German payslip explained

What's a payslip?

A payslip — or Lohnabrechnung in German — shows you how your wages or salary is structured. You can see what deductions are taken from your gross salary (before-tax income) and what your net salary will be (take-home earnings).

Your income tax (Lohnsteuer) and if you pay the solidarity surcharge (Solidaritätszuschlag from an income over €73.000 per year), and if you are a member of a catholic or a protestant church the church tax (Kirchensteuer) go directly to the tax office.

Your social security contributions including health insurance, pension contributions, nursing care, and unemployment insurance on the other hand will be forwarded to the relevant social insurance institutions.

German Payslip Explained: How to read your Payslip in Germany?

A German payslip is divided into three different sections:

The first section includes important information such as the name and address of you and your employer, a reference number and issuing date, your tax ID and social security number, as well as your job title.

The second section gives you an overview over all the deductions.

In the last section you can find your bank account information, the total net salary paid by the employer, and your statement of earnings.

1. Personal Information

• Arbeitnehmer Nr. or Personal-Nr. – Employee number
• Geburtsdatum – Date of birth
• StKl. (Steuerklasse) – Tax class
• Ki.Frbtr. (Kinderfreibeträge) or ZKF (Zahl der Kinderfreibeträge) -Number of tax exemptions for children (1 per child)
• Konfession or Rel. (Religion) – Religion (RK = Roman Catholic; EV = Protestant; — = No religion)
• Freibetrag or Steuerfr. Bezug (Steuerfreibezug) – Tax-free allowance
• St. Tg. (Steuertage) – Tax days (The relevant time period. For a full month it is usually 30)
• -SV-Nummer (Sozialversicherungsnummer) or RV-Nummer (Rentenversicherungsnummer) – Social security number
• Krankenkasse – Your health insurance fund
• KK % – Your health insurance contribution rate
• Eintritt or Eintrittsdatum – Date of hire
• SV-Tg. (Sozialverischerungstage) – Social security days (The relevant time period. For a full month it is usually 30)
• BGRS or SV Schlüssel / Beitr.gr. (KV/RV/AV/PV) – Social security codes, indicating your level of contribution (1 = full contribution)
• Steuer-ID or Lohnsteueridentifikationsnummer (IdNr.) – Tax ID number
• Url. Anspr. (Urlaubsanspruch) – Vacation days as per contract. By law 20, up to 30 are common
• Url. Tg. gen. (Urlaubstage genehmigt) – Approved vacation days year to date

2. Salary Information

Not all terms listed below will appear on your payslip. Some might only appear on specific months, depending on bonuses, etc.

Earnings

• Brutto Bezüge – Gross earnings
• Bezeichnung – Description
• Gehalt – Monthly base salary
• Geldw. Vorteil or Sachbezug – Non-cash benefits, subject to tax and social contributions
• VL AG (Vermögenswirksame Leistungen Arbeitgeberanteil) – Voluntary employer contribution to savings plan
• Betr. AV or BAV (Betriebliche Altersvorsorge) – Employer contribution to savings plan
• Einmalbezug or Einmalzahlung – One time bonus (e.g. for Christmas, holidays, or achievement)
• Urlaubsgeld – Holiday pay
• Gehaltsumwandlung: Deduction for tax or any other social benefits.
• ST-frei (Steuerfreie Bezüge) – Tax-free benefits
• Gesamtbrutto or Steuer-Brutto – Total gross salary (taxable amount)
• Nettoverdienst or Auszahlungsbetrag – Net salary paid to your bank account listed at the bottom of your payslip

What is the difference between “Lohn” and “Gehalt”?

• Gehalt: Every month the same, not dependant on some form of measurement
• Lohn: Varies every month depending on the measurement (e.g. hours worked, units sold, etc)

3.Taxes and Social security contributions

In Germany you pay social security contributions and taxes from your salary. So, there are around 40% tax deductions. We show you what and how much taxes and further contributions of your salary you are paying.

Taxes

Your employer automatically deducts these taxes from your gross salary and pays them to the German tax authorities (Finanzamt).

• Lohnsteuer (LSt.) – Income tax calculated progressively (14-42%)
• Kirchensteuer (KiSt.) – Church tax based on whether you have a confession (8-9%)
• Solidaritätszuschlag – Solidarity surcharge paid by all states of former West-Germany (max. 5,5%) – from 2021 you only have to contribute if you earn more than 73.000 euros gross per year.
• Steuerrechtliche Abzüge – Sum of all tax reductions

Social Security Contributions

The social security contributions are paid 50% by the employee and 50% by the employer.

• SV (Sozialversicherung) – Social security insurances
• KV-Beitrag (Krankenversicherung) – Contribution to statutory health insurance (14,6% state contribution + 0,69-2,5% contribution for your health insurance fund – TK example)
• PV-Beitrag (Pflegeversicherung) – Contribution to long-term care insurance (2,4 - 4,0%; depending on the number of children)
• RV-Beitrag (Rentenversicherung) – Contribution to pension insurance (18,6%)
• AV-Beitrag (Arbeitlosenverischerung) – Contribution to unemployment insurance (2,4%)
• Zusatzbeitrag – Additional contribution
• SV-rechtliche Abzüge – Sum of all social security reductions, usually 50%
• SV-AG-Anteil (Sozialversicherung Arbeitgeber Anteil) – Sum of all social contributions paid by the employer, usually 50%

Do you earn more than 69,300 € per year?

Then you can switch to private health insurance in Germany and you can benefit from a lot of advantages:

• Tariffs are tailored to the needs of different occupational groups.
• Tariffs can be customized: The chosen tariff can be customized with additional modules to meet your own requirements and wishes.
• Preferred treatment: With private health insurance you benefit from the most advanced treatments and shorter waiting times at the doctor's office. ottonova also offers an appointment service, meaning we book and organize your doctor's appointments for you.
• Contractually agreed benefits: Benefits are not eliminated in old age, whereas this can be the case with statutory health insurance. With ottonova, there are also no tariff-based price/benefit schedules, i.e. no hidden benefit reductions in the event of treatment.

How are my deductions calculated?

In Germany there are around 40% deductions from your gross salary depending on the tax class, health insurance, whether you are paying church tax, and where you are living in Germany. So the actual deductions are very individual.

Your taxes and contributions are calculated as a percentage of your total gross salary (Bruttogehalt).

Your income tax rate normally lies between 15% and 45%. This amount then defines how high your church tax and solidarity surcharges will be.

What is left is the net salary you will receive via wire transfer to your German bank account.

What are the different income tax classes?

In Germany, we have six different income tax classes:

• Income tax class 1: Single person (single, unmarried, widowed, divorced)
• Income tax class 2: Single person with at least one minor child
• Income tax class 3: Married, widowed, or common-law partnerships (only possible in combination with tax class 5)
• Income tax class 4: Married or common-law couples, who both chose tax class 4 (this tax class is ideal for partners earning roughly the same amount)
• Income tax class 5: Married or common-law partnerships, where the other partner files in tax class 3 (the partner who earns less should file in tax class 5)
• Income tax class 6: Person (single, married, common-law partnership) with two or more jobs (the second job always falls into this category)

Do I need to keep the pay slip?

Yes, you need to keep your pay slips. Those documents are essential proof of the number of years you’ve worked and the social security contributions you’ve paid — which is especially important when it comes to your retirement.

In case you are not planning on staying until retirement in Germany you will need your pay slip never the less each year at the time when you file your tax returns.

If you do not receive your pay slip, you are responsible to ask your employer to provide you with your document. They have to keep them for a total of six years—meaning you can still request missing payslips from previous employers.