What is Brutto und Netto?
What are brutto and netto? The Bruttolohn (gross wage) is the total remuneration the employer owes before anything is deducted. The Nettolohn (net wage) is the amount left over that is actually transferred to your account. The difference between gross and net is made up of the statutory deductions: Lohnsteuer, where applicable the solidarity surcharge (Solidaritätszuschlag) and church tax (Kirchensteuer), and the employee's share of social insurance.
Social insurance comprises pension insurance, health insurance, long-term care insurance and unemployment insurance. The employer withholds the employee's share from the gross wage and pays it, together with its own share, to the health insurance fund (Krankenkasse), which collects the contributions. Contribution rates and contribution ceilings are set every year. Current figures are published by, among others, the Deutsche Rentenversicherung (German pension insurance) and the Federal Ministry of Labour and Social Affairs, so they should not be copied from old examples.
The amount of Lohnsteuer depends on the tax class, allowances, child allowances and the gross wage. Two people with the same gross pay can therefore have different net pay, and the same gross leads to a different net in tax class I than in tax class III. An additional health insurance contribution or church tax also changes the amount paid out.
The term Effektivlohn (effective wage) is often confused with the gross wage. The Effektivlohn is the gross wage actually paid, including supplements, overtime, bonuses and non-cash benefits. Its counterpart is the Tariflohn (collectively agreed wage), the minimum amount set in a collective agreement. When the Effektivlohn is above the Tariflohn, this is called above-scale pay (übertarifliche Bezahlung). The Effektivlohn is therefore a gross concept and not what is paid out at the end of the month.
For employers there is a third figure: total cost. On top of the gross wage come the employer's share of social insurance and other levies, which is why an employee costs more than their gross salary. A payslip lists every item in sequence, from total gross through the deductions to the amount paid out. Anyone negotiating a salary or reviewing an offer should therefore always clarify whether a stated amount is gross or net, and whether it covers only the base salary or the entire Effektivlohn. An amount without this detail cannot be compared, because the difference between gross and net can be several hundred euros a month depending on personal circumstances.
In practice
A payslip starts at the top with total gross, for example base salary plus an overtime supplement plus a non-cash benefit such as a company car. Below it come the statutory deductions: first Lohnsteuer, solidarity surcharge and church tax, then the employee's share of pension, health, long-term care and unemployment insurance. The result is the net. After that there may be further deductions from net pay, such as an advance payment or the net portion for the company pension scheme, and this gives the amount paid out. When comparing offers, you should put the Effektivlohn side by side, meaning everything that is actually paid as gross, and calculate the net with your own tax class, because comparing only base salaries distorts the real result.
Frequently asked questions
What is the difference between brutto and netto?
Brutto is pay before deductions, netto is the amount paid out after Lohnsteuer and social contributions. The difference is made up of the statutory deductions.
What are brutto and netto?
Brutto is the total remuneration before deductions, netto is the money that arrives in your account after the deductions.
What is the Effektivlohn?
The Effektivlohn is the gross wage actually paid, including supplements, bonuses and overtime. It can be higher than the Tariflohn.
How do Effektivlohn and Bruttolohn differ?
The Effektivlohn is a gross wage, namely the one actually paid, while the Tariflohn is only the agreed minimum amount. Both are amounts before deductions.
Why is the net different for the same gross?
Because tax class, allowances, church tax and the health insurance fund's additional contribution affect the deduction. That is why two people with the same gross often have different net pay.