Germany Payroll Compliance Map

Email: fra4ww@evershinecpa.com
The Engaging Manager from Headquarter
Ms. Anna Wang, Speak German, English and Chinese.
skype: burlinna

WWT – Germany Payroll Income Tax Deduction

WWT-DE-01 WWT Tax Entity

Question from client:
Is the German salary income tax levied in federal or state? Or both federal and state?
Are the federal and state personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
Wage tax in Germany is administered by the Federal Ministry of Finance (BMF) and payable to the local state tax office, which collect on behalf of the federal government.
There are no local or state income taxes levied in Germany.
Income tax rates are levied on a progressive scale, rates range between 0-45%.

2022 Federal tax brackets are:

Employers also are responsible for withholding a mandatory solidarity tax, which for most individuals is a tax of 5.5% assessed on total income tax obligations rather than total taxable income.

WWT-DE-02 Registration

Question from client:
The German salary income tax collection is under the jurisdiction of which government unit?
The registration of the Germany salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate?
What is the advance certificate number of the number? Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
PAYG – wage tax, administered by Federal Central Tax Office, pay to Local State Tax Office.
Employers are required to register with their local tax office if they meet any of the following criteria:

• Were established with the intention of making a profit.
• Represent a share in generic economic transactions.
• Were established separate from self-employed or freelance work; or
• Were established separate from the agriculture and forestry industry.

The registration period for the payroll tax is generally a calendar month.
The tax office will provide a tax number, which will then be used to file information regarding the employer’s fiscal situation and turnover/profit expectations.
To Register, https://www.elster.de/eportal/registrierung-auswahl

WWT-DE-03 WWT Order (OD)

Question from client:
What is the order of Germany salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?
Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Same Period (SP) – Declaration and payment are due by 10^th of the following month.

WWT-DE-04 Mechanism of Filing (MOF)

Question from client:
Germany salary income tax withholding declaration (information flow determines the tax base)
What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Website URL?

Answer from Evershine RD:
Employer is required to withhold wage tax monthly from an employee’s income and remit it to the tax authorities by 10^th of the following month.

Wage tax certificates must be transmitted electronically and be authenticated by the employer.
Germany mandates the use of an online financial services tool – called Elster Online – to process employee and employer tax filings.
Employers access the website and download the requisite program software.

WWT-DE-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the Germany salary income tax withholding payment (funding flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
The employer is required to withhold wage tax monthly from an employee’s income and remit it to the tax authorities by 10^th of the following month.
Germany mandates the use of an online financial services tool – called Elster Online – to process employee and employer tax filings and payments.
Employers access the website and download the requisite program software.

BNF – Deduction of Employee Social Welfare

BNF-DE-01 BNF Entity

Question from client:
Germany’s social insurance, medical insurance, pensions and other employee social welfare levy, is it Federal?
Is it states? Or is there a federal plus states? If there is a federal and states, are they levied separately?
or levied together? What is the withholding tax rate?

Answer from Evershine RD:
Employee social security is levied at states level.
Below are the social security rates for the States of Hesse.

BNF-DE-02 Registration

Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?
Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country?
Paper certificate number application? Or an online account application? Website?
Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:
The social security system in Germany is administered by the German Pension Insurance Agency.
Companies use payroll programs that are approved for data exchange with health insurance companies, or use the form provided by the health insurance companies to fill out the form.
You need the company number to uniquely identify your employing company when you register your employee at the start of employment.
You can find out more in the company number profile .
As an employer, you must register with the accident insurance institution responsible for your company and receive your UV membership number from there.
You can find out how and where you can register in the UV membership number profile.

The employers’ liability insurance association also informs the companies belonging to them of the hazard tariff points, about the significance of which the hazard tariff point information sheet provides information.
You need both details together with the company number of the accident insurance institution both for your electronic wage statement for accident insurance and for the annual UV reports.

BNF-DE-03 BNF Order (OD)

Question from client:
What is the order of the withholding declaration of social welfare for German employees (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pays? At the same time as the declaration and payment?

Answer from Evershine RD:
Same period: Report and pay at the same time.

BNF-DE-04 Mechanism of Filing (MOF)

Question from client:
What is the method of reporting for withholding of social benefits for German employees (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist? If electronic filing is possible: Web site URL?

Answer from Evershine RD:

File remittance voucher with method of remittance (payment).
Employers are responsible for registering their employees in compulsory health insurance and withholding social insurance taxes each month for remittance to the employees’ health insurer, which collects on behalf of the federal government and remits to various other compulsory social insurance funds.

BNF-DE-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for German employee social welfare withholding contributions (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or do the above methods coexist?

Answer from Evershine RD:
Payment and reporting obligations vary according to the specifications of each employer, including whether they are German or foreign and the residency status of their employees. Monthly wage tax filings are due on the 10th day of the following month.
Wage-tax certificates must be transmitted electronically through the ElsterOnline webpage and authenticated by the employer. Individual tax returns are filed for earnings across a full calendar year—Jan. 1 to Dec. 31—and are due by May 31 of the following year.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Frankfurt Evershine BPO Service Limited Corp.
Email: fra4ww@evershinecpa.com
The Engaging Manager from Headquarter
Ms. Anna Wang, Speak German, English and Chinese.
skype: burlinna

or
For investment structure relevant to multi-national tax planning and Financial & Legal Due Diligence for M&A (Merge and Acquisition), send an email to HQ4fra@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
LinkedIn address:Dale Chen

Additional Information

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(version: 2024/07)

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