Countries
Pay in Germany
Pay employees in Germany
Administrating timely, accurate and compliant payroll in Germany requires a deep understanding of local tax, reporting, employment and compensation requirements. With our payroll solutions, you can count on in-country expertise and support to help ensure your workers in Germany are paid correctly, compliantly and on time - every time.
Taxes, employee compensation and benefits
Our local experts provide up-to-date guidance on the specific tax legislation, compensation requirements and benefits expectations for processing payroll in Germany.
- Corporate, income and regional taxes
- Social taxes, including pensions, healthcare and unemployment
- Compensation for holidays, vacation and various types of leave
- Other withholdings and employer contributions
We administer payroll in various ways:
- EOR, our employer of record solution that allows you to employ and pay international workers even if you don’t have a local entity
- Global Pay, our local payroll solution for your operations in a specific country
Taxes for payroll in Germany
Corporate tax
The national corporate tax rate for entities in Germany is 15%. In addition, they owe 5.5% for a solidarity surcharge related to reunification costs. Municipalities can levy their own taxes as well, so the total corporate tax varies based on where you are based.
Income tax
Income tax rates for employees are levied on a progressive scale, with rates ranging from zero to 45%. The base amount of income on which tax is not assessed is known as the Grundfreibetrag, and changes annually.
Effective for 2024, Germany’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows: Taxable income range for single taxpayers:
- €0 - €11,604: 0%
- €11,604 to €66,760: 14% - 42%
- €66,760 to €277,825: 42%
- €2,77,825 and above: 45%
Taxable income range for married taxpayers:
- €0 - €23,208: 0%
- €23,208 to €133,520: 14% - 42%
- €133,520 to €555,650: 42%
- €555,650 and above: 45%
Additionally, some employees who meet a certain income tax obligation must also pay the 5.5% solidarity surcharge.
Employers must withhold the appropriate amount from employees’ gross payments each month, then submit payment to the appropriate local tax office by the 10th of the following month.
The penalty for a late tax submission in Germany is up to 10% of the assessed tax up to €50,000.Until 2021, when the German Federal Fiscal Court ruled it unconstitutional, 6% interest per annum was assessed on late tax payments. The courts have until July 31, 2022 to decide on a new interest rate.
Social taxes
Germany’s multifaceted social insurance scheme, known as Sozialversicherung, is financed jointly by employer and employee contributions and includes unemployment insurance, healthcare coverage, pensions and long-term care.
Employers in Germany must withhold the appropriate amount and pay social taxes to the federal government. Current contribution rates are as follows:
- Pension: 9.3% each for employees and employers
- Healthcare: 7.3% each for employees and employers
- Long-term care: 1.525% each for employees and employers
- Unemployment: 1.3% each for employees and employers(through 2023)
Workers’ compensation
Employers contribute an average of 1.3% of payroll for workers’ compensation, also known as accident insurance. Rates may vary with the assessment of risk and employees do not contribute to this fund.
Insolvency benefit
Effective for 2023, the insolvency benefit contribution rate for employers is 0.06% of payroll. Effective for 2022, the insolvency benefit contribution rate for employers was 0.09% of payroll.
Benefits tax
Employers have the option to pay a flat income tax rate—typically between 15% to 25%— for services provided to employees, like office outings, transportation, accident insurance and retirement payments.
Updated: December 18, 2023
Employee compensation and benefits in Germany
Most labor-related requirements and benefits in Germany are regulated by the German Trade Union Federation and collective bargaining agreements. The Federal Leave Act mandates time off, such as vacation, maternity, parental and sick leave. These regulatory bodies in Germany have a big impact on the structure of payroll, as they may decide issues related to working decisions, working times and wages.
When processing payroll in Germany, you’ll need to consider the following employment regulations:
Partner with Safeguard Global for your payroll in Germany
Hundreds of organizations depend on our global payroll expertise to ensure their payroll processing is accurate and compliant with local tax and employment requirements.
We support payroll in Germany in various ways: through our employer of record solution, as a local payroll provider for your German operations, and as part of a managed provider solution for your global organization.
As an employer of record in Germany, we handle payroll for your German workers, ensuring accuracy and compliance, while you manage their day-to-day contributions.
As a local provider of payroll in Germany, we can help your German operations:
- Comply with German labor laws and regulations
- Deduct the appropriate tax and social security withholdings
- Ensure your employees in Germany are paid accurately and on time
As a global payroll provider, we offer streamlined processing across countries, currencies, languages and time zones—to help companies gain global visibility to pay data and make smarter workforce decisions.
Whether you need payroll support in Germany through an employer of record, a local provider or as part of a comprehensive global payroll system, contact us to let our experts find the right solution for you.
Disclaimer
The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.