The payroll taxes in Germany are applied to both employers and employees and are calculated as a percentage of the salaries. Payroll taxes are divided into deductions from the employee’s salary and taxes paid by the employer on the salaries paid to its employees. The deductions applied to German employees are also known as withholding taxes and cover the following:
The taxes applied to German companies are directly linked to the employment of individuals.
German companies are required to withhold the wage tax on a monthly basis and will be considered a prepayment of the income tax. German employees are also allowed to file annual income tax returns. The payroll taxes in Germany depend in the personal income an employee makes on a monthly basis and the tax class the employee opted for.
The social security taxes cover the following contributions:
Other taxes registered in the German payroll system are the accident insurance, the sick pay insurance, the maternity and the insolvency insurances.
These taxes are divided between the employer and the employee. For details information about the percentages applied to each insurance you may refer to our lawyers in Germany.
In order to simplify clients’ company administration process, our lawyers may provide them the following payroll services in Germany:
The German Employment Law also establishes certain regulations with respect to payroll administration, among which the employees’ rights to join an union, a minimum wage depending on the industry and other collective agreements. All these provisions must be taken into account when administering the payroll system. Employers must also take into account the provisions of the German Civil Code and the Industrial Code with respect to wage payments. Due to the complexity payroll administration involves, you may contact our German law firm for specialized services.
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