Understanding your Payslip

payslip deductions

Congratulations! Your paycheck is in your account! And, um, there’s quite a chunk missing from the gross. Is that all correct?

Well, to help you, your HR team will send you an amazing document, all in German, full of numbers that you really hope you understand. This guide to understanding your payslip will help you see how you got from Brutto to Netto.

Abrechnung der Brutto-Netto Bezuge

Settlement of gross-net remuneration

Your personal information

Personal-Nr

Employee Number. The payroll system uses this to track your profile with the company’s payroll system. It may not be the number you see in your company’s HRIS. That’s ok.

Tax class

Your tax class plays a big factor in how much you pay in taxes. Depending on your marital status, your tax class will be:

I – Unmarried, spouse lives abroad, spouse doesn’t have residence permit, separated more than one year, widowed more than one year, divorced, or in civil partnership.

II – Single parents or a minor, or receiving monetary assistance

III – Married worker living with spouse. Where one partner earns significantly more (60% of household income), they may have the tax class 3 while their partner takes tax class 5. This increases the household income after tax especially if one partner is not working. Note: only for married couples!

IV– Married worker living with spouse, where both earn similar amounts of money

V – If spouse is in tax class 3, then the worker will have tax class 5

VI – If worker has two sources of income, the second (Nebenbeschäftigung) will be taxed at class 6. It is the highest tax class.

If you get married, your tax class will change (from 1 to 3,4, or 5) so read how to change it if wedding bells are in the air.

Krankenkasse

This is your health insurance company. There may also be a % listed – this is the % of your salary that will be deducted for your health insurance. It is taken partly from your earnings and partly paid by the company on top of your salary.

Eintritt / Austritt

These are the start and end date of your contract. If you have a limited contract, or have agreed with your employer that you will terminate on a certain day, the end date will also show. Otherwise, you may just see the start date.

Earnings

Brutto Bezüge

Here are listed your gross payments received. Each payment is a separate entry here. Some examples you will probably see:

Gehalt: Salary

Bonus: Bonus 🙂

Stundenlohn: Hourly wage

Urlaubslohn: Payout of hours marked for holiday (if you are paid hourly, this will show up)

Any other payments you receive will show here too.

Gesamt Brutto

Total Gross Wages. This amount is the total $$$ you are getting this pay period. The total amount on which you pay taxes may be different, if you receive a non-taxed allowance.

Deductions

Steuer: Tax Deductions

You will see the amount deducted from each type of payment you received. Some payments are not taxed, others are!

Lohnsteuer: income tax

Kirchensteuer: church tax (if you don’t pay it, this will be blank)

Solidaritatszuchlag: Solidarity payment. This is an additional payment worth 5.5% of your income tax, and is paid by all German taxpayers to fund the growth of Eastern Germany, which had some catching up to do after 1989. This payment is not optional but will be stopped from 2021 for most taxpayers. Yay!

Sozialversicherung: Social security deductions

You will see the amount deducted from each type of payment you received.

RV Brutto: the amount that is subject to Rentenversicherung (pension): 19.6%, paid 50/50 by you and your employer

AV Brutto: the amount that is subject to Arbeitslosenversicherung (unemployment insurance) 3%, paid 50/50 by you and your employer

PV Brutto: the amount that is subject to Pflegeversicherung (long-term care insurance) 2.88% of gross income for childless people and 2.5% for those with children, paid 50/50 by you and your employer

You’ll see the amount that is actually deducted for each of these amounts.

KV-Beitrag: the amount that you pay for health insurance. If you have public health insurance, you share this 50/50 with your employer.

Whew.

Hopefully you haven’t been holding your breath.

If you are still deeply interested in how these deductions are made, check out more info here.

Keep an eye on your payslip and save a copy of it (soft or hard) for your records. If you notice something you don’t understand, go to your HR team and ask them about it. The faster any mistakes are corrected, the better for everyone!

TheresaJohansen

ABOUT THE AUTHOR

TheresaJohansen
Pragmatic. Informative. Uses a machete to cut through red tape.

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