PAYROLL FAQS
FAQs for Payroll in Germany
Payroll involves the calculation and distribution of wages and salaries to employees, including the deduction and payment of taxes and social security contributions. It encompasses tasks such as employee registration, monthly payroll processing, tax filing, and reporting to authorities.
Employees must provide:
- Electronic income tax withholding features (ELStAM)
- Tax identification number and date of birth
- Social security card
- Health insurance membership certificate
- Residence and work permits (for foreign employees)
- Documents for capital-forming benefits (if applicable)
- Certificate of vacation already granted or compensated during the current year (if applicable).
Employers are required to withhold wage tax from employee wages and report it to the tax office. They must electronically retrieve the necessary income tax characteristics from the ELStAM database and maintain payroll records for six years. In addition to income tax, employers must also withhold and pay the solidarity surcharge and church tax if applicable.
Employers must register their employees with the relevant health insurance provider and manage the contributions to health, pension, unemployment, and long-term care insurance. These contributions are shared between the employer and employee. Geringfügig (minijob) employees must be registered with the Minijob-Zentrale.
All employees must be registered with the relevant trade association for accident insurance („Berufsgenossenschaft“, e.g. Verwaltungsberufsgenossenschaft). This insurance is mandatory and provides coverage for workplace accidents and occupational diseases.
Certain industries, such as construction and hospitality, must submit immediate electronic reports to the pension insurance data center when employment begins („Sofortmeldepflicht“). Employers in these sectors must also inform employees about the obligation to carry identification documents.
At WW+KN, we utilize DATEV eG, the leading payroll software in Germany, ensuring secure and precise payroll processing. We provide payroll reports in both German and English and can offer electronic data through interfaces for seamless integration with your systems. There are also other, smaller software providers in the market.
Yes, as a member of Baker Tilly, we have access to experienced employment lawyers who can assist with drafting employment contracts, handling terminations, managing labor court proceedings, and providing legal clarifications and registrations.
- Monthly Payroll Calculations: Includes gross salary calculation, tax deductions, social security contributions, and net salary payments.
- Annual Payroll Reconciliation: Ensures that all taxes and contributions have been accurately calculated and paid throughout the year.
- Tax Filing: Employers must file income tax and social security contributions with the relevant authorities electronically via ELSTER.
- Record Keeping: Employers are required to keep payroll records for six years, including pay slips, tax declarations, and social security reports.
Employers must comply with various legal requirements, including maintaining accurate payroll records, submitting DEÜV reports for social security contributions, and adhering to the guidelines set out in the Gewerbeordnung, Entgeltbescheinigungsverordnung, and Lohnsteuer-Durchführungsverordnung.
The payroll process is subject to regular audits by the tax office and social security agencies. These audits ensure that employers are correctly calculating and paying taxes and social security contributions, and maintaining proper records.
Employers must submit payroll taxes monthly, quarterly, or annually depending on the total amount of payroll taxes due. Monthly submissions are required if the amount exceeds a certain threshold.
The Betriebsnummer is a unique company number required for reporting to health insurance providers and other social security institutions. It is necessary for all payroll-related reporting.
Failure to comply with payroll regulations can result in significant penalties, including fines and interest on overdue payments. Employers may also face audits and inspections by regulatory authorities.
Outsourcing payroll can save time and resources, ensure compliance with local regulations, and reduce the risk of errors. It allows businesses to focus on core activities while experts handle payroll processing.
Lohn: Wages that vary based on hours worked or output produced, typically used for hourly workers.
Gehalt: A fixed salary paid regularly, regardless of hours worked or output, typically used for salaried employees. The type of remuneration impacts payroll processing complexity and record-keeping.
To engage WW+KN, the best approach is to send an email outlining your needs and exchanging initial information. This allows us to understand your requirements and provide tailored solutions.
Yes, as a member of Baker Tilly, WW+KN has access to a global network of partners in 145 countries, enabling us to coordinate and manage payroll services worldwide.
WW+KN, through its affiliation with Baker Tilly, has specialized employment lawyers available to assist with drafting employment contracts, handling terminations, managing labor court proceedings, and providing legal advice on employment matters.
If you are interested in collaborating with us or have further questions, please feel free to send us an email at info@payrollgermany.de