founderjob / Countries / Germany
Employer of record in Germany: the cost, the AÜG licence and the freelancer risk
Hiring in Germany on €60,000?
It's €60,000 €72,780.
Your cost is €72,780 a year. German employer social contributions come to 21.3% of gross up to €69,750 a year for health and care and €101,400 for pension, and the employer of record fee of €99 to $699 a month comes on top.
Employee, GermanyYearly cost to you
- Gross salary€60,000
- PensionRentenversicherung9.30%€5,580
- UnemploymentArbeitslosenversicherung1.30%€780
- HealthKrankenversicherung7.30%€4,380
- Health fund top-upZusatzbeitrag, employer half1.45%€870
- Long-term carePflegeversicherung1.80%€1,080
- Insolvency levyInsolvenzgeldumlage0.15%€90
Employer of record, your own company, or a contractor
Three ways to put one person to work in Germany.
Employer of record
- Fits when
- A first employee in Germany, or a freelancer you need to bring onto a proper German contract, before you are ready for a GmbH.
- What you pay
- €72,780 a year, and a provider fee between €99 and $699 a month.
- Watch out for
- If your person works under your instructions inside your team, German law calls that Arbeitnehmerüberlassung. The provider then needs a licence under the AÜG, and the same person can usually be placed with you for at most 18 consecutive months.
Your own GmbH
- Fits when
- A German team you are building for the long run, or a hire who will stay well past 18 months.
- What you pay
- €72,780 a year for each hire, plus at least €25,000 of share capital, of which at least half must be paid in before you can register, and German payroll and accounting after that.
- Watch out for
- The capital is the visible cost. The rest is admin: the commercial register entry, a payroll provider and a tax adviser.
Contractor (freelancer)
- Fits when
- A freelancer with their own clients who works on a project basis and does not take day-to-day instructions from you.
- What you pay
- Their invoice, and no German social contributions while the status holds.
- Watch out for
- If the German Pension Insurance finds employment, you owe the contributions, and the employee's share can only be taken from their next three pay runs. See the section below.
Keeping them as a contractor? Here's the bill if it goes wrong
A contractor costs you no employer contributions. If the role is really a job, the authorities can claim them back.
If the contractor is reclassifiedOn €60,000 a year
- Employer contributions you skippedEach year, at today's rates€12,780
- Years the authority can reach back4 years (30 if deliberate)x 4
- Who decides 13 Nov, gesetze-im-internet.de
- Deutsche Rentenversicherung decides status (Statusfeststellung).
- On top 13 Nov, gesetze-im-internet.de
- 1% a month on the arrears.
- The employee's share 13 Nov, gesetze-im-internet.de
- You can only take back the employee's share from the next three pay runs; the rest is yours.
Employer of record providers for Germany, compared
We found 18 providers that can employ in Germany, ordered by published fee. Two columns decide more than the price: whether the provider says it employs through its own German GmbH, and whether it says it holds an AÜG licence. 9 of them publish no price for Germany, so ask them for a quote and for the licence in the same email.
- Not statedNot stated
- Not statedNot statedNot read
- daysNot statedNot read
- $349billed yearlya few days to two weeks (generic EOR statement)Not stated
- Not statedNot stated
- From 4 daysNot stated
- Not statedNot stated
- Not statedno standard deposit; refundable reserve may be required in some cases
- From 48 hoursrefundable deposit required, amount not stated
- Price not confirmedFrom two weeksNot stated
- ECOVIS KSOGermany firmDoes not publish a priceNot statedNot statedNot read
- FMC GroupRegional firmDoes not publish a price1-2 Tage (hire within 1 to 2 days)Not statedNot read
- Price not confirmedNot statedNot stated
- Does not publish a priceNot statedNot stated
- Does not publish a priceNot statedNot statedNot read
- Price not confirmedNot statedNot stated
- Does not publish a priceNot statedNot stated
- Does not publish a priceFrom two weeksNot stated
The rules you sign up to in Germany
These are the statutory floors from the BGB, the Federal Holiday Act and the Continued Remuneration Act. A collective agreement (Tarifvertrag) can set better terms, so check whether one covers the role.
- Minimum wage13 Nov, bundesregierung.de
- €13.90 an hour€14.60 from 1 January 2027.
- Paid holiday13 Nov, gesetze-im-internet.de
- 20 daysOn a five-day week (24 working days on a six-day week).
- Probation13 Nov, gesetze-im-internet.de
- Up to 6 monthsWith 2 weeks' notice during it.
- Ending the contract13 Nov, gesetze-im-internet.de
- 4 weeks' noticeTo the 15th or the end of a month. 1 month from 2 years, 2 months from 5.
- Sick pay13 Nov, gesetze-im-internet.de
- 100% for 6 weeksPer illness, paid by the employer.
Not in the total: U1 and U2 levies, set by the health fund; Accident insurance, set by the trade association (Berufsgenossenschaft). Average health fund top-up (2.9%, half paid by the employer). Outside Saxony.
Scheinselbstständigkeit: when your German freelancer is an employee
German social insurance law defines employment as non-self-employed work, and names two indicators: working under instructions, and being integrated into the work organisation of whoever gives those instructions (SGB IV § 7). A full-time freelancer in your sprint planning, taking tasks from your CTO, ticks both.
You can ask before it goes wrong. Either party can apply to the Deutsche Rentenversicherung Bund for a status decision (§ 7a), which weighs all the circumstances of the case. Where the work is done for a third party and the person is integrated there and takes its instructions, the DRV also decides whether the employment is with that third party. For a foreign startup using a German freelancer through an agency, that third party can be you.
The cost falls on you. The employer pays the total social insurance contribution (§ 28e). The employee's share can only be deducted from pay in the next three pay runs; after that, only if the employer was not at fault (§ 28g). Claims run for four years after the end of the year they fell due, and for thirty years if contributions were withheld on purpose (§ 25).
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The AÜG: licence, 18 months and who pays if it fails
Germany regulates the lending of employees in the Arbeitnehmerüberlassungsgesetz (AÜG). Under § 1, workers are lent when they are integrated into the hirer's organisation and subject to its instructions. That describes most employer of record set-ups, where the provider employs and you direct the work. A lender needs a licence. The contract has to be labelled expressly as Arbeitnehmerüberlassung, and the worker named, before the work starts.
The same worker can be lent to the same hirer for no more than 18 consecutive months. Earlier placements count if the gaps between them were three months or less. A collective agreement in the hirer's sector can set a different limit.
Without a licence, the contracts are void (§ 9), unless the worker declares in writing within a month that they keep their contract with the lender. If they do not, the law treats the worker as employed by the hirer from the planned start date (§ 10). That hirer is you. Even with a valid contract, the hirer stands as guarantor for the lender's social insurance contributions for the people it was lent (SGB IV § 28e(2)).
Ask your provider for its AÜG licence and for its plan at month 18 before you sign.
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The same €60,000 hire across Europe
Total yearly cost to the employer. Light is the salary, blue is what the employer adds by law. Try your own salary.
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Being checked
Questions founders ask about Germany
Is an employer of record legal in Germany?
Lending employees is legal with a licence under the AÜG. Where your person works inside your team and takes your instructions, the law calls it Arbeitnehmerüberlassung, so the provider needs that licence. Without it, the contracts are void and, unless the worker objects in writing within a month, the law treats them as your employee. Ask for the licence in writing.
Is there an 18-month limit on an employer of record in Germany?
Under the AÜG, the same worker can be lent to the same hirer for at most 18 consecutive months, and earlier placements count if the gap was three months or less. A sector collective agreement can change the limit. Plan the exit before you start: a GmbH of your own, or another structure your provider can explain in writing.
What happens if my freelancer in Germany is found to be an employee?
You owe the full social insurance contribution, and you can only recover the employee's share from the next three payslips unless you were not at fault. Claims reach back four years after the end of the year they fell due, and thirty years if contributions were withheld on purpose. Settle the status before the work starts, not after an audit.
How can I check a freelancer's status in Germany?
Apply to the Deutsche Rentenversicherung Bund for a status decision under § 7a SGB IV. You or the freelancer can file it. The DRV weighs all the circumstances, and where the person works integrated into a third party under its instructions, it also decides whether the employment is with that third party.
How much does an employer of record cost in Germany?
At €60,000, the employment costs €72,780 a year: employer contributions of 21.3% up to €69,750 a year for health and care and €101,400 for pension, before the accident insurance and sick-pay levies that vary by employer. Add the provider's fee, €99 to $699 a month among those that publish. 9 more only quote on request.
What changed
- 2026 ceilings (€101,400 and €69,750) checked on bmas.de.
- Pension (18.6%), unemployment (2.6%) and long-term care (3.6%) rates checked on deutsche-rentenversicherung.de and bundesgesundheitsministerium.de; insolvency levy (0.15% on pay up to the pension ceiling) on deutsche-rentenversicherung.de and § 360 SGB III. Employer halves unchanged.
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