Calculating wages: what you need to know

Wage calculation only looks simple at first glance. Between the agreed "on-paper" salary (gross) and the amount received in the account (net) sit taxes and contributions that must be calculated correctly.

From gross to net

Personal income tax and social security contributions are withheld from the employee's gross salary. The remaining amount is the net salary paid to the employee.

The tax-exempt amount

When calculating income tax, a tax-exempt amount applies, which depends on the salary level and other circumstances. Incorrectly applying it is one of the most common mistakes.

Employer costs

In addition to the employee's salary, the employer also pays its own share of social security contributions. The real cost of a workplace is therefore higher than the gross salary.

Common mistakes

• incorrectly applied tax-exempt amount;
• errors in calculating bonuses, supplements or holiday pay;
• inaccurate sickness or downtime payments.

Sound payroll administration ensures that the employee, the social security fund and the tax authority all receive the correct amounts on time.