Germany offers companies great opportunities for international growth with one of the largest economies in the world, a sophisticated business infrastructure, and perfect location in the heart of Europe.
There are challenges with doing business and managing payroll in Germany. There is a complicated tax system, several required tax payments during the year, and up to 14 different types of taxes imposed on businesses. There are also many local regulations that require additional certifications depending on the type of industry and company.
Leave policies in Germany:
In accordance with the labor laws of Germany, the following rules apply to payment for absence due to regular illness (including government mandated quarantine with Covid-19)
- Employer paid six (6) weeks salary
- After six (6) weeks, health insurance will take over sick leave payments
- Employers with less than 30 employees can request a reimbursement from the health insurance
- In the case when an employee has had contact with someone who tested positive for an infectious disease and must remain home under quarantine, the employee is entitled to the same six (6) weeks’ pay.
The tax year ends on December 31st, and tax declarations must be made by May 31st each year. Monthly and yearly reporting of social security and Benefits in Kind are required.
Monthly and annual reporting obligations include social security and withholding tax statements, statutory accident insurance and more. Social security statements must be completed and submitted for each employee in March of each year. Tax returns are due by May 31st, but using a tax consultant can move the deadline to December 31st each year.
There are different options for funding payroll in Germany, based on your individual business. Blue Marble provides money movement services so you do not need a local bank account to fund payroll. You can fund employee payroll in USD and settle in the local currency. If you have a local bank account, you can send funds to the in-country provider and pay employees directly. If you do not have a local bank account, you need a trust account to send fund to the payroll provider who will pay employee salary and statutory payments in Euros.
Blue Marble can help you get payroll and business operations up and running to ensure compliance in Germany. Our cloud-based payroll technology provides customized, aggregated reporting to give you real-time access to payroll across all countries. We have a hybrid service model with a US-based team and in-country experts in Germany to help when questions come up. Talk to us today about simplifying your payroll in Germany.