Understanding Your German Payslip

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If you live and work in Germany and have difficulty understanding your payslip, I may be able to help you. Let’s see.

The German payroll is determined by federal labor laws and collective or company agreements. It is based on a monthly salary, and the allowances and bonuses are determined by collective or company agreements.

Here are the information you can find on your payslip:

1. Personal information

You can find it in the top right-hand corner of the payslip. It consists of the following:

  • Date of hire / Length of service / Date of birth / Employee number
  • Cost center / Department / Function / Pay group / Payscale and level
  • Tax class / Child tax exemption / Religion / Annual-tax free amount / Monthly tax-free amount / Retiree tax rule 1/ Retiree tax rule 2 / Tax days
  • Insurance fund number / Social security code / Pension special fund / Child allowance / Private insurance / Pension contribution exemption / Multiple jobs / Social insurance days

2. Earnings

• Salary
• Employer contribution to savings plan
• Deduction for tax and/or social security
• Bonus
• Non-cash benefits
• Benefits in kind subject to value-added tax (VAT)
GROSS TOTAL

3. Taxes and social contributions

• Income tax
• Solidarity surcharge tax
• Church tax
• Health insurance contribution
• Long-term care insurance contribution
• Pension insurance contribution
• Unemployment contribution
• Total of statutory deductions
NET INCOME

4. Other

• Credit to savings plan
• Other deductions/adjustments
• Non-cash benefits
• Employer contribution to private pension scheme
• Employee contribution to private pension scheme
AMOUNT PAID

Here are the terms and abbreviations that you can find on your payslip:

ST-Identnummer —Steueridentifikationsnummer (it means the tax identification number which every citizen needs to have)

STKl — Steuerklasse (it means the tax class)

There are 5 tax classes:

  • — Single or separated employees, who are not falling into tax class II or III
  • II — Single and separated employees who have a child, entitling them to a child’s allowance
  • III — Married employees or widowed employees who are within the first year of a spouse’s death
  • IV — Married employees, both are working and receive income
  • V — Married employees, normally both would fall into tax class IV, but who spouse is in tax class III

Kind — the number of children if there are, normally the tax is lower if you have a child or children

ZKF — Zahl der Kinderfreibeträge (it means tax exemptions for having children)

Kirchensteuer — church tax (sometimes it is Konfession which means religion to determine if an employee is subject to church tax; employees who report they are
Catholic or Protestant are required to pay this tax. Starting in 2013, the rate was 9% of the
income tax

  • RK — Romankatolisch (Roman Catholic)
  • EV — Evangelisch (Protestant)
  •  — no religion

Freibetrag — non-taxable amount (yearly or monthly)

Steuer-/SV -Tage — taxable days / Sozialversicherungstage (social security days)

SV-Kennzeichen — social security number

SV-Schlüssel — social insurance code

There are 4 major insurance schemes according to employee status:

  • KV — Krankenversicherung (health insurance)
  • RV — Rentenversicherung (pension insurance)
  • AV — Arbeitslosenversicherung (unemployment insurance)
  • PV — Pflegeversicherung (long-term care insurance)

The following are the four social insurance contributions for employees:

  • KV-Beitrag-AN — Krankenversicherungsbeitrag Arbeitnehmer (health insurance contribution)
  • RV-Beitrag-AN — Rentenversicherungsbeitrag Arbeitnehmer (pension insurance contribution)
  • AV-Beitrag-AN — Arbeitslosenversicherungsbeitrag Arbeitnehmer (unemployment insurance contribution)
  • PV-Beitrag-AN — Pflegeversicherungsbeitrag Arbeitnehmer (long-term care insurance contribution)

The employers make also contributions for each, changing AN to AG which is Arbeitgeber. They also contribute to maternity leave and accident insurance funds for their employees.

Sozialversicherungssätze — social insurance rates

For the four contributions, the following are the terms:

  • KV-Satz — healthcare insurance rate
  • RV-Prozentsatz — pension insurance rate
  • AV-Prozentsatz — unemployment insurance rate
  • PV-Prozentsatz — long-term care insurance rate

Kennzeichen:

  • E — Einmalzahlung (one-time payment)
  • L — Lohnsteuer (income tax)
  • — SV-Pflichtig (social insurance contribution)
  • — Gesamtbrutto (gross income)

Gehalt — monthly base salary

VL: AG-Anteil — voluntary employer contribution to savings plan: employees who save money get an extra contribution from their employer

Gehaltsumwandlung — deduction for tax and/or social benefits

Bonus — granted according to company-specific agreements

Geldw Vorteil — non-cash benefits – subject to tax and/or social contributions

Erlös Sachbezug — benefits in kind subject to VAT

VL-Sparbetrag — employee savings on company “sponsored” plan

D-Vers-AG, D-Vers-AN — employer and employee contribution to a private pension scheme. Private company pension plans are a complement — an option

Lohnsteuer — income taxes that are calculated at progressive rates, taking into account the employee’s individual situation

Solid. Zuschlag — solidarity surcharge which is a tax that was created in 1991 to fund the country’s reunification efforts (basically to help East Germany). A progressive rate (capped at 5.5 % in 2013) will apply above the salary exemption ceiling

If I have missed some terms or information, please let me know by leaving a comment below and I would be glad to include them here.

 

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