What Must Be Included in a German Payroll Statement?

In Germany, employers are required by law to provide employees with a detailed payroll statement (Lohn- oder Gehaltsabrechnung) each time they receive payment. This is not only important for transparency but also for legal compliance, as laid out in several regulations, including the Gewerbeordnung (Trade Regulation Act), particularly §108 GewO. Let’s break down the essential elements that must be included in a payroll statement:

Key Components of a Payroll Statement

1. Employee and Employer Information

  • Full name and address of both the employee and the employer.
  • Employee’s identification number or personnel number.
  • Employer’s tax number and social security registration number.

2. Abrechnungszeitraum (Payroll Period)

According to §108 GewO, the payroll statement must specify the exact period for which the wages or salary is being calculated. This is essential for the employee to understand the timeframe covered by the payment.

3. Zusammensetzung des Arbeitsentgelts (Composition of Earnings)

The composition of the employee’s earnings is also required under §108 GewO. This includes:

  • Base salary or wages.
  • Any bonuses, allowances (e.g., shift allowances), and other forms of remuneration.
  • Overtime payments.
  • Benefits in kind, if applicable.

4. Deductions

  • All statutory deductions must be itemized, such as:
  • Income tax (Lohnsteuer).
  • Solidarity surcharge (Solidaritätszuschlag).
  • Church tax, where applicable.
  • Social security contributions, including:
  • Health insurance.
  • Pension insurance.
  • Unemployment insurance.
  • Long-term care insurance.

5. Nettoverdienst (Net Earnings)

The payroll must clearly state the net earnings after all deductions have been made. This is the actual amount that will be transferred to the employee’s bank account.

6. Vorschüsse und Abschlagszahlungen (Advances and Instalments)

Any advance payments or instalments must also be documented, as stipulated by §108 GewO. This ensures clarity about any prepayments made that reduce the final take-home pay.

7. Abzüge (Deductions)

The payroll statement must specify the nature and amount of any deductions made from the employee’s gross pay, including voluntary deductions such as union dues or private pension contributions.

8. Zahlungsart (Payment Method)

Employers must indicate how the salary or wage is being paid, whether by bank transfer or cash.

Legal Basis for Payroll Statements

The legal framework for payroll statements is mainly derived from §108 GewO, which requires employers to issue a comprehensible and accurate breakdown of earnings and deductions. In addition, employers must ensure that the statement contains enough detail to make clear how the final amount paid to the employee is calculated. Failure to comply with these requirements can result in legal consequences, including fines or other penalties.

For more detailed information or personalized advice, contact WW+KN, a Baker Tilly Company, at info@payrollgermany.de. We are here to assist you with all your payroll and tax-related queries.