Germany - Tax Guide for Freelance Contractors

Residents and non-residents working in Germany are required to pay social security contributions on their gross salary in Germany or in the country of their employer after an E101 has been issued.

Social security rates for 2010:

Contributions have to be made to old-age insurance (19.9%) and unemployment insurance (2.8%) on salary up to EUR 5’500 per month (employer and employee pay half each), nursing care insurance on salary up to EUR 3’750 (1.95% for employer and employee and an extra 0.25% paid by a childless employee).

The employer also has to contribute to an accident insurance for his employees and for maternity indemnity insurance. Small companies with less than 30 employees have to pay for sickness indemnity insurance as well.

Health insurance is obligatory for employees with a salary of less than EUR 49’950 per year. It is calculated on a maximum of EUR 3’750 per month. The rate is 14.9%, with the employer paying 7.0% and the employee 7.9%. Employees who want to opt out of the State health insurance have to prove that their earnings are not only above the current threshold but have been above certain thresholds in the last three calendar years.