Business Expansion and Growth
Net Pay Explained: A Guide for Businesses Hiring Abroad
Vladana Donevski
Writer and payroll expert
International Employment Laws
Published on:
May 30, 2024
Written by:
Vladana Donevski
Key Takeaways
Germany has five visas available to highly educated individuals looking for work there. Most of them require a job offer from an employer.
There are alternatives for freelancers and those looking for jobs in the country. Freelancers and self-employed can start a business in Germany, provided they can prove it will be beneficial for the country’s economy.
Apart from a visa, employees will need to have residence permits. Employers should also consider tax implications, providing health and pension insurance, and other requirements.
Table of contents
Germany is one of the countries that has always been and continues to be, a very attractive destination for expats and seasonal workers.
It’s important to understand the paperwork required to make all this possible. In essence, you’ll need to have a visa and other permits if you want to relocate to Germany for work or move your team there.
Getting these may be tricky if you are unfamiliar with the processes needed for obtaining visas and relevant permits in Germany. Let’s cover how to obtain the necessary permits and other considerations such as residence permits and health insurance.
You’ll also be able to understand the costs, processing times, and other factors that will play a role in your decision whether to move and work in Germany.
Workers coming from other countries in the European Union don’t need special visas to live and work in Germany, as it is also a part of the European Union.
Countries outside the EU whose residents don’t need visas are Iceland, Liechtenstein, Norway, and Switzerland.
Citizens from other countries must get a visa to be able to live and work in Germany.
You’ll need a work visa to live and work in Germany if you are a citizen of countries other than those listed above. There are five main visas you can apply for non-EU nationals. Which one would work best for you, or your team, depends on the nature of the work.
Here are five main visas for working in Germany you can apply for:
The EU Blue Card is a work and residence permit for citizens of non-EU/EEA countries. This visa is created for highly qualified workers looking for jobs in one of the sectors where there isn’t enough qualified local workforce. In some countries, this visa is available to foreigners even if a shortage of workers in a specific industry is expected in the future.
To apply for an EU Blue card in Germany, you’ll have to provide proof that you have a higher education and work contract with a German company. Your degree must be relevant to the job position you are applying for.
There is also a minimum salary requirement. The position in Germany must provide a gross income of at least €58,400 annually. In case there is a significant shortage for the role, this requirement is lowered to €45,552.
This visa lasts for the duration of the work contract. It can last up to 4 years.
You can still apply for a visa if you are a qualified professional and the job offer doesn’t match your qualifications. You can apply for a work visa for qualified professionals if you don't meet the EU Blue card requirements.
To get this visa, you will need to get your qualifications recognized. Depending on the job, you might need to get licensed first. The job your employer provides must also be a qualified position. Federal Employment Agency (BA) needs to approve your application.
Employers will also have to prove that there are no workers from the EU or EEA states available for the job. The job offer will have to match the conditions typically offered to German employees. The gross salary required for the position must not be less than €46,530 annually.
Similarly to the EU blue card, these visas are also issued for a duration of up to four years. Generally, the visa will last the duration of your work contract, plus added three months.
It’s good to note that the holders of this visa may be eligible for a permanent residence title. This requires you to know the language and pass the “Living in Germany” test. You'll also have to have means to support yourself and other family members living with you.
If the work performed is in the IT sector, there is a third option for you or your team. Visas for IT specialists are available to those who don’t fit the education requirements for visas listed above.
This visa requires you to have a job offer in the IT sector. You'll also need proof of at least three years of experience in the IT sector that qualifies you for the job offered. This could also include training courses and exams.
Similarly to the work visa for qualified professionals, this visa also needs to be approved by the Federal Employment Agency (BA). The employer should prove there were no EU/EEA nationals available for the job. The employee should demonstrate a B1 German level of knowledge. Of course, the job conditions must be comparable to those of local workers, and the gross annual salary must not be lower than €50,760.
A visa for self-employment is the right choice for entrepreneurs, those starting a business in Germany, and freelancers.
The requirements vary between solo entrepreneurs and freelancers, but they do have a couple of them in common. For example, both need to prove that their profession or business will have a positive impact on Germany’s economy.
However, if you want to establish a freelance or self-employed business, you’ll have to be mindful of the legal and tax differences between the two. Essentially, every freelancer in Germany is self-employed. However, not all self-employed people are freelancers. It depends on the profession.
It is important to understand whether you should classify yourself as a freelancer or self-employed in Germany. Follow the procedures set up for your business type.
Germany values progress and innovation. It is not a surprise that it has a visa specifically tailored to researchers and scientists. Depending on the type of work and your nationality, this type of visa might be the best fit for you.
With this visa, you can work at the research institute you have a contract with, or take on a teaching position. This visa can also be extended significantly.
The requirements for this visa include:
You must have at least a PhD doctoral degree or university degree, and be considered a researcher in Germany.
You must also have a work contract or a hosting agreement with a research center or institute in Germany.
The research center has agreed to cover your living expenses, and travel costs back to your home country.
If you are unsure which visa would work for your specific situation, it might be best to consult with the experts. Employers looking to relocate their teams to Germany will certainly benefit from consulting with an EOR, as they are familiar with relevant laws and regulations.
You may apply for a job seeker visa to move to Germany without a job offer. You need a Bachelor's or Master’s Degree recognized in Germany and 5 years of experience in the role. You'll also need health insurance, travel proof, and proof that you have enough means to support you throughout the job search.
This visa is usually issued for up to six months. You cannot legally work with this visa. Instead, if you get a job offer from a German employer, you should apply for either an EU blue card or a work visa for qualified professionals.
As you’ve seen, there are different types of work visas in Germany, and each of those has its separate requirements. However, here are the documents you’ll likely have to submit, varying per visa type.
Your CV
Employment contract
Invitation letter from your employer
Valid passport and passport photo
Health insurance
Proof of address in Germany.
Rental contract for the address in Germany.
Your university certificate
A translation of your university certificate.
Proof that your university degree is recognized in Germany.
You will also have to submit a job description form, and your visa application form and pay the relevant fee.
The requirements will vary depending on the type of visa. You may need to prove you have sufficient means to support yourself while in the country or provide other documents.
Applying for a German work visa will depend on your country of residence.
Generally, non-EU/EAA citizens have to apply for a visa before arriving in Germany. They can apply at the German embassy or consulate in their home country.
However, some countries are an exception to this rule. Citizens from Canada, the United States, the United Kingdom, Australia, Japan, Israel, South Korea, and New Zealand may apply for a visa before or upon arrival.
Citizens from these countries can enter Germany without a visa similar to EU citizens. Their visa-free stay cannot be longer than 90 days. But, they can apply for a work visa at the immigration office.
The fees for a work visa vary depending on the type of visa you are applying for. However, a visa will cost you around €75 – €100.
The approval times will depend on the type of visa you apply for and where you are applying from. On average, your visa will be approved and issued anywhere from two weeks to two months.
It’s important to be aware of residence permits, health insurance, and tax implications as an employer in Germany.
There are different types of residence permits in Germany you can obtain, but they are based on the length of your stay. They usually fall under “temporary residence” and “permanent residence” categories.
Temporary residence cards allow you to stay in Germany for a short period. These are usually issued for up to a year, but they can also be extended.
When you want to get a residence permit, you’ll likely have to state why you need one. They are typically issued for employment purposes, study purposes, and marriage purposes. Depending on the reason you named for your residence permit, you may not be able to work if your permit was for studying purposes, for example.
These temporary permits can accumulate, and you may be eligible for permanent residence after a while.
Permanent residence permits allow you to stay in Germany for as long as you want. These are also often called settlement permits. It allows you not only to work and live in the country but also to come and go as you please.
If you have had a temporary residence permit for a few years, you can apply for a permanent one. Some of the requirements for the permanent permit include having a job for at least five years. The job must have been approved by the Federal Employment Agency.
Most residence permits also require you to know the German language at least a B2 level. Whether or not you have paid taxes and contributions to the government will also play a significant role. It is mandatory to obtain a permanent residence card.
Income tax in Germany depends on your income, and it gets higher the more income you have. For example, you don’t have to pay any taxes if your income is lower than €10,908. However, you have to pay a 42% tax rate if your income is anywhere between €62,810 to €277,825.
If you are employed, the tax will be automatically deducted from your salary. These deductions typically include health and pension, unemployment, and long-term care insurance.
You may also need to meet “benefits in kind” taxes. These are applicable in case the employer provides non-monetary perks. These include perks such as employee discounts, use of company car, etc.
There’s also a “solidarity surcharge” you should meet, and if you are religious, you may also need to meet church tax. The solidarity surcharge is currently rated at 5.5%, and everyone whose income is less than €61.700 annually is exempt from paying it.
Tax institutions also collect church tax. This tax goes to the religious institutions from members of any state-recognized churches. It is currently at an average rate of 8%.
You are still required to meet your taxes if you are a freelancer or self-employed in Germany, but you’ll have to calculate them yourself.
You’ll have to register your freelance business with the German Tax Office. It will issue you a tax number which you will use to collect and pay taxes on your freelance activities.
The taxes you pay will depend on your income. The rates are similar to those deducted from your salary and met by your employer. You are exempt from paying taxes if you earn less than €9,744 per year.
However, you will pay:
€9,745 – €57,918 per year: 14% to 42%
€57,919 – €274,612 per year: 42%
Over €274,613 per year: 45%
As a freelancer in Germany, you pay these quarterly, and the amount you pay each quarter is based on the estimate of your annual earnings. At the end of the year, you will have to submit an income tax declaration. You may be entitled to a reimbursement if you have paid more over the year than you should have.
Freelancers should also be informed about VAT in addition to their income tax. Generally, you are exempt from paying VAT if you earn less than €22,000 in your first year and less than €50,000 in your second year as a freelancer.
Which visa allows you to work in Germany?
To live and work in Germany as a non-EU/EEA resident, you will need to get a work visa. Germany currently offers five visas that allow working in Germany. You can opt for an EU blue card, a work visa for qualified professionals, a work visa for freelancers, a work visa for IT specialists, and a work visa for research.
Can I work in Germany if I only speak English?
While knowledge of German is desirable, and even mandatory for some jobs, it is not obligatory. You may be able to find jobs in Germany that don’t require German but rely on English instead. For example, you can find these jobs in the IT sector, or take up a position as an English teacher.
How much money do you need to live comfortably in Germany?
On average, in smaller cities and cheaper regions, one may get by for about €1,000 a month. However, this rises in cities as rents are higher, to about €1,500€ - €2,000€ per month. If you are a student, you will be able to cover living expenses for about €850 a month.
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