A UK company’s first employee in Germany: what the employer needs to arrange

Tax year: 2026 (calendar year). Sources checked 4 October 2026. For UK companies directly hiring an ordinary employee who will habitually work in Germany. This Guide explains the German registrations and decisions needed before payroll starts. Net-pay calculations, UK PAYE treatment and immigration permission require their own work.

What changes when you hire in Germany

Your first German employee brings several decisions before the first payroll: where social insurance is due, which employer registrations are needed, who handles German records and whether the company must deduct German wage tax. A UK payroll arrangement cannot answer those questions by itself. The company also needs a separate assessment of any German corporate-tax presence. DVKA: foreign employers, § 38 EStG, § 12 AO

For an ordinary direct hire, the steps below show how those decisions fit together. A temporary posting or regular work in several countries needs a different social-insurance assessment before the same setup can be used.

Before you start

• Will the person work habitually in Germany, or divide their work between countries?
• Which company employs them, and is a German company or office involved in their work?
• When do they start, what will they do, and is any foreign social-insurance coverage being claimed?

These facts establish the route. The payroll provider can then request the specific information needed at each step.

What to do

1. Establish where social insurance is due. German employment generally falls within German social-insurance law; international coordination can change that result. The employee’s work pattern and existing insurance establish which system and insurance branches apply. The payroll provider needs the start date, work locations, other jobs and health-insurance details to make that assessment. A fresh local hire is not proved to be a UK posting by retaining a UK bank account or employment contract. Where foreign coverage is claimed, the certificate’s legal basis, issuer, dates and underlying assignment facts need to support it. A posting or multi-country arrangement should be resolved with the competent institution before payroll treats it as exempt. § 3 SGB IV, § 6 SGB IV, DVKA coordination

2. Appoint the German representative and retain records. An employer with no domestic seat must appoint a representative resident in Germany for the statutory wage-record duties. The appointment should make clear who holds the records, where they are accessible and who answers an audit. German-language records must be kept in Germany, by employee and calendar year, until the end of the calendar year following the last audit. A payroll software subscription does not itself establish this appointment. § 28f(1), (1b) SGB IV

3. Arrange statutory accident insurance. The competent accident insurer needs the business details within one week of the relevant business commencement. For an existing UK undertaking starting German activity, the insurer or adviser should confirm when that obligation begins. A timely qualifying trade notification can fulfil the statutory notification requirement. The insurer provides the Unternehmensnummer needed for the next registration. A foreign undertaking must also address its accident-insurance representative obligation. The representative’s appointment should expressly cover that role. § 192 SGB VII, § 130(2) SGB VII

4. Obtain the Betriebsnummer. The employer or authorised agent applies electronically through the Federal Employment Agency's Betriebsnummern-Service. The application needs the employment-location address, activity classification, legal form and Unternehmensnummer so the correct employment establishment can be registered. The Unternehmensnummer comes from the accident insurer and is distinct from the Betriebsnummer and tax number. The number belongs to the employer’s employment establishment, rather than the payroll provider. Keep its confirmation and report changes promptly. Agency application guidance, Agency prerequisites, § 18i SGB IV

5. Set up the collecting institution and reports. For ordinary insured employment the statutory health fund normally collects health, care, pension and unemployment contributions. Private health insurance does not remove any pension or unemployment contributions that remain due; those still need a collection route. Minijobs use their separate collecting institution and require a different calculation route. The employee’s social-insurance number, insurer details, duties and other employment help the payroll provider select the reporting classifications and collection account. The collecting institution can resolve relevant insurance-liability doubts. § 28i SGB IV, § 28h SGB IV

6. Register the employee on time. The ordinary insured-employment start report is due with the first following payroll, no later than six weeks after commencement. Separately check whether the sector requires a Sofortmeldung by the start of work; that immediate report does not replace the ordinary registration. The payroll provider should retain the accepted registration and resolve any rejection before treating the employee as registered. § 6 DEÜV, § 28a SGB IV

7. Decide whether the employer must deduct German wage tax. Section 38 EStG sets the relevant employer conditions. Relevant employer connections include German residence, management, seat, establishment or permanent representative. Foreign commercial labour leasing has its own branch. In an international assignment, a qualifying German host can be the domestic employer if it economically bears, or should bear under arm's-length principles, the remuneration. No German incorporation therefore does not prove absence of withholding. Equally, German social-insurance registration alone does not establish wage-tax withholding. Contracts, management locations, the employee’s role and any host-company recharges help establish who is responsible. Where the result is uncertain, the tax adviser can consider an Anrufungsauskunft—a wage-tax ruling—before payroll starts. § 38 EStG, § 42e EStG

8. Put the tax arrangement in place. Where withholding applies, the payroll provider needs a tax-office account and authenticated reporting access. The employee’s tax ID, date of birth and main-or-additional job information allow retrieval of the ELStAM, the electronic wage-tax details. Changes and exceptions need checking for each payroll. The statutory new-establishment rule determines the filing interval; a small headcount does not establish quarterly filing. The return and payment generally fall due on the tenth day after the reporting period. § 39e EStG, § 41a EStG

   Where the employer has no German withholding obligation, the employee still needs advice on German income-tax reporting and advance payments. German residence can establish unlimited income-tax liability, and the tax office sets advances by assessment. Any UK payroll consequences need separate UK advice. § 1 EStG, § 37 EStG

9. Agree who runs payroll and funds the payments. The employer is responsible for the total social-insurance contribution. Employee shares are normally recovered through wage deduction, subject to statutory limits for missed deductions. The company should agree responsibility for calculations, returns, payment funding and notice reconciliation with its provider. Salary, benefits, variable pay, hours and contract terms are needed to calculate the payslip after the insurance and tax decisions are settled. The German payroll Guide (germany-payroll) covers those calculations and the routine payroll cycle. § 28e SGB IV, § 28g SGB IV

   Contributions can fall due before salary is paid: the statement precedes the due date by two working days; the expected contribution is generally due by the third-last bank working day of the month, with the statutory following-month reconciliation. The provider’s collection calendar should give the company enough time to fund those payments. § 28f(3) SGB IV, § 23 SGB IV

10. Assess the company’s tax presence and the employee’s right to work. German domestic fixed-place and permanent-representative concepts require their own facts; a worker who habitually concludes or intermediates contracts or obtains orders merits specific review. The corporate-tax adviser needs office or home-office access arrangements, hiring and sales authority, negotiation activities and where management decisions are made. Those facts support the separate domestic and UK–Germany treaty assessment of permanent establishment and company residence. Employer registration and social-insurance certificates do not settle it. Employment-law terms and immigration permission also need review before work starts. § 12 AO, § 13 AO

Examples

These examples show how the decisions can differ; they do not calculate a payslip.

• Local hire, no company subsidiary: an ordinary employee works indefinitely only in Germany for a UK company. No foreign-coverage exception is evidenced. German social-insurance registration is needed, while wage-tax withholding requires the separate section 38 assessment. A German subsidiary is not a prerequisite for recognising those obligations. DVKA foreign employers
• Insurance applies, withholding does not: the adviser confirms no § 38 employer/host/leasing trigger on fully documented facts. German insurance registration and contributions continue. The employee needs income-tax and advance-payment advice even though the employer is not required to withhold. § 38 EStG, § 37 EStG
• UK payroll, German economic host: a German host should bear the assigned worker's remuneration but the group has not posted a recharge. The missing invoice does not remove the need to assess the host’s wage-tax responsibilities. § 38(1) EStG
• Certificate claimed, facts changed: a certificate covers an earlier temporary assignment, but the employee is now hired indefinitely in Germany. The changed facts require a fresh decision on which insurance law applies; the old certificate cannot simply be assumed to cover the new arrangement. § 6 SGB IV, DVKA coordination
• Late first payroll: the first payroll is after the six-week registration limit. The employer cannot wait for payday to register. In a listed immediate-report sector, the start-of-work deadline was already earlier. § 6 DEÜV, § 28a SGB IV

Before the first payroll

The company and its provider should be able to identify the insurance arrangement, German representatives, accident insurer, employer number, collecting fund and accepted employee registration. They should also know who handles wage tax—or the employee’s income-tax obligations where withholding is not required—and who funds each payment.

Keep the registrations, mandates, relevant certificates and tax advice together so a change of payroll provider or an authority enquiry does not require reconstructing the setup. Review the arrangement when the employee changes workplace, travel pattern, host company or contract authority, or when coverage expires. Current rates and reporting requirements need checking for each new calendar year.

When to get advice

• Resolve uncertain insurance coverage, required representatives, missing registrations and the withholding decision before treating the payroll setup as complete.
• Temporary UK postings, regular work in several countries and certificate disputes need an assessment under the applicable coordination rules. EU telework arrangements cannot simply be assumed to cover a UK case.
• Labour leasing, directors and shareholders, employment-status disputes, equity remuneration and regulated sectors need specialist advice beyond this ordinary direct-hire route.
• Company tax presence, profit attribution, corporate residence, employment-law terms and immigration permission need their own conclusions alongside payroll registration.