eBrief

Ever felt confused by all the rows and abbreviations in your paycheck? 🤔 Never totally understood where almost half of your salary goes? 😐 In this post, I’ll shed some light on the topic 💡

You might have noticed that each paycheck contains info. for the current month as well as the yearly total up to the current month. That’s why sometimes you would be asked for your December pay slip as it provides a complete overview of your yearly earnings.

The largest deduction from your salary in the income tax (Lohnsteuer). See our post on income tax to learn more about this. There are at least two other types of tax depending on your situation. The first one is the so called Solidaritätszuschlag, usually abbreviated to Soli. This tax is used to improve the economy of former eastern Germany, and it’s around 5.5% of the income tax. After the recent changes, only the high-earners are required to pay this tax and everyone else is exempt. The other one is the church tax (Kirchensteuer), which you will pay only if you’d like to benefit from the church services.

Here are the other most important deductions:

1. Pension payment (Rentenversicherung, RV): A mandatory, so called “gesetzliche”, payment into the public pension fund. The employee and the employer both pay around 9% of the monthly salary as pension contributions. The payment for each party is capped at around 600 euros per month.
2. Unemployment insurance (Arbeitslosenversicherung, AV): 2.4% of salary paid equally by the employee and the employer.
3. Care insurance (Pflegeversicherung, PV): If you are in need of special care, provided by either professionals or your family members, this insurance will cover some of the expenses. The fees are around 3% of salary paid by the employee and the employer.
4. Health insurance (Krankenversicherung, KV): This will be deducted from your salary only if you are publicly insured (see our post on health insurance). In that case, you and your employer will each pay around 7% of the gross monthly salary. KV is capped at a maximum of around 350 euros per month.

All right, that’s it for now 🙂 Save the post & share it with your friends! 🙏🏻

If you don’t already have a liability insurance, get yourself one as soon as possible.

This covers you for all the damages you cause to other people (third-party insurance).

The premium is usually quite low, less than 100 euros per year, but in case you cause any damages it will save you a lot of money.

The most extreme example I read about in favor of purchasing a liability is the following. If this doesn’t convince you, I don’t know what will 😉

Imagine that you’re just walking down the street while checking your cellphone (as we all usually do). Without realizing it, you step over to the bike path of the sidewalk and a biker coming towards you maneuvers to the side not to hit you. In their attempt, the biker hits a car that is parked on the side and injures themselves badly. The injury results in a type of disability that prevents them from working for the rest of their life. In this scenario, you will be responsible to pay their medical bills, for their pain and suffering, and for their life expenses. This would easily lead you to bankruptcy if you don’t have a liability insurance.

So don’t wait any longer. Go ahead and purchase one today.

You could compare different plans and their coverage on [check24.de](http://check24.de) (see the second photo of this post)

Useful words: Versicherung (insurance), Haftung (liability), Pflicht (duty, responsibility), Haftpflichtversicherung (liability insurance)