Germany
As Europe’s economic stalwart, Germany provides an environment where precision, innovation, and quality intersect, ensuring that doing business here is synonymous with excellence. beyond.
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Our free global insight guide to Germany offers up-to-date information on international payroll, income tax, social security, employment law, employee benefits, visas, work permits and key updates on legislative changes and more in 2024.
Basic Facts about Germany
Germany is situated in central Europe, and represents a historic gateway between the East and the West. Bordered by Poland and the Czech Republic to the east, Austria and Switzerland to the south, and France, Luxembourg, Belgium and the Netherlands to the west, Germany connects the continent in a variety of ways, including trade, transport and culture.
Since the reunification of East and West Germany in 1990, and the founding of the European Union in 1993, the country has become one of the world’s leading financial powers, with a reputation for technological innovation and manufacturing.
Bordered by the North Sea, Germany has a temperate climate and a diverse geography ranging from rocky, southern Alpine regions to more verdant, forested northern regions.
General Information
- Full Name: Federal Republic of Germany
- Population: 83.79 million (World Bank 2022)
- Capital: Berlin
- Major Language: German
- Major Religion: Christianity
- Monetary Unit: 1 euro = 100 cents
- GNI Per Capita: US $53,390 (World Bank 2022)
- Main Exports: Motor vehicles, electrical machinery, metals and pharmaceuticals
- Internet Domain: .de
- International Dialling Code: +49
How Do I Say in German?
- Hello: Hallo
- Good morning: Guten Morgen
- Good evening: Guten Abend
- Do you speak English?: Sprechen Sie Englisch?
- Good bye: Auf Wiedersehen
- Thank you: Danke
- See you later: Wir sehen uns später
Dates & Numbers
Dates are usually written in the day, month and year sequence. For example, 1 July 2021 or 1/7/21.
Numbers are written with a period to denote thousands and a full stop to denote fractions. For example, 3.000.50 (three thousand euro and fifty cent).
Doing Business in Germany
Germany is a central European country and the continent’s largest economy. Bordered to the west by Switzerland, France, Luxembourg, Belgium, and the Netherlands, to the north by Denmark, and to the east by Poland, the Czech Republic, and Austria, Germany has become a significant global economic power and a popular location for foreign investment.
Navigating the business landscape in Germany offers a reassuring sense of structure and efficiency that global businesses aspire to match. As Europe’s economic stalwart, Germany provides an environment where precision, innovation, and quality intersect, ensuring that doing business here is synonymous with excellence.
Companies entering the German market are met with a highly efficient workforce, renowned for their technical skills, adding robust value to operations in engineering, manufacturing, and beyond.
The logistic and digital infrastructure in Germany paves the way for seamless supply chain management and market integration, fostering not just domestic growth but also expansive reach into other European economies.
In essence, the integration of business in Germany is a convergence of tradition and forward-thinking dynamics, creating a uniquely dependable and progressive commercial habitat.
Why Invest in Germany?
Investment in Germany equates to planting economic seeds in fertile ground, well-nurtured by a stable political and economic climate. As a leading member of the European Union, and with the largest population, Germany is an influential financial force, with access to a vast regional marketplace. It also benefits from trade agreements with the rest of the world.
As a magnet for investment, the country captivates with its unmatched central location in Europe, presenting the dual benefit of a significant domestic market and gateways to the EU's expansive market sphere.
A global front runner in technological advancement, Germany is a beacon of innovation, setting the stage for businesses to thrive in a culture grounded in meticulous research and development. The result is a market environment that is not only adaptable and future-ready but also one that upholds an undeniable promise for growth and sustenance.
Germany’s workforce is among the most skilled and innovative in the world, with over 81% of the population holding a university or vocational qualification. Research and development in Germany receives billions of euros in federal funding every year.
It's this unwavering commitment to progress and stability that makes Germany a compelling choice for investors from across the globe, assuring that investments will mature in a landscape designed for longevity and success.
Foreign Direct Investment in Germany
Germany’s open and welcoming attitude towards foreign direct investment (FDI) is evident in its regulatory environment and numerous incentive programs offered.
The government supports FDI through a variety of measures. These include cash incentives, labor-related incentives, tax concessions, and more. Additionally, public loans and guarantees, as well as equity investments, are available to foreign investors.
Germany, with its robust industrial framework and forward-thinking economic strategies, offers a fertile landscape for direct investment across a multiplicity of sectors. Here we outline key sectors ripe for investment:
- Life Sciences: The German life sciences sector is a nexus of innovation, buoyed by extensive research infrastructure and a prolific healthcare market. It's an ideal space for advancements in biotechnology, pharmaceuticals, and medical technology.
- Green Energy: Embracing the global shift towards sustainable resources, Germany's commitment to green energy opens avenues in solar power, wind energy, and other renewable technologies. This sector benefits from a supportive regulatory environment and incentives for clean energy initiatives.
- Automotive and Mobility: A traditional stronghold, the German automotive industry is pivoting towards electric and autonomous vehicles, providing investment prospects in both established and emerging mobility solutions.
- Digital Economy: Germany's digital landscape offers a spectrum of opportunities, from cyber security and fintech to e-commerce and Industry 4.0 technologies, underpinned by a strong ICT infrastructure and digital policy framework.
- Advanced Manufacturing: Capitalising on the country’s engineering prowess, advanced manufacturing with its focus on efficiency and innovation is a compelling choice for investors aiming for the pinnacle of production excellence.
- AgriTech and Food Technology: With a focus on efficiency and sustainability, the agricultural technology and food tech landscapes open doors to innovation in food production, supply chain management, and biotechnology.
- Chemicals and Materials: As a long-standing industrial base, the German chemicals sector presents vast opportunities for investment in specialty chemicals, advanced materials, and sustainable production processes.
Germany Trade & Invest (GTAI) – the federal economic development agency, provides an array of services to help foreign businesses establish operations in Germany. This includes providing market data, identifying suitable locations, clarifying legal and administrative queries, among other services.
Whether businesses are looking for growth, stability, a favourable business environment, or an innovation hub, Germany should be on their radar.
Business Banking in Germany
In Germany it is not mandatory to pay employees from an in-country bank account.
Salary and third-party payments can be made on behalf of the client.
Bank transfers are used to pay both employees and the local authorities in Germany.
Any transfers that are made between banks in Germany are usually complete within a day.
International bank transfers can take at least three working days.
In Germany banks usually open on a Monday to Friday between 8:30 AM and 9:00 AM and close around 4:00 PM to 6:00 PM. Some branches may close for a lunch break, often between 1:00 PM and 2:30 PM.
Some banks are open on a Saturday, typically between 9:00AM and 12:00PM
Registrations and Establishing an Entity in Germany
Establishing a business entity in Germany involves navigating through a comprehensive regulatory framework to ensure compliance with local commercial and employment laws. The process of company registration and entity establishment is structured to facilitate a clear path for businesses to legally commence operations within the country. Below is an expanded overview of the types of entities, registrations required, and the general process involved in setting up a company in Germany.
Types of Business Entities In Germany
Germany offers a variety of legal forms for setting up a company, each catering to different business needs and sizes. The most common types of entities include:
- Gesellschaft mit beschränkter Haftung (GmbH): Similar to a limited liability company (LLC), offering flexibility and limited liability to its shareholders.
- Aktiengesellschaft (AG): A public limited company suitable for larger enterprises, with the ability to raise capital through public stock offerings.
- Offene Handelsgesellschaft (OHG): A general partnership where partners have unlimited liability.
- Kommanditgesellschaft (KG): A limited partnership combining elements of both limited and unlimited liability for its partners.
Company Registration Process in Germany
Commercial Register (Handelsregister) Registration
The initial step involves registering the company with the local Handelsregister, which publicly documents the firm's existence, legal form, and key management personnel. This registration is crucial for GmbHs and AGs, among other entity types.
In the establishment phase of a company and prior to assumption of commercial activities, a company only has to be registered in the public commercial register (Handelsregister) and the local trade office (Gewerbe-/Ordnungsamt).
Local Trade Office Registration
Following the Handelsregister registration, the company must register with the local trade office (Gewerbe-/Ordnungsamt). This step is mandatory for all businesses and serves as a notification of the company's operational activities to local municipal authorities.
Payroll and Social Security Registrations
For companies planning to employ staff and process payroll in Germany, additional registrations with tax and social security authorities are required:
- Employer Company Number: Issued by the Employment Agency (Betriebsnummernstelle), this number is essential for payroll processing and social security contributions.
- Foreign Company Registration: Companies without a physical presence in Germany must provide a copy of their Foreign Company Registration.
- Statutory Accident Insurance: Registration with a professional association (Berufsgenossenschaft) for statutory accident insurance is mandatory for covering workplace-related accidents and illnesses.
- Employer Tax Number: Necessary for withholding and remitting taxes on behalf of employees, this number is obtained from local tax authorities.
Timeline and Legislative Authority in Germany
The timeline for completing the registration process can vary and typically takes up to six weeks, depending on the registering authority and the complexity of the application. The key legislative authorities involved in the registration and ongoing compliance process include:
- German Tax Authorities: For matters related to taxation and employer tax numbers.There are two organisations for taxation in Germany local tax offices and the Federal Central Tax Office.
- Health Insurance Companies: For enrolling employees in health insurance schemes.
- Statutory Accident Insurance Providers: For coverage against work-related accidents and diseases.
Navigating the establishment and registration of a company in Germany requires careful planning and adherence to the country's regulatory requirements. Businesses are advised to consult with Global Mobility and Tax experts such as activpayroll, who specialised in German employment and commercial law to ensure a smooth and compliant setup process. This strategic approach not only facilitates legal compliance but also positions the company for successful operations in Germany's robust economic environment.
Visas and Work Permits in Germany
Germany offers a comprehensive framework for visas and work permits, catering to a broad spectrum of international workers and businesses. This system is designed to facilitate the entry and employment of foreign nationals while ensuring compliance with German immigration laws.
EU and EFTA Citizens in Germany
Citizens from the European Union (EU) and European Free Trade Association (EFTA) countries enjoy freedom of movement within Germany and do not require a work permit to be employed. This privilege simplifies the process for these individuals, allowing them to live and work in Germany without the need for extensive immigration paperwork.
Non-EU Countries with Visa Exemptions in Germany
Nationals from specific non-EU countries, including Australia, Israel, Japan, Canada, South Korea, New Zealand, and the United States, are granted a more straightforward path to employment in Germany. While they do not need a work visa to enter Germany for employment purposes, nor a job offer before their arrival. Individuals planning to stay in Germany for more than 90 days must register at the local residence registration office (Einwohnermeldeamt). This registration is a crucial step and must be completed within a week of securing permanent housing. During registration, the individual is required to provide:
- A valid passport or identification document.
- Proof of address, such as a lease or rental agreement.
- A completed registration form, available at the registry office.
Visa and Work Permit Process for Other Non-EU Nationals in Germany
For other non-EU nationals not listed in the exemption category, the process to work in Germany involves obtaining a visa that permits employment. The steps include:
- Obtaining a job offer: The first step is to secure a job offer from a German employer.
- Applying for a work visa: With a job offer in hand, the individual must apply for a work visa at the German embassy or consulate in their home country. The application requires:
- A valid passport.
- The job offer or contract from the German employer.
- Proof of qualifications.
- Any additional documents requested by the consulate.
- Residence Permit for Employment: Upon arrival in Germany with a work visa, the individual must apply for a residence permit for employment purposes at the local Foreigners' Office (Ausländerbehörde). This permit legalises the individual's long-term stay and employment in Germany.
- Blue Card EU: Highly skilled professionals with a recognised university degree and a job offer in Germany that meets the minimum salary requirements may apply for the Blue Card EU, a residence permit that offers additional benefits, such as easier family reunification and mobility within the EU.
The process and requirements for visas and work permits can vary based on the individual's nationality, qualifications, and the nature of the job. Employers should also ensure compliance with all regulations when hiring foreign nationals, including those from visa-exempt countries.
Income Tax in Germany
The tax year runs from 1 January to 31 December in Germany.
Income Tax in Germany
In Germany, income tax is managed via payroll withholding, which accounts for both tax and social security contributions. Tax processing is facilitated by local Finanzamt offices, which oversee the PAYE (Pay As You Earn) administration1.
The withholding tax statement and payments must be made to the authorities by the 10th of the following month. Late submissions may result in a penalty equating to 10% of the assessed tax, and late payments attract interest at an annual rate of 6%1.
The German tax system is progressive, and the following detailed tax rates have been adjusted for the tax year 2024:
INCOME THRESHOLD (EUR) |
TAX RATE (%) |
0 - 11,604 |
0% |
11,604 - 66,761 |
14 – 42% |
66,761 - 277,826 |
42% |
277,826 and above |
45% |
Employees are eligible for personal allowances, which fluctuate according to the number of children they have and their marital status. Notably, Germany's basic tax allowance increased from €10,908 to €11,604 in 2024, and for married couples, the allowance rose to €23,208. As such, any income below these limits is not subject to tax.
In addition to income tax, church tax, or Kirchensteuer, may also apply to employees. Calculated as a percentage of their income tax, rates range from 8% to 9%, depending on the federal state.
Expatriate tax considerations
Foreign employees in Germany may be subject to either limited or unlimited tax liability, depending on their residency status and employment circumstances. Temporary residents may qualify for limited tax liability on German-sourced income, whereas unlimited tax liability for permanent residents will include worldwide income sources.
Social Security in Germany
Germany's social insurance framework is robust, providing comprehensive protection against life's uncertainties for the workforce.
Germany's intricate social insurance system mandates employers to generate a contribution statement and remit the total contributions reported each month. Cleared payment of these contributions must reach the correct insurance bank account by the third-last bank working day of the month.
Social security contributions are divided into five categories, and the rates are split evenly between the employer and employee, except for accident insurance, covered purely by the employer. Since July 2023 there is a discount on EE having children at long term care insurance of 0,25% for each child under 25 years (2-5 children).
Insurance Type |
Employee Contribution % |
Employer Contribution % |
Combined Total % |
Public Health Insurance |
7.3 + 1.7% |
7.3 + 1.7% |
18% |
Long-term Care Insurance |
1.7% |
1.7% |
3.4% |
Pension Insurance |
9.3% |
9.3% |
18.6% |
Unemployment Insurance |
1.3% |
1.3% |
2.6% |
Accident Insurance |
N/A |
Varies (fully covered) |
Varies (fully covered) |
In 2024, Germany has increased the Beitragsbemessungsgrenze (income threshold) which is used to calculate statutory insurance contributions from €59,850 to €62,100 for Health insurance and Long term care insurance and from €87,600 to €90.600 for pension insurance and unemployment insurance. This indicates that statutory insurance contributions for those earning more than the threshold will be computed as if they earn €62,100/€90.600, rather than their total income.
Germany's social insurance system offers a layer of financial security for employees and their families in case of illness, long-term care needs, unemployment, and work accidents. However, overseas employers should ensure they fully understand these requirements and maintain compliance to avoid penalties.
Reporting Tax in Germany
In Germany employers are required to file reports of:
- Pay and tax deducted reports known as the Lohnsteuer-Anmeldungszeitraum
- Social insurance contribution statement known as Beitragsnachweis
In Germany the following payroll processing activities must take place at year end, 31 December:
- Certificate of wages for each employee (Lohnsteuerbescheinigung) latest by February payroll of the following year
- Social Security Statement for each employee (Sozialversicherungsmeldung /DEÜV) – with the January payroll of the following year but latest by 15th February of the following year
- Statutory Accident Insurance (Berufsgenossenschaftsmeldung) – employer – February following year
- Statement for Persons with disabilities – employer statement – 31st March following year
New Employees in Germany
When onboarding new employees, businesses in Germany need to collect specific information to ensure compliance with local employment, tax, and social security regulations. This process is designed to safeguard both the employer's and the employee's rights and obligations.
Essential Documentation from New Employees
- Proof of Citizenship or Residency - Employers must verify the legal status of new employees in Germany. This includes obtaining proof of citizenship for nationals or appropriate work and residence permits for foreign employees, ensuring they are authorized to work in Germany.
- Holiday Certificate - A document from the employee's previous employer outlining accrued but untaken holiday days. This certificate helps the new employer determine the remaining entitled holiday leave, ensuring compliance with statutory vacation entitlements.
- Proof of Parenthood - If applicable, employees may need to provide proof of parenthood, such as birth certificates of children, for purposes related to parental leave entitlements, family health insurance coverage, and potential tax benefits.
- Health Insurance Membership Certificate - Employees are required to enroll in a health insurance scheme and must submit their membership certificate to their new employer within two weeks of commencing work. This ensures that contributions to health insurance are appropriately managed from the outset of employment.
- Health Certificate for Minors - For employees under the age of 18, a health certificate is mandatory to confirm their suitability for the type of work they will be performing, in line with youth employment protection laws.
Tax and Social Security Information for New Employees in Germany
- ELStAM (Elektronische Lohnsteuerabzugsmerkmale) - The ELStAM system automatically provides employers with the necessary tax deduction information for new employees, such as tax class and allowances. Employees need to ensure their tax details are up-to-date and may need to provide additional information if requested by the employer.
- Social Security Number - New employees are required to supply their social security number associated with the German public pension insurance (Deutsche Rentenversicherung) and/or any private pension schemes they are a part of. This number is crucial for the employer to correctly process pension contributions as well as contributions to health, unemployment, and long-term care insurance.
Leavers in Germany
In Germany, the process of managing the departure of employees is governed by a set of legislative specifications that ensure the rights and obligations of both the employer and the employee are respected. These specifications cover final payments, benefits, and the necessary administrative steps to formally conclude an employment relationship.
Final Payments to Leaving Employees in Germany
Employers are required to make final payments to departing employees within the timeframe of the standard payroll cycle. This includes not only the last month's salary but also any additional compensations, such as bonuses or special payments, which must be disbursed in accordance with the stipulations outlined in the employment contract.
De-registration and Notification Requirements
Upon an employee's departure, the process of de-registration from the company's payroll system is automated. However, the employee has specific responsibilities to ensure a smooth transition out of their employment status, particularly concerning social security and insurance:
- Employees are obliged to notify their health insurance provider of their departure four weeks in advance. This advance notice is crucial for the health insurance company to update their records and make any necessary adjustments to the employee's insurance coverage.
- Although the employee is automatically de-registered from the employer's payroll system, they must personally de-register with the local registry office (Einwohnermeldeamt). This step is essential for updating the employee's official status and ensuring their records reflect the change in employment.
- Employers are typically required to provide a written employment certificate (Arbeitszeugnis) upon request, detailing the duration and nature of the employment. This document is crucial for employees as it serves as a reference for future employment.
Payroll in Germany
The financial year in Germany runs from 1st January – 31st December.
The employer must provide employees with payslips and it is legally acceptable in Germany to provide employees with online payslips.
Reports
By law, in Germany payroll information/reports should be kept for six years.
Bookkeeping information should be kept for 10 years.
German Payslip Example
Employment Law in Germany
Holiday Accrual and Calculations in Germany
In Germany, the accrual and calculation of holiday entitlements are regulated to ensure employees have adequate rest periods, in line with the Federal Holiday Act (Bundesurlaubsgesetz).
By default, the holiday year aligns with the calendar year, running from January 1st to December 31st. However, individual employment contracts or collective agreements may specify a different period for the leave year, tailoring it to the needs of the sector or company.
German labor law mandates a minimum holiday entitlement of 24 days per year, assuming a standard six-day workweek. For employees working a five-day week, this entitlement adjusts proportionally to 20 days per year.
Holiday Calculations for Employers in Germany
While the statutory minimum sets the baseline, it's common for employees in Germany to receive holiday entitlements ranging from 25 to 30 days per year. This is often determined by the specific terms of employment contracts, collective agreements, or company policies, which can provide for more generous leave than the legal minimum.
For employees joining or leaving partway through the holiday year, holiday entitlement is typically calculated on a pro-rata basis. This means employees earn a proportion of their total annual leave entitlement corresponding to the fraction of the year they work.
Certain circumstances, such as maternity leave or long-term illness, are covered by specific regulations that protect employees' holiday entitlements during these periods. Employers must ensure that holiday rights are preserved in these instances, following the relevant legal guidelines.
In addition to annual leave, employees in Germany also benefit from public holidays, the number of which varies by federal state. These are not deducted from the annual leave entitlement.
Maternity Leave in Germany
In Germany, the Maternity Protection Act (Mutterschutzgesetz) ensures comprehensive support for expectant and new mothers in the workforce, providing them with a period of Maternity Protection Leave to safeguard their health and that of their newborns. Expectant mothers are entitled to six weeks prior to the expected delivery date and extends to eight weeks following childbirth. For cases of premature or multiple births, the post-birth leave period is extended to 12 weeks. This entitlement applies to all working women in Germany, covering a broad spectrum of employment types and working hours, reflecting the country's commitment to maternal and child health.
The financial aspect of Maternity Protection Leave is addressed through the Maternity Protection Benefit (Mutterschaftsgeld), which is designed to compensate for the loss of income during this period. The benefit is calculated based on the average net income of the last three months or the last thirteen weeks preceding the leave. The primary responsibility for disbursing the Maternity Protection Benefit lies with the health insurance provider. To ensure that employees receive their regular net income during maternity leave, employers are mandated to make additional payments if necessary. This top-up by the employer covers any difference between the Maternity Protection Benefit provided by the health insurance and the employee's usual net income.
Expectant mothers must apply for the Maternity Protection Benefit through their health insurance provider, supplying the necessary documentation, including a medical certificate indicating the expected due date. Upon notification of the employee's Maternity Protection Leave and the Maternity Protection Benefit amount, the employer calculates and disburses the top-up payment to ensure the employee's net income remains consistent.
In addition to financial support, the Maternity Protection Act includes provisions to protect expectant and new mothers from workplace hazards, undue stress, and dismissal.
Paternity Leave in Germany
In Germany, paternity leave is part of a broader family-friendly policy framework designed to support new fathers in balancing their work and family responsibilities. While Germany does not have a specific "paternity leave" in the same way as maternity leave, new fathers have the option to take advantage of parental leave (Elternzeit) provisions, which allow both parents to take time off work to care for their newborn child.
Parental Leave in Germany
Both parents are entitled to parental leave in Germany, allowing them to take up to three years of leave per child. This leave can be taken flexibly until the child reaches the age of eight. Fathers can choose to take their parental leave simultaneously with the mother or at a different time, depending on what works best for their family situation.
To support parents financially during this period, Germany offers Parental Allowance (Elterngeld), which compensates for lost income when a parent reduces work hours to care for their child. The amount of Parental Allowance received is based on the parent's income prior to the birth of the child and can range from 65% to 100% of the lost income, capped at a maximum amount and is paid for up to 12 months (plus two additional months if both parents apply).
Fathers must apply for Parental Allowance at their local family benefits office (Elterngeldstelle). The application should be submitted as soon as possible after the child's birth, as payments are only retroactive for three months from the date of application.
In addition to parental leave, fathers in Germany can request part-time work arrangements during their child's early years, subject to certain conditions and employer agreement.
Employers are required to grant parental leave to eligible employees and cannot refuse a parental leave request. However, employees must notify their employer of their intention to take parental leave at least seven weeks before the leave's commencement for the first year of the child's life and at least 13 weeks in advance for leave taken between the child's first and third birthdays.
Sick Leave in Germany
The legal framework governing sick leave is primarily outlined in the Continued Remuneration Act (Entgeltfortzahlungsgesetz), which stipulates the conditions under which employees are entitled to continued payment in the event of sickness.
Employees who have been employed for at least four weeks are entitled to receive statutory sick pay for up to six weeks, provided the sickness absence is not self-inflicted. This entitlement is designed to alleviate the financial burden on employees during short-term illnesses, allowing them to focus on recovery without the stress of income loss.
Employees are required to inform their employer of their illness and the expected duration of absence as soon as possible. If the illness extends beyond three calendar days, a medical certificate stating the incapacity to work and the expected duration of the absence must be submitted to the employer.
If an employee recovers from their illness but subsequently falls ill again due to a different underlying cause, they are entitled to a new six-week period of statutory sick pay. This ensures that employees are not unduly penalised for suffering from unrelated illnesses.
Once the six-week period of statutory sick pay expires, employees who are still unable to work due to their illness can claim benefits from either statutory health insurance or private insurance schemes, depending on their coverage. These sickness benefits are aimed at providing longer-term financial support until the employee can return to work.
- Employees covered by statutory health insurance are eligible for sickness benefits (Krankengeld) from their health insurance fund. This benefit typically amounts to 70% of the employee's gross salary but is capped at a maximum amount.
- Employees with private health insurance should review their policy details for information on sickness benefits, as coverage and entitlements can vary widely between policies.
National Service in Germany
There is no compulsory national service in Germany.
National Minimum Wage in Germany in 2024
The national minimum wage in Germany for the year 2024 is set to €12.41.
Working Days and Working Hours in Germany
The average working hours in Germany is 8 hours per day.
This can be extended to up to 10 hours per day for a short period.
A rest period of 11 hours is normally prescribed between 2 shifts.
National Statutory Holidays in Germany in 2024
There are multiple statutory holiday schedules within Germany. Below are the statutory national holidays in Germany for 2024.
Date |
Weekday |
Name of Holiday |
1 January |
Monday |
New Year's Day (Neujahr) |
29 March |
Friday |
Good Friday (Karfreitag) |
1 April |
Monday |
Easter Monday (Ostermontag) |
1 May |
Wednesday |
Labour Day (Tag der Arbeit) |
9 May |
Thursday |
Ascension Day (Christi Himmelfahrt) |
19 May |
Sunday |
Whit Sunday (Pfingstsonntag) |
20 May |
Monday |
Whit Monday (Pfingstmontag) |
3 October |
Thursday |
Day of German Unity (Tag der Deutschen Einheit) |
25 December |
Wednesday |
Christmas Day (Erster Weihnachtstag) |
Employee Benefits in Germany
This information is currently being updated for 2024.
Expenses
Typical benefits provided in Germany include the following:
- General expenses e.g. per day payments could be provided for travel expenses up to a certain amount and will remain tax free.
- If the employee uses his/her own car, the car mileage could be provided tax free for business related trips. Trips from home to office are calculated with €0.30 per kilometer (distance one way) and can be deducted in the individual’s German income tax return.
- If an employee has a company car, private usage should be taxed with 1% of gross list price per month. For distances between home and office, an additional amount of 0.03% of the gross list price multiplied by distance in kilometers should be taxed.
Benefits in Kind in Germany
In Germany, Benefits in Kind, also known as fringe benefits or perks, are non-monetary compensation provided by employers.
Typically, benefits in kind are taxable in Germany, viewed as part of the employee's salary for tax calculation purposes. Their monetary value constitutes part of the individual's income, which may be taxable depending on specific tax laws and statutes.
Benefits from a company car for private use are recognised as a benefit in kind, and taxes are calculated based on 1 percent of the vehicle's list price, including Value Added Tax.
Shares given as bonuses or perks are also tax-exempt.
Unique to the German system, certain exceptions allow employers to provide tax- and social security-free benefits in kind. From October 26, 2022, to December 31, 2024, German employers can provide their employees with up to EUR 3,000 in benefits in kind tax- and social security-free on top of the salary earned.
Key updates in 2024 in Germany
In 2024, several changes in Germany's employment law, income tax, and social security came into effect. Please find these key updates outlined below:
Employment Law in Germany
The minimum wage in Germany increased to €12.41 per hour starting January 1, 2024. This adjustment was part of ongoing efforts to ensure workers’ fair compensation and address the cost of living adjustments.
Income Tax in Germany
For Income Tax, there were pertinent financial adjustments, including an increase in the tax-free income threshold, and a delay in the commencement of the 42% income tax rate. These steps were taken to improve individual financial prosperity and foster economic stability.
Social Security in Germany
The wage thresholds increased effective 1 January 2024The Social Security Contribution Thresholds, also known as Beitragsbemessungsgrenze, saw an increment from 59,850 euros before tax to 62,100 euros.
From October 26, 2022, to December 31, 2024, employers were allowed to pay their employees an amount of up to EUR 3,000 (subsidies and benefits-in-kind) tax- and social security-free on top of the salary already earned.
Notes
Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.
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