What Does a Payslip Include and How Is It Calculated?
Introduction
A payslip, known in German as Gehaltsabrechnung, is a document issued by the employer in Germany that details an employee’s monthly salary, including all deductions and additions that affect the final amount paid out. The employer must issue this statement regularly, allowing the employee to see all details of their income and the deductions applied to it.
The Gehaltsabrechnung shows the total amount the employee earns before taxes and social contributions are deducted, as well as the specific items that lead to the final net salary. The following deductions usually appear clearly on the payslip:
Health insurance contribution (Krankenversicherung):
Covers the employee’s healthcare costs.
Pension insurance contribution (Rentenversicherung):
Contributes to providing a retirement income after the employee’s working life ends.
Unemployment insurance contribution (Arbeitslosenversicherung):
Provides financial support in case of unemployment.
Long-term care insurance contribution (Pflegeversicherung):
Helps cover long-term care costs when needed.
Income tax (Lohnsteuer):
Calculated based on the salary and taxable income.
Church tax (Kirchensteuer):
Charged if the employee is a member of a recognised religious community.
In addition to deductions, the Gehaltsabrechnung may also include various increases or bonuses, such as:
Bonus payments:
For example, annual bonuses or other special allowances.
Company pension scheme (Betriebliche Altersvorsorge):
Contributions towards additional company-based retirement benefits.
Financial allowances:
Such as contributions to savings plans or capital-building schemes.
When you look at your Gehaltsabrechnung, you will typically see:
Gross salary (Brutto):
Your income before taxes and social security contributions.
Net salary (Netto):
The amount you actually receive after all deductions.
The payslip clearly sets out all financial details related to your salary, including taxes and insurance contributions, giving you a transparent picture of your monthly income.
In Germany, taxes and the various social insurance contributions are automatically deducted from the employee’s monthly salary and transferred to the relevant authorities. These deductions are processed via the employee’s bank account (Girokonto), without the need for any additional action by the employee.
The Gehaltsabrechnung is an important tool that provides a clear overview of everything related to an employee’s monthly salary in Germany, from gross income to net pay. Thanks to the automatic deduction of taxes and insurance contributions, employees can manage their income easily and with full transparency.
*The authors and editorial team of our website make every effort to provide accurate information based on careful research and multiple sources. However, errors may occur or some information may be incomplete or not fully verified. Please treat the information contained in this article as an initial point of reference and always contact the relevant authorities or professional bodies for binding and up-to-date advice.
