SHARE
COPY LINK
For members

TAXES

EXPLAINED: How to understand your German payslip

Everyone looks forward to getting their salary each month - but if you're employed in Germany, you may be wondering why half of it appears to be missing. Here's how to understand your payslip and what tax deductions you can expect.

Money lies on top of a German payslip.
Money lies on top of a German payslip. Photo: picture alliance / dpa | Arno Burgi

If you’re an employee in a German company or organisation, it’s very likely that you’ll receive your wages once a month – usually around the end of the month but your bosses should tell you the exact date of payment when you start working there. 

You should also receive a payslip (die Gehaltsabrechnung or Lohnabrechnung) that details how much will be going into your bank. 

Your name, address and tax identification number (Steuer ID) should be on the slip. You’ll also find your Krankenkasse (health insurance organisation) and your Sozialversicherungsnummer  or SV-Nummer (social security number) on it, as well as the month you’re being paid for. 

You may also see some other information on there that’s used to identify you, but isn’t too important for you to take note of. The first is the Arbeitnehmer-Nr. or Personal-Nr., which is your employee reference number within the company, and the second is Eintritt or Eintrittsdatum, which should refer to your starting date at the company. 

The information to pay most attention to on your payslip is your salary information and any deductions. With so many different types of tax and insurance to pay, an average worker in Germany will see about 40 percent of their salary deducted – though there are some good reasons for this, which we’ll go into below. 

Here’s a breakdown of what to expect:

der Betrag / die Brutto Bezüge: 

This section refers to your gross salary before tax and other deductions. Here, you’ll see the magical amount you were promised when you first took on your job. Be prepared to see it slowly but surely evaporate due to the contributions below.

die Lohnsteuer 

This is essentially an advance payment of your Einkommensteuer (income tax) each month. It’s collected at source and paid directly to the Finanzamt (tax office) by an employer.

Of course, Lohnsteuer doesn’t take into account any work-related expenses or other tax deductions you may have, which is why it can be worth doing a tax return at the end of the year and why doing so often leads to a rebate.

Since Germany has a progressive tax system, the amount you pay in income tax is linked to how much you earn. Basically, the higher you earn the more you pay.

The good news is that everyone is given a tax-free allowance, which you may see detailed on your payslip under Freibetrag or Steuerfreibezug. As of 2022, this is €9,984 for individuals and €19,968 for couples who choose to submit a joint income-tax assessment.

For everything over that, you’ll pay between 14 and 42 percent income tax on any earnings up to €277,826. All earnings above this whopping figure will be taxed at 45 percent. 

READ ALSO: Everything you need to know about your German tax return in 2022

die Rentenversicherung

Pension insurance amounts to a massive 18.6 percent of your salary, but you don’t have to pay this all yourself. Your employer pays half and you pay half (9.3 percent each).

This is due to remain the same in 2022, though the government does plan to increase contributions in stages to reach 20 percent of earnings by 2025. That means 10 percent paid by you, and 10 percent paid by your boss.

To try and cope with changing demographics and an ageing population, the traffic-light coalition is also trying to find new ways to make the money stretch further.

Since ever fewer people are paying into the pot and every more are drawing out of it, the government wants to invest some of the money into lower-risk stocks.

That means that two percent of your contributions will be put into an equity pension pot, while the rest will be put in the usual pay-as-you-go pension. 

An elderly couple sit together on a bench in Kiel

An elderly couple sit together on a bench in Kiel. Photo: picture alliance/dpa | Marcus Brandt

READ ALSO: How to maximize your German pension – even if you plan to retire elsewhere

If you are working full-time in Germany, even on a temporary basis, pension contributions tend to be non-negotiable and are required by law.

die Krankenversicherung (KV)

This is the amount you pay for your health insurance each month.

You’re likely have chosen a public health provider such as TK or AOK when you moved to Germany or before taking your first job.

The general contribution rate for these public insurance contracts is 14.6 percent of your wages, with the employer and employee each paying half (so 7.3 percent each). If your contract doesn’t entitle you to sick pay, the contribution will be set at 14 percent.  

Public insurance companies can also choose to set an additional contribution of up to 2.5 percent, which they may justify with the offer of additional services or better coverage. 

If you are privately insured, the system works slightly differently. 

Your monthly premiums will be calculated as a flat fee according to your tariff rather than a percentage of your wages. This can often make it cheaper for high earners in the short-term – though costs can shoot up in the event of illness or as you get older. 

READ ALSO: Reader question: How can I change my German health insurance provider?

die Pflegeversicherung

As another way of putting money aside for a rainy day, you’ll also see a mention of ‘Pflegeversicherung’, or long-term care insurance, on your payslip. This amounts to 3.05 percent of your gross income if you have children, or 3.40 percent of your income if you don’t. 

Once again, the contributions for this are split between you and your employer, so in reality half of this amount comes out of your salary. 

Long-term care insurance means in theory that should you require care at any point in your life, such as assistance with shopping or live-in care in your old age, you should be able to get it.

An elderly woman waits for a lift in Berlin

An elderly woman waits for a lift in Berlin. Photo: picture alliance / Britta Pedersen/dpa-Zentralbild/dpa | Britta Pedersen

die Arbeitslosenversicherung

You pay unemployment insurance in case you lose your job. Contributions are currently at 2.4 percent, of which your employer pays half.

This gives you the right to claim 60 percent of your previous salary from the job centre for a year while you look for another job. This is known as Arbeitlosengeld I.

The only requirement for receiving this money is that you have been in a job which is subject to compulsory insurance payments for 12 of the last 24 months. There are also allowances made if you have had to take time off work to care for a newborn child or because you were sick.

If you are still unemployed after a year you move into Arbeitslosengeld II, known as Hartz IV.

READ ALSO: 10 golden rules to know if you lose your job in Germany

die Kirchensteuer

Church tax, or Kirchensteuer, is a tax that religious groups charge their members to finance their institution, staff and the upkeep of buildings like old churches. When you register at your first address in Germany, you’ll be asked to state your religion on the Anmeldeformular. Your local tax authority collects this tax and passes it onto the church while retaining a service fee.

How much church tax you pay depends on your income and where you live. In Bavaria and Baden-Württemberg the rate is eight percent of income tax, while in other states it is nine percent.

The good thing is that this tax is voluntary so you don’t have to pay it if you’re not religious, though there is anecdotal evidence of the church trying to find out whether or not an “atheist” foreigner has in fact been baptised elsewhere, which can lead to issues if you were once a practicing church-goer but aren’t anymore.

It’s worth also noting that opting out of the tax – and, by extension, affiliation with the church – may have ramifications for potential religious weddings, which you can find out more about below. 

READ ALSO: EXPLAINED: The rules foreigners should know on German church weddings

Churchgoers in North Rhine-Westphalia

People take their seats at a service at St. Peter’s church in Recklinghausen, North Rhine-Westphalia. Photo: picture alliance/dpa | Caroline Seidel

der Solidaritätszuschlag

The ‘Soli’ or ‘solidarity charge’ was introduced as a special ‘tax’ in 1991 mainly for infrastructure and projects in eastern Germany after German reunification in 1990.

It used to be paid by pretty much everyone, but over the past few years this has been changed and now only the top 3.5 percent of earners are still expected to pay it. 

That means it only applies to you if you’re lucky enough to be earning more than €96,800 as an individual or more than €193,600 as a married couple. In this case, it’s calculated rather confusingly at 5.5 percent of your Lohnsteuer, so someone who pays €3,000 a month in income tax would pay an additional €165 as a solidarity charge. 

Here are some useful words or abbreviations that might appear on your payslip:

der Auszahlungsbetrag – the total amount you receive

Brutto – the German word for ‘gross’, i.e. the amount prior to calculation and deduction of tax.

Netto – the amount of wages you receive after tax.

Netto Verdienst – net or total earnings

SV-AG Anteil or Sozialversicherung Arbeitgeberanteil – employer’s contribution to social security

Steuerrechtliche Abzüge – tax deductions

die Betriebsrente – company pension

KK % – the contribution rate for your Krankenkasse (health insurance provider)

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

WORKING IN GERMANY

EXPLAINED: How employees in Germany can take twice as many holidays in 2023

2023 comes with an especially large number of public holidays falling during the week. Here's what they are and how to make the best of them.

EXPLAINED: How employees in Germany can take twice as many holidays in 2023

Overall 2022 has not been the best year for both national and state public holidays in Germany, with several falling on the weekend. Even the upcoming Christmas Eve and Christmas Day are, respectively, on a Saturday and Sunday. 

But employees can rejoice in 2023: with the exception of New Year’s Day, which falls on a Sunday, most public holidays in Germany take place during the week. 

And because several fall on a Thursday or Tuesday, people in Germany have the chance to take more Brückentage, or bridge days, so that one vacation day can make a four-day weekend. 

Or in some cases, when public holidays fall on a Monday and Friday, for example, employees can take three days off of work in order to have nine work-free days.

READ ALSO: Vacation days in Germany: What to know about your rights as an employee

The German travel website travelcircus found that employees with an average of 25 vacation days can squeeze out up to 61 days of vacation using Brückentage.

Off to a good start in the New Year

New Year’s Day 2023 falls on a Sunday, but if you live in the right state, you can look forward to nine days off with four vacation days. You will benefit if you live in Bavaria, Saxony-Anhalt or Baden-Württemberg – as there is a day off in these states on January 6th, for the Epiphany – also called Three Kings Day. 

READ ALSO: Three Kings Day: What you should know about Germany’s public holiday in three states

Employees can apply for vacation from January 2nd to 5th – provided, of course, that you work a regular five-day week from Monday to Friday. If you have taken too little vacation during 2022, then you may be able to carry the remaining vacation with you into the next year. 

Typically, German employers allow employees to carry five days over into the next year. 

Extra time over Easter

Want to take half of April off, but just use up eight vacation days? Simply submit a request from April 3rd to 6th (as Easter Friday falls on the 7th), and then again April 11th-14th following Easter Monday on April 10th.

Many May holidays

For the first time in two years, Labour Day – on Monday, May 1st –  again falls on a weekday in 2023.

With four vacation days, you can enjoy nine work-free days at the beginning of the month. 

If you are holding out for nicer weather, you can save up those days for Ascension Day (or Christi Himmelfahrt in German) on May 18th or Whit Monday on May 29th. With four vacation days you’ll take advantage of nine days off at the end of May, or with six vacation days you can extend that to 12 whole days.

Tourists Saxon Switzerland

Tourists admire the view in Saxon Switzerland, one of Germany’s top tourist attractions. picture alliance/dpa/dpa-Zentralbild | Sebastian Kahnert

Extra long weekend in June

If you live in Bavaria, Baden-Württemberg, Hesse, North Rhine-Westphalia, Rhineland-Palatinate or Saarland, you can take a long weekend off with one vacation day. The reason? Corpus Christi (or Fronleichnam in German) on June 6th. Workers from other states will have to make do without public holidays in June. 

READ ALSO: Fronleichnam: What you should know about the public holiday

In July, Germany as a whole is short of public holidays, and on August 15th, people from Saarland and Bavaria each get a day off. 

Those who live in Augsburg can look forward to a free day – August 8th is the Peace Festival, which is a holiday only in Augsburg.

Two long weekends in October

German Unity Day falls on Tuesday, October 3rd, so if you take Monday off, you’ll have a long weekend. 

The same possibility is offered at the end of October. Reformation Day – which is celebrated in about half of Germany on October 31st – also falls on a Tuesday, so you could take a long weekend off there as well.

Ample holiday time over Christmas 2023 

Christmas Day and Boxing Day in 2023 fall on a Monday and a Tuesday, which means that with three vacation days you can experience ten whole days off.

And the next year will be off to an even better start: New Year’s Day 2024 falls also falls on a Monday. 

What are Germany’s public holidays in 2023?

New Year’s Day (national): Sunday, January 1st

Three Kings Day (Bavaria, Baden-Württemberg, and Saxony-Anhalt): Friday, January 6th

International Women’s Day (Berlin): Wednesday, March 8th

Easter Friday (national): April 7th

Easter Monday (national): April 10th

Labour Day (national): Monday, May 1st

Ascension Day/Christi Himmelfahrt (national): Thursday, May 18th

Whit Monday (national): Monday, May 29th

Corpus Christi/Fronleichnam (Baden-Württemberg, Bavaria, Hesse, North Rhine-Westphalia, Rhineland-Palatinate, Saarland, Saxony and Thuringia): June 8th

Assumption Day/Mariä Himmelfahrt (Bavaria and Saarland): Tuesday, August 15 

World Children’s Day/Weltkindertag (Thuringia): Wednesday, November 20th

Day of German Unity (national): Tuesday, October 3rd

Reformation Day (Brandenburg, Hesse, Mecklenburg-Western Pommerania, Bremen, Hamburg, Lower Saxony, Saxony, Saxony-Anhalt, Schleswig-Holstein and Thuringia): Tuesday, October 31st 

All Saints Day (Baden-Württemberg, Bavaria, North Rhine-Westphalia, Rhineland-Palatinate and Saarland): Wednesday, November 1st

Buß- und Bettag (Saxony): Wednesday, November 22nd

Christmas Day (national): Monday, December 25th

Second Day of Christmas (national): Tuesday, December 26th

SHOW COMMENTS