Germany > Legal entities > Payroll processing
Payroll Processing
in Germany
(Lohnabrechnung)
We can help you process your employees’ payroll taxes.
We can help you with administration and solutions in Germany
If you send employees to Germany who stay in Germany for more than 183 days in a calendar year, you are liable as a company in Germany to pay payroll tax for these employees. This obligation to pay payroll tax also applies in the case of temporary assignment of employees to Germany (so-called “staff leasing”), whereby the obligation to pay payroll tax arises from the first day of the temporary assignment of the employee.
In order to calculate the relevant payroll tax, you must have your employees’ wages processed by a German tax consultant in order to calculate the German payroll tax amount, which you can then pay to the German tax authorities. You have the same obligation if you employ German employees or if your domestic employees are insured by a German insurance company. With the help of our German tax advisor, we will process your employees’ wages and inform you of your further obligations in Germany.
Frequently asked questions
When does a foreign company have to pay German payroll tax for its employees?
The obligation does not depend solely on the number of days spent in Germany. The employee’s tax residence, the economic employer, who bears the wage costs and the conditions of the relevant double taxation agreement must also be considered. We review the posting model and arrange the next steps in cooperation with a German tax or payroll partner.
Does the 183-day rule always apply when taxing wages in Germany?
No. The 183-day limit is only one of the conditions of the treaty rule and does not in itself determine in which country the salary is taxed. If the other conditions are not met, German taxation may arise earlier. We will assess all relevant circumstances of the posting.
Is German payroll processing required when employees are leased?
Cross-border employee leasing may give rise to an obligation to withhold German wage tax from the beginning of the assignment. The exact treatment depends on the contractual and factual arrangement and the tax rules. We review the assignment and arrange the preparation of the German payroll documents.
What documents are required for German payroll processing?
Typically, employer and employee data, work and posting documents, data on remuneration, hours worked and tax or insurance status are required. The scope may vary depending on the specific case. We will prepare a list of supporting documents and coordinate their processing with the German advisor.