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.
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 (~€7,248 in 2025) per employee
- 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 for health/care in 2025), employer SV contributions are capped — so the addition for high-earners is proportionally lower.
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