Cost of Hiring in Germany Through an Employer of Record

For international companies, the cost of hiring in Germany through an Employer of Record is often the most predictable way to price local headcount. Instead of building your own entity and HR team, you pay a single monthly fee that covers gross salary, employer taxes and social contributions, plus the EOR fee.​

Salary levels as the starting point

Any cost calculation for hiring in Germany through an Employer of Record begins with the correct gross salary for the role. Germany has a statutory minimum wage, and many roles are influenced by collective agreements or strong market expectations, particularly in skilled and technical sectors.​

As an international employer, you need to align German salaries with your global bands and local expectations. Agility’s Employer of Record in Germany page and cost tools help you understand the total employment cost for German hires before you commit.

Employer social contributions and non-wage costs

The next part of the cost of hiring in Germany through an Employer of Record is statutory employer social‑security contributions. Employers must contribute to health, pension, unemployment, and long-term care insurance, usually on a roughly 50:50 basis with employees, up to capped thresholds. Mandatory employer contributions could add approximately 19–22% to gross salary, depending on income and insurance choices.​

Beyond this, German employers also face non-wage labor costs such as accident insurance, continued salary during sickness, and the administration of generous vacation and family‑leave entitlements. When you work with an EOR, these statutory costs are calculated and applied on your behalf and are usually itemized as part of the overall employment cost.​

Payroll taxes, withholdings, and gross‑to‑net

While income tax is borne by the employee, employers are responsible for withholding and remitting wage tax through the payroll system.As part of the cost of hiring in Germany through an Employer of Record (EOR),the EOR handles the full gross-to-net process—applying progressive income tax bands, the solidarity surcharge, the church tax (where applicable), and employee social security contributions.​

From your perspective, you see a clear breakdown between total employer cost and the employee’s net pay, but you do not need to build internal expertise in German tax or payroll software. That makes budgeting and forecasting easier, especially when you are adding only a handful of German roles to a wider international team.​

EOR fees and how they sit on top

The final element in the cost of hiring in Germany through an Employer of Record is the EOR fee itself. This fee is typically added to salary and statutory employer costs and covers local contracts, onboarding, payroll processing, statutory filings, HR support, and ongoing compliance monitoring.​

Fee structures vary by provider and headcount but are typically either a fixed amount per employee or a percentage of payroll, agreed upfront to keep costs predictable. Agility’s Employer of Record service in Germany consolidates salary, employer contributions, and professional fees into a single monthly invoice, giving you a clear total cost per employee without hidden local charges.​

Comparing EOR cost to direct hiring

When evaluating the cost of hiring in Germany through an Employer of Record, it is useful to compare it with building your own German entity. Direct hiring can reduce per-employee costs once you have a larger, stable team, but it requires upfront incorporation, ongoing local compliance, and internal HR and payroll capacity.​

By contrast, an EOR may add a service fee but removes entity setup costs and spreads local expertise and systems across many clients, which is often more economical for smaller or test teams. It also avoids the risk and expense of misclassification if you were otherwise tempted to rely heavily on contractor arrangements rather than proper employment.​

How Agility helps you model the cost of hiring in Germany

Agility EOR’s Employer of Record in Germany page includes tools and guidance to model the full cost of hiring in Germany through an Employer of Record for a given gross salary. By sharing a gross salary with the cost calculator, you receive an indicative breakdown of employer social contributions, total employment cost, and how an EOR fee can be consolidated into a single monthly charge.