Germany Payroll Guide
HR & Payroll in Germany
Good to know
- Local currency: Euro (EUR)
- Minimum Salary: 12.82€ gross per hour (since Jan 1, 2025).
- Tax Year: 1st January – 31st December
- Legal working hours: 40 hours for a 5-day week / 48 hours for a 6-day week.
About Germany
Germany is seen to be one of the world’s most welcoming countries for businesses looking to expand into their market. It is Europe’s largest economy and offers employers access to a well-educated workforce.
The country offers many benefits for businesses, but for any business looking to expand to Germany, it can be a complicated and time-consuming process to keep up with its legislations for Payroll and HR.
Are you looking to settle in Germany? Do you need help with payroll or human resources management?
Our German payroll and HR experts will provide you with a fast and accurate service in full compliance with local legislation.
German Income Tax (Einkommensteuer) Wage tax calculation is based on the German income tax law (“EStG Einkommenssteuergesetz” in German) together with wage tax regulations (“LStR -Lohnsteuerrichtlinien” in German). In Germany, income tax is progressive, and its rate varies according to the taxable income of the taxpayer. This means that with every Euro the employee earns more, the income tax percentage is increasing — taxation is increasing smoothly in the lower area of in- come and is increasing even more in the higher area of income. The tax rates vary between 14% and 45%, starting at 14% on earnings currently higher than EUR12,096 per annum and ends at the top income tax rate of 45% with a solidarity surcharge of 5.5% (which is equal to an effective 47.48%) on earnings higher than EUR277,826 per annum. For a couple or a family, the rate is doubled. There are no fixed percentages for wage taxes but there are tax brackets, the list below defines the 6 different tax classes which are based on the employee’s marital and family status.
Wage tax class 1 ( Steuerklasse 1) – granted to single people (or married people, who live separately)
Wage tax class 2 ( Steuerklasse 2) – granted to single people, who have at least one child.
Wage tax class 3 ( Steuerklasse 3) – granted to married people if the spouse is accepting wage tax class 5.
Wage tax class 4 ( Steuerklasse 4) – granted to married people if the spouse is accepting wage tax class 4.
Wage tax class 5 ( Steuerklasse 5) – granted to married people if the spouse is accepting wage tax class 3.
Wage tax class 6 ( Steuerklasse 6) – granted to all people who work for more than one employer at the same time.
Solidarity Surcharge (Solidaritätszuschlag)
Taxpayers also has to pay solidarity surcharge which is a tax that corresponds to 5.5% of the income tax. From 2021, the solidarity surcharge is no longer valid for middle and lower incomes so that up to an annual wage tax amount of EUR 19.950 for single people and EUR 39.900 for married, no solidarity surcharge will be due in the future.
Church Tax (Kirchensteuer)
In Germany, anyone who is declared to be a member of the Catholic or Protestant faith must pay a church tax. The rate of tax is either 8 or 9% of the income tax, depending on the federal state in which you live.
| Taxable income for a single employee | Taxable income for a couple/family | Amount |
|---|---|---|
| 0 to 12.096 € | 0 to 24.192 € | 0% |
| 12.096 € to 68.429 € | 24.192 € to 13.,858 € | 14% to 42% |
| 68.430 € to 277.825 € | 136.860 € to 555.650 € | 42% |
| 277.826 € and above | 555.652 € and above | 45% |
Social security contribution in Germany
The social security contribution (Payroll contribution) in Germany consists of 5 insurance branches
Health Insurance (Sickness and maternity),
Pensions (Old age, disability, death),
Unemployment,
Workplace accidents,
Long-term care insurance.
| Contributions | Employer | Employee |
|---|---|---|
| Health insurance (14.6%) | 7,3% (1) | 7,3% |
| Pension (Old age, disability, death) (18.6%) | 9,3% | 9,3% |
| Unemployment (2.4%) | 1,2% | 1,2% |
| Workplace accidents | % based on the industry and the risk | – |
| Long-term care insurance (3.05) | 1,525% (2) | 1,525% (2) |
| Insolvency contribution | 0.15 (3) | – |
| Total (excluding workplace accidents) | Around 21 % | Around 20% |
- (1) When it comes to the 14.6% standard contribution rate for statutory health insurance (and the Zusatzbeitrag) in Germany for 2025, the contributions are applied up to an annual income ceiling of EUR 66.150. Any income exceeding this amount is not subject to these contributions.
- (2) An additional contribution of 0.35% for long-term care insurance is paid by insured persons without children, aged 23 or older.
- (3) Insolvency contribution only payable by the employer amounts to 0.15%, up to the income ceiling of EUR 84.600 annually (EUR 81,000 in the new federal states).
Collection
The health insurance companies are responsible for collecting contributions for all branches except accident insurance. The contributions for workplace accidents are to be paid to the competent Berufsgenossenschaft according to the sector of activity of the company.
Our HR & Payroll Experts are Ready to Help
Payroll and HR are different in each country and to each business. Trust one of our local experts to ensure your company’s compliance in Germany.
Our Payroll and HR services in Germany
- Implementation and testing of the software
- An understanding of your individual business payroll processes
- Online payslips & payments
- A dedicated payroll expert
- Data entry & processing
- Payslip distribution
- Personnel & document production
- Legislation compliance
- Highly secure
- I am ready for my German HR & Payroll Expert
Sources: https://www.deutsche-rentenversicherung.de/DRV/EN/Versicherung/versicherung_node.html
- https://taxsummaries.pwc.com/germany/individual/other-taxes
- https://www.deutsche-rentenversicherung.de/SharedDocs/Downloads/DE/Broschueren/international/willkommensflyer_pdf_text/englisch.pdf?__blob=publicationFile&v=1
- https://www.tk.de/firmenkunden/versicherung/beitraege-faq/zahlen-und-grenzwerte/beitragsbemessungsgrenzen-2033026?tkcm=ab
- https://www.bmas.de/DE/Service/Gesetze-und-Gesetzesvorhaben/sozialversicherungs-rechengroessenverordnung-2025.html
- https://www.cleiss.fr/docs/cotisations/allemagne.html
- https://grenzinfo.eu/en/increase-in-the-minimum-wage-in-the-netherlands-and-germany-as-of-1-january-2025/
- https://www.deutsche-rentenversicherung.de/DRV/EN/Versicherung/versicherung_node.html
- AI: https://gemini.google.com/app/27dcd14bda0e105c