Can I Claim Arbeitnehmergehälter (Staff Salaries) as a Business Expense in Germany?
Yes: employee salaries and wages are fully deductible as Betriebsausgaben under §4 EStG / §8 KStG. Deductible amounts include gross salary plus all employer social insurance contributions (approximately 20% additional), and employer pension contributions to company pension schemes.
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What Federal Central Tax Office (BZSt) & Finanzämter says
§4 Abs. 4 EStG (Betriebsausgaben) / §8 Abs. 1 KStG. Salaries must be at arm's length and actually paid: accruals are deductible when the obligation crystallises. For 2026 the BMAS sets the pension and unemployment insurance ceiling at €8,450 a month (€101,400 a year) and the health and long-term care ceiling at €5,812.50 a month (€69,750 a year). The pension rate stays at 18.6% and the general health rate at 14.6%, plus the fund's own Zusatzbeitrag. Employer and employee normally share these rates equally. The marginal employment limit (Geringfügigkeitsgrenze) rises to €603 a month from 1 January 2026 as the minimum wage moves to €13.90 an hour.
When you can claim
- All gross employee wages including bonuses, holiday pay (Urlaubsgeld), and Christmas bonuses (Weihnachtsgeld)
- Employer share of all five social insurance pillars: Kranken-, Renten-, Arbeitslosen-, Pflege-, and Unfallversicherung (~20–21% of gross wage)
- Company pension (betriebliche Altersvorsorge) contributions up to 8% of the Beitragsbemessungsgrenze per employee, which is €7,728 for 2025 and €8,112 for 2026 on the pension ceiling of €96,600 and €101,400 a year
- Geschäftsführer salary in a GmbH where the managing director is also the shareholder: must be at arm's length and agreed in advance in a Anstellungsvertrag
When you cannot claim
- Geschäftsführer remuneration paid to shareholder-directors where no formal Anstellungsvertrag exists: treated as hidden dividend distribution (verdeckte Gewinnausschüttung)
- Salaries that appear unreasonably high compared to arm's length benchmarks: Finanzamt may reclassify excess as a verdeckte Gewinnausschüttung
- Payments to family members in roles without genuine employment substance
Good to know
Pro tip: For GmbH owner-Geschäftsführer salary: have a written Anstellungsvertrag agreed by the shareholder meeting before the year starts. The Finanzamt regularly challenges retrospective salary agreements as verdeckte Gewinnausschüttungen.
Important: The full employer SV cost is deductible, not just the capped contribution. However, where an employee earns above the Beitragsbemessungsgrenze (€66,150 a year for health and care in 2025 and €69,750 in 2026), employer SV contributions are capped, so the addition for high-earners is proportionally lower.
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