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Where the other forty per cent goes
The distance between brutto and netto is the single biggest financial surprise for someone starting work in Germany, so it is worth knowing what the deductions actually are. Income tax, die Lohnsteuer, is withheld by the employer and depends on your Steuerklasse, of which there are six. A single person with no children is class 1; class 3 and 5 are the pair that married couples can split between them; class 6 is for a second job. Choosing the wrong class does not change the tax you owe over the year, only how much is withheld each month, and the annual Steuererklärung — lesson 71 — settles the difference. Then four social insurances, each roughly split between you and your employer: Rentenversicherung (pension), Krankenversicherung (health, lesson 69), Arbeitslosenversicherung (unemployment) and Pflegeversicherung (long-term care). Your half of the four comes to around twenty per cent of gross on its own. And one that catches foreigners completely off guard: Kirchensteuer, church tax, at eight or nine per cent of your income tax — deducted automatically if you gave a religious affiliation when you registered at the Bürgeramt. It is legal, it is normal, and it is avoidable only by formally leaving the church, which is its own bureaucratic act. On the other side of the ledger there are extras a contract may or may not include. Urlaubsgeld in summer and Weihnachtsgeld in November are common but not statutory; a thirteenth monthly salary amounts to the same thing. Vermögenswirksame Leistungen is a small employer contribution to a savings plan that many people never claim because they have not heard of it. And where pay is tariflich geregelt, all of this is set out in the industry agreement rather than negotiated — which cuts both ways: less room to argue, and a floor nobody can push you below. One legal point worth knowing. Germany has low salary transparency by Anglophone standards, but the Entgelttransparenzgesetz of 2017 gives employees in companies with more than two hundred staff a right to ask for the median pay of comparable colleagues of the other sex. It is used less than it could be, and asking is not held against you.