How to read a Gehaltsabrechnung
At the top are personal details, the tax class (Steuerklasse) and the period. Then the monthly gross (Bruttoverdienst), the deductions (Abzüge) and at the bottom the net (Nettoverdienst) that is transferred to the account.
The deduction items have their own names: Lohnsteuer is the tax, and contributions appear as Krankenversicherung, Rentenversicherung, Arbeitslosenversicherung and Pflegeversicherung. Seeing them together for the first time is daunting, but the pattern is stable month to month.
Tax: Lohnsteuer and tax class
Lohnsteuer is the withholding against German personal income tax, progressive: it rises with salary and depends on the tax class, which changes according to marital status. There are six classes; I is for singles and III for married couples with a single earner, the most favourable for net pay.
Two points almost nobody expects: the solidarity surcharge (Solidaritätszuschlag) has only been paid by high earners since 2021, so most employees do not see it on their payslip; and if the worker is a member of a church, church tax (Kirchensteuer) is also deducted, at 8% to 9% of the Lohnsteuer.
Social contributions: around 40%, split evenly
In total, contributions are around 40% of gross and are split almost equally between company and worker. The share borne by the worker is close to 21% of gross; the rest of the deduction down to net pay is the Lohnsteuer.
Key points
- Health (Krankenversicherung): 14.6% plus an insurer surcharge of around 2.5-3%, split evenly between company and worker
- Pension (Rentenversicherung): 18.6%, split evenly
- Unemployment (Arbeitslosenversicherung): 2.6%, split evenly
- Care (Pflegeversicherung): 3.6%, split evenly, plus 0.6% only for those over 23 with no children
Pay: 12 monthly payments and extras under the collective agreement
Salary is agreed as an annual gross figure and paid in 12 monthly instalments. There is no statutory extra payment: the Christmas Weihnachtsgeld and the summer Urlaubsgeld exist under a collective agreement (Tarifvertrag) or an individual contract, and those without a collective agreement may never see them.
The minimum wage (Mindestlohn) is 13.90 euros per hour in 2026, around 2,400 euros gross per month for a full-time position. Collective agreements in metal, chemicals or banking set minimums far above that.
From gross to net with an example
With 4,000 euros gross per month, the employee takes home between 2,200 and 2,600 euros depending on their tax class and family circumstances. The company pays around 4,800 euros in total when it covers its half of the contributions, which is the usual arrangement.
The practical rule for budgeting a German subsidiary: the employee's net is around 55-65% of gross, and the total cost to the company adds roughly 20% more on top of the agreed gross.
What to watch out for when hiring in Germany
In Germany the employee receives their payslip with the same structure regardless of their tax class; what changes is the amount of Lohnsteuer. If you hire a newly arrived Spaniard in Steuerklasse I, their net will be the lowest possible for their situation, and it is worth explaining this before they do their sums based on the gross figure.
Key points
- Offers in annual gross: the contract sets the year, not the month
- Employee's tax class: it changes the net, not the company cost
- Collective agreement (Tarifvertrag): it determines working hours, extra payments and salary minimums
- Accident insurance (Berufsgenossenschaft): mandatory and separate from social contributions
