Germany Global Payroll and Tax Information Guide

Last updated in September 2025.

Germany, officially the Federal Republic of Germany, is Europe’s most populous EU member state. Managing payroll here involves navigating progressive income tax, social security contributions, minimum wages, collective agreements, and federal and state-level regulations.

Key Facts

• Currency: Euro (EUR)

• Payroll Frequency: Monthly

• Tax Year: January 1 - December 31

• Official Language: German

• Minimum Wage (2025): €12.82/hour (national), industry-specific rates may be higher

Income Tax

Germany employs a progressive income tax system with the following brackets:

• Church Tax: 8–9% of income tax if registered with a religious community

• Solidarity Surcharge: 5.5% on income tax

Foreign workers are taxed the same as residents.

Social Security

Social contributions cover:

• Retirement Pension Insurance: 18.6%

• Health Insurance: 14.6% (general rate), with an average additional contribution of 2.5%

• Long-Term Care Insurance: 3.6%

• Unemployment Insurance: 2.6%

• Accident Insurance: Varies by industry

• Contributions are shared between employer and employee (around 20–22% total).

• Rates are adjusted annually.

Minimum Wage

• National Minimum Wage: €12.82/hour

• Industry Agreements: May specify higher wages

Working Hours & Overtime

• Standard Workweek: 38–40 hours

• Maximum: 48 hours including overtime

• Overtime: Paid if specified in contracts or CBAs

Paid Leave

• Annual Leave: 20–30 days depending on employment agreement or CBA

• Sick Leave: Employer covers first 6 weeks at 100% salary; thereafter health insurance applies

• Maternity Leave: 6 weeks pre-birth, 8 weeks post-birth (full pay)

• Paternity & Parental Leave: Dependent on collective agreements and employer policies

Public Holidays

• National Holidays: Nine observed in all federal states, e.g., New Year’s, German Unity Day, Christmas Day

• State-Specific Holidays: Additional holidays may apply

Corporate Tax

• Federal Corporate Tax: 15% + 5.5% solidarity surcharge = 15.825%

• Trade Tax: 7–20.3% depending on municipality

• Combined Rates: Approx. 30–33% for corporate profits

Withholding Tax

• Applies to: Non-residents and certain employees

• Rates: Depend on income, marital status, and tax class

VAT

• Standard Rate: 19%

• Reduced Rates: 7% (certain goods and services)

Collective Bargaining Agreements (CBAs)

• Influence: Salaries, leave, working hours, and benefits

• Consideration: Employers must consider CBAs in payroll calculations

Payslip Requirements

Payslips must include:

• Gross and net salary

• Tax and social security deductions

• Hours worked

• Bonuses, allowances, and overtime

Summary

Managing payroll in Germany in 2025 requires compliance with tax, social security, and labor regulations, including federal and state-specific rules. Payslip’s Global Payroll Control Platform streamlines payroll operations, automates deductions and validations, and integrates seamlessly with local payroll providers.