and how to tax your first income cleanly.

In short: The Gründungszuschuss is tax-free under §3 No. 2 EStG and — unlike ALG I — has no progression effect. Phase 1 (6 months): your ALG I continues + €300/month. Phase 2 (9 months): on application a further €300/month. Requirement: an ALG I remaining entitlement of at least 150 days and a viable business plan with an expert certificate. Only your self-employment income is taxable.

What the startup grant is

The Gründungszuschuss under §93 SGB III supports you when you take up a full-time self-employed activity out of unemployment benefit (ALG I). It’s meant to secure the first months when your business isn’t yet carrying itself.

It’s paid in two phases:

Phase 1 (6 months): your existing ALG I + €300 per month for social security.
Phase 2 (a further 9 months): on separate application, €300 per month if you prove your business activity.

The tax twist: doubly favoured

This is the decisive difference from other wage-replacement benefits:

Tax-free under §3 No. 2 EStG — you pay no income tax on the grant.
No progression clause — unlike unemployment benefit, which raises your tax rate on the rest of your income, the startup grant stays entirely out of it.

This is the exception, not the rule: ALG I, parental and sick pay are subject to the progression clause. The startup grant is not.

The requirements

Receiving ALG I with a remaining entitlement of at least 150 days when you start self-employment.
Full-time self-employed activity (at least 15 hours/week).
Viable business plan — the viability must be certified by an expert body (chamber of industry and commerce, chamber of crafts, tax advisor, startup centre).

Important: the startup grant is a discretionary benefit — there’s no legal entitlement. A convincing plan is therefore decisive.

What you still have to tax

Only the grant is tax-free — not your business. You tax the income from your self-employed activity normally:

as a freelancer via Anlage S, as a trader via Anlage G,
you calculate the profit via the cash-basis profit calculation (EÜR).

Whether you’re a freelancer or a trader decides trade tax and chamber membership — see Trade vs freelancer 2026. The first registration steps are in Freelancer registration 2026.

Worked example

Designer Mira had ALG I of €1,300/month. She starts up and receives the startup grant.

Phase 1: €1,300 ALG I + €300 = €1,600/month, tax-free
Self-employment income in the first half-year: profit €4,000 → taxable
The grant (€9,600 over 6 months) stays completely tax-free and doesn’t raise her tax rate on the €4,000 either.

Common mistakes

Wasting the remaining entitlement. Those who wait too long fall under the 150-day limit.
Thinking business income is tax-free. Only the grant is tax-free, not your profit.
No expert statement. Without a viability certificate, no grant.
Not applying for phase 2. The second 9 × €300 are only paid on application.

How Restio helps

Founding, the grant, the first tax return — that’s a lot at once. Restio sorts it for you:

What’s tax-free? — Restio explains clearly that the grant stays out of it and only your profit counts.
Record income — photograph receipts; Restio assigns them to your EÜR and keeps track of the first year.
Instant answers — ask in English or German: “Do I have to declare the startup grant?” or “How do I tax my first jobs?”

For the viability certificate and the application, the chambers or a tax advisor are responsible — Restio helps you set up the tax side correctly from the start.

The startup grant is one of the few benefits that costs you nothing in tax — a real tailwind in the first months. Those who apply in time and separate their income cleanly start without a nasty surprise. The legal basis is in §93 SGB III.