Wages tax - Lohnsteuer
Employers based in Germany are obliged to withhold wages tax for their employees. The employer must report and pay this tax to the local tax office of his company.
To do so, they submit an electronic wages-tax return. Depending on the amount of wages tax, it must be reported and paid monthly, quarterly or annually.
As of the 1.1.2013, it is only be permissible to file the wages-tax-return electronically with authentication. To get the electronic certificate which is needed for authentication the employer has to register electronically at ElsterOnline-Portal under www.elsteronline.de.
Wages tax is due on the 10th of the following month at the latest.
Employers not based in Germany (without residence, habitual abode, place of management, registered office, permanent establishment, a person acting on behalf of the business in Germany) are not obliged to withhold wages tax. In this case the employee has to pay income tax pre-payments to his responsible tax office.
Social insurance (social security)
The social insurance in Germany includes health, nursing care, pension, unemployment and accident insurance (www.deutsche-sozialversicherung.de).
Employers are obliged to register their employees at the employee’s compulsory health insurance. The compulsory health insurance of the employee collects all social contributions. The health insurance passes the proportional contribution to the other compulsory social insurances. In general, the employer and employee each pay half of the contributions. The employer pays contributions to accident insurance.