The Wage account is a legally prescribed payroll tax record kept by the employer. Pursuant to Section 41 of the Income Tax Act (EStG), a Payroll record must be maintained for every employee and each calendar year, in which certain characteristics and values of the Lohnsteuer deduction are recorded.
What is a Payroll record?
The Payroll record documents employee-related information required for the Lohnsteuer deduction for a calendar year.
This includes both specific personal and tax characteristics as well as information on the individual wage payments. The Payroll record is continued during the employment relationship and closed at the end of the calendar year or when the employment relationship is terminated.
What information does a Payroll record contain?
The details that must be recorded in the Payroll record follow in particular from Section 41 of the Income Tax Act (EStG) and Section 4 of the Income Tax Implementing Regulation (Wage tax-LStDV). Depending on the circumstances, these include, among other things:
- personal details of the employee
- the characteristics relevant for the Lohnsteuer deduction
- the retrieved ones ELStAM
- Payday and pay period
- Type and amount of remuneration paid
- certain tax-free or flat-rate taxed remuneration
- the retained or assumed Wage tax
- further statutory markings and information
Which specific details are actually required depends on the respective employment and payroll circumstances.
Payroll record and Payroll – what is the difference?
The Payroll represents the billing result for a specific employee and Payroll period.
By contrast, the Payroll record is the calendar-year, employee-specific record of the statutory payroll tax details.
In short: The Payroll concerns a Payroll period – the Payroll record compiles an employee's mandatory wage tax records over the calendar year.
Payroll record and Payroll journal – what is the difference?
The Payroll record is employee-related and legally required. A Payroll journal is, by contrast, a summary evaluation of billing data for several or all employees for a specific period.
The Payroll journal is therefore not to be equated with the legally regulated Payroll record.
Connection with Wage tax certificate
At the end of the calendar year or upon termination of the employment relationship, the Payroll record is finalised. Based on the records contained therein, the employer transmits the data required by law for the electronic Income Tax Certificate.
How long does a Payroll record need to be kept?
Under § 41 EStG, wage accounts must be kept until the end of the sixth calendar year following the most recently recorded wage payment.
