Posting of foreign employees to Germany
Posting of foreign employees to Germany
Application, registration and taxes
Employees who are posted to Germany from abroad require a German tax ID number before starting work. Many companies do not take this into account. You also need the deduction features for wage tax (formerly tax class – now ELStAM). This is the only way for companies to be able to make payroll accounting for these employees with the most favorable wage tax deduction for them.
If this information is not available, the employee must be settled according to the least favorable tax class. This leads to a tax burden of around 50%. The employee then often lacks liquidity and will complain to their employer. If the tax number or deduction details are provided retrospectively, it is no longer possible to correct the payslips. The excess income tax paid can only be recovered from the employee as part of an income tax assessment in the following year.
Visa and work permit
When posting workers from third countries (non-EU or EEA countries), please also ensure that you apply for a work permit and visa in good time beforehand. If employment is taken up despite the absence of a work permit, this is illegal employment. Both the employee and the employer can be prosecuted under criminal law. This may result in the employee being deported.
Application, registration and taxes
If the employment in Germany does not exceed five years and contributions are paid into the German pension insurance, the foreigner is not entitled to benefits from the pension fund (old-age pension). Contributions paid in can then be reclaimed with an application. This should not be forgotten.
If there is a social security agreement between Germany and the foreign country, the foreign employee can be exempted from the German social security obligation by presenting an A1 certificate from the social security institution in their home country. In this case, the employee should check whether the health insurance cover in their home country also covers medical expenses in Germany. If not, a corresponding supplementary health insurance policy for Germany would have to be taken out.
