Please note:
This feature will be rolled out over the next few weeks and will be available in your account.

This article explains how you can manage flat-rate church tax with Personio Payroll.

What is the flat-rate church tax?

If the employer decides to apply a flat rate for income tax for employees with unlimited tax liability, church tax must also be calculated at a flat rate. The employer has the following procedures at their disposal for this purpose:

• Simplified procedures
• verification procedure

The choice of method affects the calculation, payment, and presentation of church tax in payroll accounting.

You can find more information on flat-rate church tax in general in our article on the theme.

Calculation options: Standard procedures and verification procedures

Standard procedure (simplified procedure)

The standard procedure is the simplified procedure for paying church tax on lump-sum compensation in Personio Payroll. In this case, church tax is paid at a flat rate for all employees, regardless of whether they are members of a taxable religious community or not. This procedure is stored as the default setting for flat-rate taxed compensation in Personio Payroll. The following special features and notes must be observed for this purpose:

• No distinction based on church membership: No checks are made to determine whether people belong to a taxable religious community. Church tax is paid at a flat rate for all employees.
• Salary types: The standard procedure applies to all flat-rate taxed services, even if the verification procedure is not available.
• No obligation to provide proof: A certificate of church membership is not required.

Please note:
The standard procedure significantly simplifies the processing of church tax, as custom checks and certificates are no longer required.

verification procedure

The verification procedure offers a targeted opportunity to pay church tax only for employees who are actually liable for church tax—i.e., members of a recognized religious community. This procedure is particularly relevant for organizations that wish to distinguish between employees who are subject to church tax and those who are not. The following special features and notes must be observed for this purpose:

church affiliation 

In order for the verification procedure to be applied correctly, the Taxable Church Membership attribute must be maintained in the employee profile. Currently, this attribute is updated manually after the tax office submits a contribution statement regarding a change in tax-relevant master data. Therefore, check the monthly change list and apply any changes to the employee profile. For employees who are not registered with the tax office (e.g., flat-rate taxed employment), information on taxable church membership must also be recorded in the employee profile and the relevant documentation must be stored in Personio. 

You can find out how to refresh employee attributes in the Help Center article on the theme.

Please note:
For this procedure, certificates of church membership must be provided and documented. Keep the relevant documents ready and refresh them regularly.

Tip:
Religious communities subject to church tax are generally documented using ELStAM data. If you do not have this data, please use the official form from the Federal Ministry of Finance and save the document signed by the employee in the employee profile under the Documents tab. You can find more information about the verification process in our general article on the theme.

salary types

The verification procedure is currently available for the following salary types:

• Short-term employees / mini-jobs with 20% flat-rate tax
• Travel expenses (15%)
• Remuneration/monetary benefits (25%)
• Direct insurance
• Monetary benefits § 37b

For other flat-rate taxed services that do not fall under the above-mentioned salary types, the simplified procedure is applied as standard.

Setup in Personio Payroll

The simplified procedure is preset as standard. If you want to activate the verification procedure for certain salary components or types of employment, follow these steps:

1. Navigate to Payroll > Manage > Taxes.
2. Select the flat-rate church tax and click on customize.
3. Activate the salary components or employment types to which the procedure should apply.
4. Select the effective date. The setting applies to the entire calendar month. When set for the first time, this is automatically backdated to January 1, 2025, so that the desired and correct church tax calculation is applied for the entire year.
5. Save your Settings.

cost coverage

In principle, the employer is liable for tax and must therefore pay the flat-rate tax. If contractually agreed, however, he can usually pass on the flat-rate income tax to employees.

Types of employment Short-term employees/mini-jobs with 20% flat-rate tax:

For employees in the "flat-rate taxation" tax class, you can use the flat-rate tax calculation attribute in the employee profile to specify whether the flat-rate tax (including church tax) is paid by the employer or the employee:

• Employer pays: The tax appears as employer costs.
• Employee pays: The tax is reported as a negative amount in income.

Additional salary components:

For each of your flat-rate taxed wage types, the link to the rules stored in Personio determines whether the flat-rate tax is paid by the employer or the employee. This link is established during the onboarding process for Personio Payroll.

Job posting in documents

• Employer pays: All lump-sum tax components are grouped together as employer costs.
• Employee pays: The individual flat-rate tax components appear as negative amounts in the gross earnings section, marked with wage type 80000. These are aggregated for all remuneration types with the same percentage.

FAQ

Changes and subsequent customizations

If the procedure is changed, Personio Payroll can retroactively correct the payroll for affected employees. This ensures that the tax contribution statements are correct. Changes are always applied for the entire billing month.