Social security contributions are made up of:
- Health insurance – Public or private (the pilot is responsible for selecting and for paying to the public or private health scheme) (Variable rates according to provider, usually 7.3% ER and from 7.6% to 9% EE). We deduct this from salary only if pilot is insured with a public provider.
- Nursing care insurance (the pilot is responsible for selecting and for paying to the public or private health scheme, the nursing care insurance is mandatory in Germany) (1.28% ER and 1.28% EE/1.53% EE if childless). We deduct this from salary only if pilot is insured with a public provider.
- Pension insurance (9.3% ER and 9.3% EE).
- Unemployment insurance (1.5% ER and 1.5% EE).
- Sickness Insurance (Variable rates according to provider, usually between 0.4% to 3.9% ER).
- Paternity Benefit (0.49% ER).
- Company Insolvency (0.09% ER).
- Accident insurance (19.5 Euro per month ER).
*In some cases, if a pilot average monthly gross salary since the start of the current year is lower than 4.950 per month, they are expected to earn below 59.400 Euro per year (line trainers etc.), they must then be registered as mandatory member of a public health insurance of their choosing. Our consultants will then contact the health insurance to inform them of the pilots’ status. In these cases, we will also deduct health insurance from their salary (Approx 15% extra). However, it is still the pilot`s responsibility to take out a public plan and our consultants can advise them on this. If they do not take out any health insurance plan, penalty fees will be incurred as we cannot run the payroll for the company.
- A number of Irish companies have been registered in Germany for social insurance purposes only.
- All pilots based in Germany will be moved to one of these companies.
- A German payroll will be operated on a month basis for hours flown that month. So January’s Germany payroll will be based on January’s hours flown for social insurance purposes only.
- Social Insurance will be calculated on your gross income calculated deducting the ER deductions from your agency total, but is capped at certain levels (6500 Euro for West Germany and 5800 Euro for East Germany).
- Health insurance and Nursing care, for pilots insured with a statutory provider, will be calculated on your gross income calculated deducting the ER deductions from your agency total, but is capped at certain levels (4425 Euro).
- German allowable expenses will be deducted from your agency income retrospectively (a month in arrears).
- A German payslip will be issued showing the social insurance contributions on a monthly basis (the payslip will show only the EE deductions as you are considered an employee in Germany).
- An A1 and E106 social insurance certificate will be issued to you as soon as possible for your health provider in the country of your residency,
Health Insurance Funds:
- If your annual income from your agency is expected to be over the current limit set by the German authorities (€59.400), you can opt for either private health insurance or public health insurance. If it is below this amount you must join the German public health scheme.
- If you opt for public health insurance, the German Krankenkasse will apply for your German social insurance number for you. You are to provide us with a copy of the documentation showing this number for payroll purposes after you receive paperwork from the Krankenkasse and the German Social Security administration (Deutsche Rentenversicherung).
- For either public or private health insurance, we recommend you use our dedicated German insurance broker who is very experienced in dealing with your situation (contact details attached and there is no charge for her services).
- If you use your own broker, you must provide us with the insurance certificates immediately or we shall be required to default you to the public system.
- This matter is still unsettled and we are discussing a possible solutions with the German authorities. For the moment pilots must pay the U1 (sickness insurance) but are not able to claim sick payments. This situation is due to the "special" nature of the contract of the pilots and the German law. Basically, pilots are "deemed" employees for the German law, so the employer should pay the sick days for the first 42 days of sickness in the calendar year and then the health insurance should pay any additional days after this. Unfortunately, pilots don't have an employer as they are self-employed directors of an Irish company as per their contract with McGinley so there is no employer that is going to pay for the sick days.
Costs associated with the German payroll:
- There are additional costs to your Irish company associated with registering and running such a payroll.
- We have tried to reduce these costs as much as possible by allowing six contractors to a company.
- As you are treated as an ‘employee’ we will apply for additional tax allowances for you in the Irish taxation system which will go some way to offset the level of social insurance payable.
- The additional cost will be €60 per flying month per pilot. This will include the following services:
- Registering of company in Germany for social insurance purposes
- Registering and de-registering each contractor with the German tax authorities and social insurance authorities
- Issuing of monthly payslip for German social insurance purposes
- Issuing of end of year payroll certificates
- Applying for Social insurance certificates – A1 and E106
- Transfer of social insurance payments to relevant authorities
- Direct access to Matz-Townsend insurance broker for all your health insurance issues should you use their services
- Issuing of compliance statement to your agency
Domenico Locatelli – Contact Details: