German tax and social security authorities (2)

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Foreign entities who want to start business activities in Germany face numerous legal requirements. They also have to deal with various authorities and other semi-official organisations. This article describes authorities and organisations who are in charge of tax and social security issues. Part 1 described the taxation of business entities and related issues. This is part 2 which describes authorities and organisations a German employer has to deal with.

(1) Tax authorities

In general different tax offices are responsible for the tax affairs of employer and employee. The employer has to withhold the salary and wage tax and to pay it on behalf of his employees to his local tax office. He has extensive obligations concerning reporting and documentation. Tax authorities carry out special tax audits focussing on salary and wage tax only.

Social security contributions are not collected by the tax authorities.

(2) Social security organisations

Social security contributions in Germany are compulsory for

  • Health insurance
  • Nursing care insurance
  • Pension insurance
  • Unemployment insurance
  • Accident insurance

Contributions to the first four mentioned insurances have to be paid by employer and employee on an equal basis. Contributions to the accident insurance have to be paid exclusively by the employer.

Various semi-official health insurance companies are responsible for the collection of social security contributions. In 2014 there were 132 different health insurance organisations in Germany! Since every employee is free to choose any of the 132 insurance organisations the employer might have to report relevant data to numerous organisations and to pay contributions to these organisations.

In special cases employees are entitled to choose a private health and nursing care insurance. Insurance premiums have to be paid to the private insurance companies.

The accident insurance has to be paid to special semi-official accident insurance organisations. Employers have to report relevant figures once a year to the organisation which is responsible for the business sector of the employer.

For special issues concerning the statutory pension insurance a central federal bureau is responsible. This bureau is also responsible for social security audits.

Special types of professions have their own insurance organisations:

  • Artists insurance
  • Pension organisations for professions like lawyers, chartered accountants, tax advisers

(3) Other organisations

For special issues the local labour office is responsible. This applies for example for

  • Child benefits
  • Short-time working allowance
  • Parental leave

The employer has to report various employment relevant data to the Federal statistic office.

Glossary

Tax authorities Steuerbehörden
Tax office Finanzamt
Social security organisations Sozialversicherungsträger
Health insurance Krankenversicherung
Nursing care insurance Pflegeversicherung
Pension insurance Renteversicherung
Unemployment insurance Arbeitslosenversicherung
Accident insurance Unfallversicherung
Health insurance organisation Krankenkasse
Accident insurance organisation Berufsgenossenschaft
Central federal pension bureau Deutsche Rentenversicherung Bund
Artists insurance Künstlersozialkasse
Pension insurance organisation Versorgungswerk
Labour office Arbeitsamt
Child benefits Kindergeld
Short-time working allowance Kurzarbeitergeld
Parental leave Elternteilzeit
Federal statistic office Statisches Bundesamt

 

Authors: Peter Scheller, Tax Adviser – Master of International Taxation, www.scheller-international.com / Alexander Wangerowski, Tax Adviser

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