Recruitment in Germany

Recruitment in Germany: Frequently Asked Questions

What is the monthly cost of using an Umbrella Company in Germany? 

€ 400


What is the cost of a Work Permit in Germany?

€ 1,700

How long does it take to get a work permit in Germany?

Up to 90 days.

What is the estimated net retention in Germany for a contractor earning USD 500 per day?

*update pending

What is the estimated net retention in Germany for a contractor earning USD 1000 per day?


Read more about the work permit process.

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Recruitment in Germany can be a challenge, but you don’t have to drown in time-consuming admin just to place a candidate. You can simplify complications by using an Umbrella Company (or “contractor management company”), as long as you pick the right one.

Skip ahead to find out how we can help you place candidates faster, or simply read on to find out more about the specific issues you’ll face.

Placing a new contractor in Germany: what are the challenges?


Recruiting in Germany generally requires a lot of complex admin duties, and contractors might end up paying too much in taxes or failing to comply with Germany tax law. It’s important to know what kind of concerns you’ll be facing.

  • Double taxation: Contractors can incur a tax liability in both their home country and in Germany. Many countries have agreements that mitigate this type of issue, but whether or not you can take advantage of them will depend on factors like the length of the contractor’s stay, or the laws of the contractor’s home country. You can learn more about double taxation here (note: this info was written with respect to the UK, but the general concepts will still apply).
  • Withholding tax: If a foreign company is used to provide services overseas, the payments made to that company by the Germany client could be liable for withholding tax under Germany tax law. Find out more about withholding tax.
  • Individual taxation and tax residency: A contractor’s tax liability will often be determined by his or her residency status in their home country and in Germany. Figuring out their tax residency can be difficult and is often tied to the length of their stay in Germany (or out of their home country). Read more about tax residency and individual tax liability here.
  • Permanent establishment: Most double taxation agreements limit the scope of taxation in the host country by providing that a business is only taxable in another state if it has a permanent establishment in that state. A permanent establishment is a fixed base such as a branch, office, factory, workshop, mine or oil well. To find out how to avoid permanent establishment and unnecessary tax liability, read more about the issue.

Work permits

Contractors will need to find a sponsored work permit, which can be difficult and may seriously slow the placement process. Additionally, they’ll need a new permit for each new contract, spawning even more paperwork.

See our FAQ to find out more about the cost and processing time of Germany work permits.

Why use a contractor management company?

An efficient way to manage these problems is to outsource them to a contractor management company. They’ll act as the contractor’s “employer,” handling all of their invoicing, fees, and social security. As Germany tax experts, they also help contractors comply with local tax law while maximising the amount they get to keep.

A quicker, better recruitment process: Working with an Umbrella Company means saving time, effort, and resources. Higher earnings and a smoother transition also make contracting a more attractive opportunity, helping you place candidates more quickly and successfully.

Still, you’ll need to find the right company for you and your candidate.

How to find the right Umbrella Company?

Making sense of the optionsFor free, we match contractors with Umbrella Companies and can help dramatically reduce waiting times. There are numerous Umbrella Companies in Germany and each has its own specialties, services, and payment structures. Choosing the right one is crucial, but it can be difficult when you’re facing a bunch of unfamiliar options.

We’ve developed an extensive database of these companies. We can guide you through your options and help connect you with the best company for you and the contractor.

Get in touch: If you want straightforward, honest advice on recruitment in Germany, we’re easy to contact. Call, e-mail, or chat with us online - for free.

Send your details for more information

Work Permits & Payroll - Frequently Asked Questions


What documentation is required for a Germany work permit?

Copies of the candidates passport, degree/diploma/professional certifications, proof of relevant work experience, 2 passport photos.

What is the work permit process in Germany?

There are 2 possible routes; if the candidate has a company in their home country they can secure a visa as a representative of that company in Germany OR more simply if the client in Germany is willing to provide a supporting Letter of Invitation the candidate can obtain a short term Residents Permit. In this instance the candidate will obtain a D Visa then on arrival an application for a Residence permit needs to be lodged immediately. This will take up to 90 days.

Can you transfer from a Business Visa to a Work Permit in Germany?

Yes but it’s actually from a D Visa to a Residence Permit.

Can we organise Business Visas in Germany?


How long does it take to process a Business Visa in Germany?

1 - 2 weeks.

How much does a Work Permit cost in Germany?

€ 200

Can nationals of certain countries enter Germany without a Business Visa (ex. on an entry visa or visa waiver)?




€ 300

What is the monthly cost to run a local payroll in Germany?


 € 400

How does payroll work in Germany?


Your employer (the company sponsoring your visa) pays the candidate on a monthly basis. They deduct social security  - which is 20.855% for employers and 20.475% for employees. This is made up of 19.6% pensions insurance (employer 9.8%) capped at EUR 67200, 15.5% health insurance (employer 7.3%) (employee 8.2%) capped at EUR 45900, unemployment insurance 3% (employer 1.5%)capped at EUR 67200, nursing care insurance 1.95% (employer 0.975%), accident insurance 1.28% (employer 1.28%). They also deduct income tax - which is progressive and varies from 0-45% pendant on salary level. These deductions are made at source and paid to the Germany tax authorities. Candidates are able to offset their taxable income with relevant business expenses. The World Bank estimates it takes employers in Germany 148 man days to ensure compliance with payroll and labour taxes each year.