The following applies in the European Union: Employees who work in a Member State are obliged to pay social security contributions in that Member State, irrespective of the country in which the employer’s registered office is located, based on Article 21 (1) of the Regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems. This means that a foreign employer must register his employees in Germany for social insurance and pay contributions as if the company had a registered office in Germany.
Exceptions apply in two cases:
Companies require a company number to employ staff in Germany who are subject to social insurance contributions. The number is assigned by the Federal Employment Agency. This number is needed to register with the German social security institutions.
Employees in Germany are free to choose the statutory health insurance fund they would like to be insured with. Before the start of the employment relationship, the employee informs the employer which fund he or she has chosen.
Anyone who employs a person in Germany who is subject to social insurance contributions must use a special online registration procedure. For this purpose, companies use payroll accounting programs that are approved for the exchange of data with health insurance funds.
If employers do not have such a program, they can use the online registration tool provided by the health insurance funds sv.net.
It is part of the employer’s obligation in Germany to send the social security contribution statements on time and to pay the contribution. Proof may also only be submitted online via system-checked accounting programs or via tools such as sv.net. At the latest on the fifth last bank working day of the month, the contribution statement must be available at the health insurance fund with which the employee is insured.
Contributions are due no later than the third last banking day of the respective month of employment.
From 1 January 2021, foreign employers with employees obliged to pay social security contributions in Germany must appoint an authorised representative in Germany who must keep and retain remuneration records in German for future company audits; this can be the employee himself or a third party (e.g. tax advisor).
By February 15 of each year at the latest, the health insurance fund must be notified of the employee’s salary in the previous year. This is the value on the basis of which the contributions were calculated. The health insurance fund forwards this to the relevant pension insurance fund as part of an annual report.
Practical tip: As an employer based abroad, you can agree with the employee in Germany that the latter will take over the employer’s task of paying the contributions on your behalf. In this case, the employee is responsible for registering with a social insurance fund, submitting the contribution statements, and paying the total social insurance contributions. However, the employer remains liable to the social security institutions for the payment of contributions.
Photo: Adobe Stock, joda
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