top of page
  • Alison Rhoades

German Payslips Explained: What Is a Lohnabrechnung?

Congratulations — you’ve landed a job in Germany and have just received your first paycheck. Things are looking up…until you receive your payslip in the mail and have no idea how to interpret it. 


Despite being difficult to decipher, German payslips include a lot of important information on them, from social security contributions to your taxes withheld. Knowing how to read your payslip will ensure that you fully understand your deductions, as well as any benefits you may be entitled to later on. Here, we break down the German payslip from top to bottom and give you some extra insights on the key terms you need to know. We’ll also dig into some handy information on taxes, social contributions, and income brackets.


German payslips, explained: Breaking down the Lohnabrechnung


What is a payslip?


If you’re employed at a company, your payslip is a document you get each month detailing your gross and net income, including all taxes and deductions. These deductions are calculated from your gross salary (Bruttoeinkommen in German), which is the money you earn before taxes and social contributions are taken out. As you’ll soon see, there are plenty of deductions to factor in! After all these are subtracted from your gross salary, you’ll have your net income (Nettoeinkommen) which is what the company will transfer to your bank account. 


Companies are legally required to issue paychecks and keep them for six years. And as a legal document, they are all required to include the same information — including your name, the company’s name, tax contributions and more. Let’s break down a standard payslip from top to bottom and learn all the info you’ll see in it. Keep in mind that payslips might look slightly different from company to company.


Top section: Personal information


When you open your payslip, the first thing you’ll see is the date for the period of work. Close to this you’ll see a box labelled St. Tg. (Steuertage), which indicates the number of taxable days in the calendar month. In the below example, this reads “30” because there are 30 taxable days in May:



Below that is the section with relevant personal information from a professional standpoint. Some of these sections may be left blank, while others may be filled in. These include your:


  • Arbeitnehmer Nr. or Personal-Nr.: Your designated employee number 

  • Geburtsdatum: Your date of birth

  • StKl. (Steuerklasse): Your designated tax class (more on this below!)

  • Ki.Frbtr. (Kinderfreibeträge) or ZKF (Zahl der Kinderfreibeträge: Tax exemptions for your child or children

  • Konfession or Rel. (Religion): Your registered religion, if you have one

  • Freibetrag or Steuerfreiebezug: Your tax-free allowance. This may be listed as yearly (Freibetrag jährl.) or monthly (Freibetrag mtl.)



The top section of the Lohnabrechnung also includes details about your social security membership, health insurance provider, and taxpayer identification. Here’s what it means and where to look for it:


  • SV-Nummer (Sozialversicherungsnummer) or RV-Nummer (Rentenversicherungsnummer): Your social security number

  • Krankenkasse: Your health insurance provider

  • KK%: Your health insurance contribution rate

  • PGRS, BGRS or SV Schlüssel/Beitr.gr. (KV/RV/AV/PV): Social security codes, indicating your level of contribution. Each of these sections has a code signifying your level of contribution. (A PGRS code of 101, for example, means “employee subject to social insurance.”)

  • Eintritt or Eintrittsdatum: The date you were hired at your company

  • Austritt or Austrittsdatum: The date you left the company (blank if you are still employed by the company)

  • SV-Tg. (Sozialversicherungstage): Total days of social security coverage in the calendar month 

  • Steuer-ID or Lohnsteueridentifikationsnummer (IdNr.): Tax ID number


Finally, the top section also includes information about your vacation days and allowances for the period in question. If any sick leave was approved, you’ll find it in this section as well. Key words and abbreviations to look out for are Urlaub (Url.), which means “vacation,” and Krankheit (Krankh.), which means “sickness.”


Two especially important sections are:


  • Url. Anspr. (Urlaubsanspruch): The number of vacation days in your contract. At least 20 days are required by law, provided you work full time.

  • Url. Tg. gen. (Urlaubstage genehmigt): The number of vacation days you’ve been approved for, to date.



Salary information and deductions


In the second section of your payslip, under your personal info, you’ll find all the important information regarding your earnings. There, you’ll see Lohn or Gehalt, depending on what type of wages you earn. 


If you work as a salaried employee, you’ll most likely receive a Gehalt — meaning your earnings will be the same each month. However, if you work on an hourly basis or receive commissions, these earnings will be referred to as your Lohn. 


One section to pay attention to is your Brutto Bezüge (“Gross earnings”). This typically includes your Gehalt (“Monthly base salary”), which we’ve highlighted in the below screenshot. Depending on what happened in the payment period, it may also include additional items such as:


  • Geldw. Vorteil or Sachbezug: Non-cash benefits

  • VL AG (Vermögenswirksame Leistungen Arbeitgeberanteil): Voluntary employer contribution to a company savings plan

  • Betr. AV or BAV (Betriebliche Altersvorsorge): Employer contribution to company savings plan

  • Einmalbezug or Einmalzahlung: A one-off bonus, such as an end-of-year bonus or relocation bonus

  • Urlaubsgeld: Holiday pay received



Note the columns labelled St, SV, and GB. These stand for “tax gross,” “social insurance gross,” and “total gross." You will see letters in this column that correspond to a key at the bottom of your payslip. “J”, for example, indicates that the amount listed is included as part of the gross amount. 


Your total gross salary (Gesamtbrutto or Steur-Brutto) is added up from the amounts in this section.


Taxes and Social security contributions


In Germany, employee taxes and social security contributions are deducted directly from your salary. That’s why the net salary you receive is so much smaller than the gross salary listed on your paycheck. In some cases, deductions can be up to 40% of your gross payment amount. 


Taxes:


Your employer automatically deducts these taxes from your gross salary and pays them to the German tax authorities (Finanzamt). Here is a breakdown of the taxes you might see:

  • Lohnsteuer (LSt.): Income tax, charged at between 14 and 42% depending on your income

  • Kirchensteuer (KiSt.): Church tax, provided you are a member of a state-recognized religious organisation (8-9%)

  • Solidaritätszuschlag: A tax paid by residents of former West-Germany. As of 2021, you'll only have to contribute if you earn more than €73.000 (gross) annually.

  • Steuerrechtliche Abzüge: Total amount of all tax deductions



Social security contributions:


When you’re employed in Germany, you’re responsible for half of your social security contributions, while your employer pays the other half. Look out for these designations on your payslip:


  • SV (Sozialversicherung): Total social security contributions

  • KV-Beitrag (Krankenversicherung): Contribution to public health insurance (14,6% state contribution + 0,69-2,5% contribution for your health insurance fund). Note that if you earn more than €69,300 you can — and often should — opt for private health insurance. More on this here.

  • PV-Beitrag (Pflegeversicherung): Contribution to nursing insurance (3.05%). 

  • RV-Beitrag (Rentenversicherung): Contribution to the public pension insurance (18,6%)

  • AV-Beitrag (Arbeitlosenverischerung): Unemployment insurance contribution (2,4%)

  • Zusatzbeitrag: Additional contribution

  • SV-rechtliche Abzüge: Sum of all social security reductions.This will usually be 50%, as your employer covers the rest.

  • SV-AG-Anteil (Sozialversicherung Arbeitgeber Anteil): Sum of all social contributions paid by the employer (usually 50%)



Net income and payouts


Finally, there are two important columns that specify your net income and total amount paid out: 


  • Nettoverdienst or Nettolohn: Net salary

  • Auszahlungsbetrag: Net amount paid to your bank account



The bottom section of the payslip section also includes a summary of deductions and a box to specify your bank and bank account number.


What taxes and social contributions do I have to pay in Germany?


All your taxes and social contributions are calculated as a percentage of your gross salary. Of that, you’ll be taxed at a rate of somewhere between 14-42%, depending on how high your income is. 


As of 2024, public health insurance contributions are charged at 14.6% of your gross income — listed as Krankenversicherung, or KV-Beitrag on your payslip. In addition to this, there’s a 3.05% contribution for long-term nursing care (Pflegeversicherung, or PV-Beitrag). After that, a whopping 18.6% is deducted for public pension contributions (Retenversicherung, or RV-Beitrag).  


In addition to the charges listed above, another 2.5% is deducted for unemployment insurance. This is helpful in case you become unexpectedly unemployed, as you’ll receive a percentage of your salary, provided you’ve paid enough into the system. 


After that, there are a few more charges that won’t apply to everyone. The solidarity surcharge (Solidaritätszuschlag) is a tax paid by residents of former West Germany to facilitate economic improvements in states from the former East Germany. This used to be 3.5% of your income tax amount, but they phased this out in 2021 – meaning you’ll only have to pay this if you’re earning over a threshold of €73,000.


Last comes the church tax. If you’re registered as a member of a recognized religious organisation, such as the Catholic church, you’ll need to pay a so-called “church tax” (Kirchensteuer, or KiSt on your payslip).


What are the tax classes in Germany?


Germany divides taxpayers into six different “classes” based on their family status. The tax class you’re in will determine, in part, what percentage of your income is taxable. Questions like whether you’re single, married, or have children all play a role. 


  • Tax class 1: Single (unmarried, widowed, or divorced)

  • Tax class 2: Single with at least one child

  • Tax class 3: Married, widowed, or in a civil partnership (combinable when your spouse has tax class 5, this tax class is used by the spouse who earns a lower income)

  • Tax class 4: Married or in a civil partnership wherein both partners are in tax class 4 (ideal for partners earning roughly the same amount)

  • Tax class 5: Married or in a civil partnership where the other partner files in tax class 3

  • Tax class 6: A person (whether single, married, or in a civil partnership) who has two jobs


Do I need to save my German payslips?


In a word: yes! Your payslips serve as a record of all your taxes and social contributions to date. This means they’re invaluable for annual processes like filing tax returns or spotting clerical errors, but also for tracking your public pension payments so that you are sure that you get the correct pension payout when the time comes. 


Put your savings to work with LeX-Wealth


Whether you’re deciphering your payslips or trying to navigate the pension system in Germany, being an expat comes with its own challenges. 


At LeX-Wealth, we specialise in insurance and wealth-management services, specifically geared toward expats and their unique needs. Our English-speaking specialists offer continuous support, no matter how diverse your goals are. Contact us today to learn more.


33 views0 comments

Comments


bottom of page