Change in social security contributions and social contribution assessment ceiling 2023
When employing in Germany, employers will face additional costs on top of gross salary as contracted with their staff. German social security contributions can amount to > EUR 1,400 each month, so an extra 17k annually.
Generally speaking, half of social security contributions are paid by employing companies (on top of gross salary) while the other half is to be paid by employees. Still, the employer is obliged to do all payroll deductions and transfer the amounts to respective insurances and the wage tax authority. In return, German employees are covered under health insurance, nursing care insurance, unemployment insurance and the statutory pension system.
The social security contributions and income thresholds change in some cases at the turn of the year. For details on the contributions and their changes in 2023:
Social contribution assessment ceiling
The social contribution assessment ceiling change only slightly:
- The social contribution assessment ceiling for health and long-term care insurance has risen to EUR 4,987.50 per month or EUR 58,850 per year in 2023. The nationally uniform compulsory insurance limit in statutory health insurance (annual income limit) has risen to EUR 66,600 since 2023.
- The social contribution assessment ceiling for pension and unemployment insurance has risen both for “West” and “East”: to EUR 7,300 per month West (EUR 87,600 per year West) and for “East” to EUR 7,100 per month East (EUR 85,200 East).
The 2023 contributions at a glance
The contribution rates remain largely unchanged:
Health insurance: 14.6% + additional contribution (~1.6%)
Nursing Care: 3.05% (+ 0.35% from childless)
Pension Insurance: 18.6%
Unemployment insurance: 2.6%
Health insurance
The general contribution rate to health insurance remains unchanged at 14.6%.
The additional contributions vary depending on the health insurance fund. They generally range between 0.2% and 1.9%. The average additional contribution for the year 2023 is according to BAnz AT 31.10.2022 B5.pdf (bundesanzeigera.de) now 1.6% (previously 1.3% in 2022). As in the previous year, the employer pays half of the contribution on a parity basis.
Nursing Care
The parity contributions to long-term care insurance will remain unchanged at 3.05% compared to 2022.
The additional contribution to be paid by childless employees over 23 years of age will remain unchanged at 0.35% in 2023.
The special case in the federal state of Saxony also remains: There, the employee continues to pay a higher share of the long-term care insurance contribution (employee 2.025%; employer 1.025) because the holiday “Day of Prayer and Repentance” was retained.
Pension insurance
The pension insurance contribution remains unchanged compared to the previous year at 18.6%.
Unemployment insurance
The contribution to unemployment insurance increases to 2.6% (2.4% in 2022).
Accident insurance
The amount of the accident insurance contribution is calculated individually for each company by the Berufsgenossenschaften. On average, the accident insurance contribution is 1.3%.
Apportionments U1 and U2
The U1 (compensation for continued payment of wages in case of illness) and U2 (compensation for maternity leave) contributions are set by the health insurance funds and therefore vary in amount. In addition, there are different levels of coverage, with different contribution levels.
Insolvency pay
The insolvency pay (“Umlage U3”) will fall as of 1.January.2023 according to BunFederal Law Gazette BGBl. online archive 1949 – 2022 | Bundesanzeiger Verlag from 0.09 per cent to 0.06 per cent (after doubling to 0.12 per cent in 2021 from 0.06 per cent in 2020).
Practical note
We would be happy to advise you on whether and how exactly benefits in addition to a pure fixed salary and/or bonus payments in EUR can make sense.
Take advantage, for example, of the new tax-free inflation compensation bonus (up to EUR 3,000 gross = net, still possible until the end of 2024) or the classic occupational pension scheme: co-financed by employees with only a financially neutral contribution from the employer in the case of deferred compensation.
Tax- and social security-free benefits such as job tickets, day-care subsidies, lunch contributions, etc. are popular and financially attractive measures both for salaries above and below the income threshold; more recently, the discounted purchase of “job bikes”, especially e-bikes, in addition to company cars (increasingly with e- and hybrid drive systems) also contribute to the satisfaction of the workforce.
Your expert
