One of the topics that many people planning to move to Germany or looking for a job in Germany are most curious about is the salary system. Unlike in Turkey, salaries in Germany are usually stated as gross (brutto). But what does that mean? How do the tax classes work? What does your net salary depend on? In this article, we explain everything you need to know about the salary system in Germany.
What are gross and net salary in Germany?
- Gross salary (Bruttogehalt): The salary stated in the contract between employer and employee. Taxes and social insurance contributions have not yet been deducted.
- Net salary (Nettogehalt): The salary that is paid into the employee’s bank account every month, i.e. what remains after deductions.
Example: An employee with a gross salary of €4,000 may receive a net salary of around €2,500, depending on their tax class and personal situation.
Tax classes (Steuerklassen)
In Germany, tax classes depend on the employee’s marital status and family members. These classes have a direct effect on net salary.
| Tax class | Description |
|---|---|
| 1 | Single, divorced or widowed |
| 2 | Single parent |
| 3 | Married, spouse with low income |
| 4 | Married, with equal incomes |
| 5 | Married person whose spouse has a high income |
| 6 | Higher tax rate applied to a second job |
Through this classification, the state sets income tax rates according to the person’s social and economic situation.
What are the mandatory deductions?
The following mandatory deductions are made from the gross salary:
- Income tax (Lohnsteuer)
- Pension insurance (Rentenversicherung)
- Health insurance (Krankenversicherung)
- Unemployment insurance (Arbeitslosenversicherung)
- Long-term care insurance (Pflegeversicherung)
The rates of these deductions are updated every year and are shared between employer and employee. The part reflected in the employee’s net salary makes up about half of these total contributions.
Why are salaries discussed in gross terms?
- In all official documents, job advertisements and contracts, salaries are stated as gross amounts.
- Net salary is calculated individually, because factors such as tax class, number of children and type of insurance differ from person to person.
- This allows employers to make a standard comparison.
How is net salary calculated?
To calculate your net salary, online Brutto-Netto-Rechner (gross-to-net salary calculator) tools are widely used. With these tools, you enter:
- your gross salary
- your tax class
- your health insurance
- your federal state
- your number of children
and find out your approximate net salary.
Example calculator: Nettolohn.de
Conclusion
In conclusion, the salary system in Germany works differently from Turkey, which can be confusing, especially for newcomers. Calculations based on the gross salary are personalised according to the tax system and turn into the net salary. When assessing a job offer, you should therefore look not only at the gross salary, but also at the net salary and other social benefits.
PIA Advice guides you through the process of settling and working in Germany and helps you get the right information. Contact us for support with calculating your net salary, choosing your tax class and reviewing your employment contract.