Employment tax and social security services

Benefits Managed Services (BMS)

Invitations to meals or events raise tax issues that must be addressed on the path to tax compliance. Correct tax treatment of these expenses is the final step in a complex upstream process involving company activities and information flows. A lack of awareness, unclear responsibilities, process weaknesses, and the complexity and variety of cases mean that incentives and gifts consistently top the list of findings in employment tax and social security audits.

Based on a thorough analysis of your processes, we provide ongoing support during each filing period for processing such benefits, including flat-rate taxation under Sections 37b and 40 of the German Income Tax Act (Einkommensteuer¬gesetz, or EStG).

Our managed service is system- and technology-agnostic and requires no implementation within your IT landscape.

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Employment tax and social security audits

Our experts help companies identify employment tax and social security risks, unlock any existing potential, and act as a mediator between you and the tax authorities or the German Pension Insurance. Together, we develop options for action or lines of argument to reduce risks and identify potential refunds. This can be done as a pre-audit simulation, as preparation for or as an assistance to an audit. Our experts also support you with the growing number of technical challenges  when it comes to providing payroll and financial data – such as the digital payroll interface (DLS), the German Principles of data access and the auditability of digital records (GDPdU) and the Principles for the proper management and storage of books, records, and documents in electronic form (GoBD) –, leveraging experience and best-practice approaches.

Health and quick checks

Our experts offer comprehensive health checks and efficient quick checks to identify weaknesses and stress-test your employment tax and social security processes and compliance. We analyse current processes, documentation, legal assessments and valuations, identify risks and unlock efficiency gains. The scope is always tailored to your needs. Modules cover payroll, finance, benefits in kind, travel expenses and expatriates. With tailored reviews, investigation projects and actionable recommendations, we help you meet legal requirements and minimise financial burdens. You can rely on our expertise to safeguard compliance and make your processes robust and future-proof.

Payroll consulting and compliance solutions

Centralising or outsourcing payroll processes, or integrating a payroll system after an acquisition, challenges established workflows. Our payroll experts leverage their extensive experience to support you through these changes.

Any required payroll corrections are time-consuming and often highly complex, especially for long-standing issues. This is because employment tax and social security regulations, as well as employee entitlements, may have been affected.

Our experts help companies identify employment tax and social security risks in payroll, resolve issues, optimise processes and ensure compliance with statutory requirements.

We also support domestic and international clients directly with national payrolls and with shadow payrolls in cases of cross-border employee activity. Companies can benefit from our long-standing expertise in assessing foreign remuneration components under domestic law, implementing salary splits and rapidly setting up a smooth-running payroll. Our technology-enabled best practices ensure secure transfer of highly sensitive payroll data and efficient processing within statutory deadlines.

International mobility

Talent is no longer recruited solely in domestic labour markets; employers must also stand out internationally with innovative, future-ready offerings. The geographic and physical decoupling of work – whether for personal or business reasons – from the employer’s location, including internationally, is increasingly common and brings numerous tax and social security challenges. The focus is no longer primarily on classic assignment programmes, but on new, flexible and hybrid work models. Current trends span remote work abroad, remote hiring, global multi-role leadership, matrix organisations and digital nomads.

Read more: Evolution of Work

To ensure legal certainty in the modern world of work, our experts adopt a holistic, client-centric approach through close, interdisciplinary collaboration among experienced specialists in employment tax and social security, corporate tax, transfer pricing, VAT, labour law, IT and HR advisory. The scope of services includes designing or optimising processes and the accompanying policies, implementation, formal opinions, training and workshops, employment tax and social security compliance, digital solutions and bespoke tools such as the Remote Work Assistant.

New forms of employment and freelancers

Many companies face significant cost pressure. They address this pressure by using alternative forms of employment and sourcing, e.g. freelancers, temporary staff, fixed-term contracts, and contracts for work and services.

Our experts help resolve employment tax and social security issues and establish compliant processes. Together with our colleagues at PwC Legal, we also support you with the preparation of the necessary contractual foundations and documentation.

Business transformations and transactions

In corporate transactions, knowledge of price-influencing factors is essential for all parties involved – not least because W&I insurers increasingly require reviews of employment tax and social security liability risks. In due diligence, Our experts quantify potential risks in employment tax and social security, increase the parties’ level of information and help to set a fair purchase price.

Transformations within a company, for example following a successful transaction, also lead to material changes in payroll and in processes that ensure employment tax and social security compliance. Our employment tax and social security team supports you from the outset with designing and implementing these changes optimally and with legal certainty. This minimises liability risks for companies and for individuals.

Compensation concepts and employee benefits

Employers seek to leverage tax and social security structuring options to offer market-appropriate, attractive and cost-efficient compensation concepts. The broad spectrum of benefits – from additional leave to canteen access to company pension schemes – is essential to modern business models. Salary conversion or models for long-term working time flexibility can also improve work-life balance and strengthen the employer brand.

Employers can also provide positive impetus in (sustainable) mobility. Potential employee benefits include company cars and bikes, e-mobility, long-distance travel, public transport offers, and flexible mobility budgets. Sustainability (ESG) aspects should also be considered. For example, electrifying a fleet of company vehicles can reduce maintenance, vehicle tax and fuel costs, while tangibly contributing to transport-related climate targets.

All benefits must comply with statutory rules, case law and stringent documentation requirements. Tax non-compliance can entail material liability and criminal consequences. Our experts review the current design of benefits, develop attractive solutions and ensure legal compliance. We can also assist with template policy wording and contract reviews.

Tax compliance management system (TCMS)

Understanding your company’s processes and responsibilities is a key step in unlocking potential and avoiding pitfalls – this is also relevant in tax, where a tax compliance management system (TCMS) is an essential part. A TCMS is a defined sub-system within a broader compliance management framework, aimed at the complete and timely fulfilment of tax obligations. It ensures lawful conduct in tax matters and minimises or avoids financial, criminal and reputational risks. Employment tax, which routinely involves very large amounts, must be a focus area, especially due to its interactions with other taxes, its mass-process nature and the high (sometimes personal) liability risks.

Our experts draw on their best-practice experience to review risk controls and measures, introducing or optimising processes and the associated policies while overseeing the full TCMS implementation.