Doing payroll yourself: what every month involves in Germany

From gross to net

The payroll starts from gross pay. Wage tax comes off it, where due the solidarity surcharge and church tax, and the employee's share of health, long-term care, pension and unemployment insurance. Wage tax follows the programme flowchart (Programmablaufplan) the Federal Ministry of Finance publishes every year; contributions follow the rates of each health insurer.

Each employee's tax characteristics, such as tax class, allowances and denomination, the employer retrieves electronically from the tax administration (ELStAM).

What is reported, and by when

• The wage tax return (Lohnsteuer-Anmeldung) to the tax office over ELSTER, monthly, quarterly or yearly depending on the amount of wage tax, by the 10th of the following month.
• The contribution statement (Beitragsnachweis) to each health insurer, two working days before the due date; the contributions themselves are due on the third-last banking day of the current month.
• The social insurance notifications: registration when employment begins, deregistration when it ends, and the annual notification for every year.
• On leaving and at the year end, the electronic wage tax certificate, for the calendar year by the end of February of the following year.

The payroll account and the audits

For every employee the employer keeps a payroll account (§ 41 EStG). The tax office and the pension insurance audit the payroll from time to time; the data for it is handed over electronically, for the wage tax audit through the digital payroll interface (DLS), for the pension insurance audit through euBP.

What matters in payroll software

• It calculates by the official rules, the programme flowchart and the health insurers' contribution rates, up to date every year.
• It checks every social insurance notification with the official core check (Kernprüfung) before it is filed.
• It sends the wage tax return and the wage tax certificate straight to ELSTER.
• It records every change with the date from which it applies.
• It shows salaries only to those you give the rights, and each employee only their own documents.

TWT Payroll: from early 2027

TWT Payroll calculates each employee's month by the programme flowchart and with the health insurers' contribution rates. Wage tax returns and wage tax certificates go to ELSTER, and every social insurance notification passes the official core check before it is filed. Until TWT Payroll has passed the ITSG system check, you file the social insurance notifications through the SV-Meldeportal; TWT Payroll prepares every value for it.

With TWT Accounting, the closed month's payroll entry lies ready to post in your journal. TWT Payroll is available from early 2027; talk to us today.

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