Payroll in Germany: What International Companies Need to Know

Payroll in Germany is one of the most structured and regulated systems in Europe, and international companies need to understand its basics before hiring. From monthly pay cycles to detailed tax and Social Security deductions, getting payroll right is critical for compliance and employee trust.​

How and when employees are paid

In Germany, payroll is typically run monthly, with net salaries paid by the last working day of the month. There is no general legal requirement for a 13th or 14th month salary, although some employers offer extra payments under collective agreements or company policy.​

Wages must be paid in euros, and many industries have minimum wage levels or collective agreements that influence pay structures.International employers, therefore, need to budget in euros and be prepared for local expectations around pay dates and guaranteed allowances.​

Core components of Germany payroll

At a basic level, payroll in Germany starts from the employee’s gross salary and then applies a series of statutory deductions and employer contributions. On the employee side, payroll must withhold income tax at progressive rates, the solidarity surcharge, the church tax (where applicable), and the employee share of social security.​

On the employer side, companies contribute to health insurance, pension, unemployment, and long-term care insurance, with percentages and thresholds set by law and updated regularly. Because Germany payroll includes multiple taxes and social contributions, accurate gross‑to‑net calculations are essential for budgeting and offer design.

Payslips, reporting, and digital processes

Germany payroll rules set out specific requirements for payslip content and reporting. Payslips must show gross salary, each deduction, employer contributions, net pay, payment date, tax class, and key identification numbers. Many authorities also expect payroll data to be submitted electronically through certified interfaces each month.​

Recent changes have pushed further digitization, including wider use of electronic payslips and more automated reporting workflows.International employers running their own Germany payroll must ensure their software and processes meet these standards or work with a local partner who does.​

Compliance risks for foreign employers

Foreign companies employing staff in Germany face the same payroll obligations as local employers and must stay on top of annual change sin tax bands, contribution rates, and reporting rules. If you are running Germany payroll from abroad, it is especially important to track filing deadlines and payment dates closely to avoid penalties and interest.

Running Germany payroll also intersects with employment law, data protection, and correct worker classification. Misclassifying contractors, mishandling employee data, or ignoring local labor law requirements can turn what appears to be a simple payroll issue into a broader compliance problem.​

Using an EOR to manage Germany payroll

Because Germany payroll is so detailed, many international companies choose to run it through an Employer of Record instead of building local expertise in-house. Under Agility’s Employer of Record solution in Germany, Agility becomes the legal employer, calculates payroll, withholds tax and contributions, issues payslips, and pays both employees and authorities on schedule.​

For multinational firms, this also supports global payroll integration: Germany payroll can be linked into a single international view, alongside other countries, with consistent reporting and controls, while still respecting local rules. This approach reduces local risk and internal admin, especially for smaller German teams or early-stage market entries.​