The Gross wage This is an employee's Remuneration before the deduction of Wage tax and employee contributions to Social security. It can be made up of fixed and variable remuneration components.
What is gross pay?
The Gross pay refers to the Remuneration before statutory deductions. In addition to the agreed basic wage, it can include things like certain allowances, bonuses, premiums or other components of remuneration.
Which components belong to the Gross pay in a specific case and how they are treated for tax or social security purposes depends on the respective type of remuneration.
What components can the Gross pay contain?
Depending on Employment relationship, examples of Gross pay may include:
- Basic salary or fixed salary
- Allowances
- Supplements
- Premiums and bonuses
- Lump sum payments
- certain benefits in kind or pecuniary advantages
Gross pay and Net pay – what is the difference?
The Gross wage refers to the Remuneration before statutory deductions. The Net wage is generally calculated after deducting Wage tax and the employee's share of contributions to the Social security.
The actual payout amount may differ from Net pay if further deductions, offsets or additional payments are taken into account.
Gross pay, gross earnings for tax and gross earnings for social security
The Gross pay is to be distinguished from the assessment bases for tax and Social security.
- Gross taxable income: tax-relevant assessment basis for the Wage tax.
- gross social security salary: contributory assessment basis for the Social security.
Gross taxable income and gross social security earnings therefore do not necessarily have to be identical to the total Gross pay.
Connection to the Payroll
The Gross pay is a key output variable of Payroll. The statutory deductions are calculated on the basis of the respective tax and social security assessment values.
