At a glance

Currency

Euro (EUR)

EOR model

Usually treated as staff leasing, so the provider needs an AÜG licence

Leasing limit

Generally 18 months per assignment with the same client

Contractor test

False self-employment (Scheinselbstständigkeit)

Employer costs

About 21% on top of salary, before contribution ceilings (sample rate)

Annual leave

At least 20 days on a five-day week

Probation

Up to six months

Minimum wage

€13.90 an hour from 1 January 2026

• Employer of record

  Germany has no separate legal category for employers of record. When a provider employs someone who works under your direction, German authorities usually treat it as staff leasing (Arbeitnehmerüberlassung).

  The provider then needs a leasing licence from the Federal Employment Agency, and the AÜG’s time limits and equal-treatment rules apply. If the provider has no licence, the contract can be void and the worker can become your employee by law.

  AÜG, §1, §9 and §10

• Staff leasing rules

  Assignments are generally capped at 18 months with the same client, although collective agreements can change this. Equal pay with comparable staff is generally due after nine months.

  The contract between provider and client must be labelled as staff leasing in writing before work starts, and the worker must be named in it. Passing a leased worker on to a further client (chain leasing) is prohibited.

  AÜG, §1 and §8

• Contractors

  Germany tests for false self-employment (Scheinselbstständigkeit): following instructions, integration into your organisation and economic dependence. A status ruling can be requested from Deutsche Rentenversicherung.

  Exposure includes back-paid social security contributions, usually for four years and longer if intentional.

  §7 and §7a SGB IV

• Permanent establishment

  A fixed place of business, or a dependent agent who habitually concludes contracts for you, can create a permanent establishment (Betriebsstätte) and German corporate tax on attributable profit.

  Sales staff who negotiate deals, and home offices used for your business, are the usual triggers. An EOR employs the worker but doesn’t remove your own exposure.

  §12 and §13 AO; OECD Model Tax Convention, Art. 5

• Right to work

  EU, EEA and Swiss citizens can work without a permit. Others need a residence title that allows the specific job, and the employer must check it and keep a copy for the whole employment.

  Federal Employment Agency approval is generally refused for temporary agency work, so many non-EU nationals can’t be employed through a leasing or EOR model.

  Aufenthaltsgesetz, §4a and §40

Check a real case in Germany

Free tools that apply these rules to your own workers and quotes.

• Worker checkMisclassification, PE and co-employment risk for one person in Germany
• Bill rate calculatorFrom pay rate to the true monthly bill in Germany
• Right to work checkWho needs permission to work in Germany, and what to check

General information, not legal advice. Rules change and depend on the facts of each case, so check with qualified local counsel before acting.