Employment tax and social security services (including accounting)
Companies are looking for alternative compensation approaches in order to cut costs and keep the tax burden as low as possible for employees. But such creative solutions make the correct calculation, withholding and payment of taxes all the more important and pose liability risks.
Tailored compensation concepts
Companies are required to pay employment tax and social security contributions at the correct level. They are eager to explore all structuring possibilities. At the same time, they need to satisfy rules established by legislators, courts and fiscal authorities; increasing documentation requirements; and increasing demands on process security and in the context of tax audits. PwC's employment tax and social security specialists assist companies in the development of customised compensation concepts.
Deferred compensation
By introducing compensation concepts like deferred compensation, or by introducing flexitime arrangements, companies can offer solutions for a greater work/life balance that are also interesting for employees from a tax perspective. PwC experts identify the structuring possibilities and support the company in the correct implementation of payroll.
Employee benefits
The wide range of employee benefits in a company, from special leave days to canteen use to occupational pensions, usually developed over time and has become integral to the workplace. PwC's experts assess the competitiveness of employee benefits, develop attractive solutions such as cafeteria systems and ensure that all tax requirements are met.
Company cars
Company cars may be granted either as a material employee benefit or as part of a deferred compensation plan. The compensation specialists at PwC identify the various possibilities, develop templates for guidelines and contracts and also ensure correct tax processing. Our services are rounded out with modules to ensure the most tax-efficient options for the various models.
Travel expense policy
The entertainment of employees and business associates, the extension of business trips for personal reasons, the reimbursement of railcard costs and the determination of one's regular place of work are essential issues of tax law relating to travel expenses. Tax law relating to travel expenses is complex. Even relatively small amounts may pose a high risk of liability for the employer. PwC's experts determine which costs can be reimbursed tax-free to employees and develop a travel expense policy that employees can use as a guide.
Tax audits
Smooth audits facilitate cooperation with the tax authorities and only minimally disrupt business operations. PwC experts help companies to recognise any employment tax and social security risks, and work with them to identify alternative actions or lines of argument to reduce these risks. This may occur during a simulation or during the preparation and course of a tax audit.
Due diligence in corporate transactions
In corporate transactions, knowledge of factors that influence the price is essential for the parties involved. As part of due diligence audits, PwC experts quantify any risks in the areas of employment tax and social security. They thereby increase the level of information available to the negotiating parties and help in determining a fair purchase price.
New forms of employment
Many companies are under high cost pressure. They try to alleviate this pressure by introducing new forms of employment, such as so-called mini jobs (up to €450.00 per month) and midi jobs (€450.01–€850.00 per month), for the low-income sector, or relying on fixed-term contracts, temporary employment and the increased use of freelancers. PwC's experts help resolve the employment tax and social security issues that arise from these approaches – by creating the appropriate contractual basis and implementing the necessary status determination procedure.
IT tools in the field of employment tax
The Payroll Tax Scan
With PwC's Payroll Tax Scan, our experts identify opportunities for action in terms of employment tax. In addition to the legal issues, they look at interfaces and processes in the company. The IT-based method enables objective analysis for the purpose of risk assessment, suggestions for improving the existing interface and process landscape, and the generation of actionable recommendations.
The Corporate Incentive Manager
For non-cash benefits to business associates as well as to their own employees, companies can opt for taxation under section 37(b) of the Income Tax Act (Einkommensteuergesetz, or EStG). Process-related information deficiencies, however, often make the correct tax treatment difficult. In addition, there is the obligation to conduct proper and complete documentation.
To meet the tax requirements of section 37(b) of the EStG, PwC has developed the Corporate Incentive Manager (CIM), a web-based tool for handling all non-cash benefits from the initial idea to the final tax liability. With the tool, the relevant processes and policies in the company are evaluated, improved and technologically supported.
Payroll accounting
Payroll accounting is a sensitive area as it involves confidential employee information. Also, continual changes in tax and social security law may entail risks that companies often underestimate. As such, many companies may find it worthwhile to entrust payroll accounting to an external partner such as PwC.
Even if payroll accounting is not part of the core business, it ties up staff resources. The preparation of payrolls requires extensive knowledge on the part of employees. In addition, employees must keep an eye on legislation because there are continuous changes in income tax and social security law. And despite all efforts, the confidentiality of data during the preparation of payrolls in the company cannot always be guaranteed.
PwC specialists are familiar with the latest developments in income tax and social security law and can carry out all payroll tasks for national and international companies. PwC supports companies with personnel and expertise in all official audits and advises on specific employment tax and social security issues. In addition, PwC experts train in-house payroll accountants on site and support them as necessary.
Overview of PwC's services
- Establishment of payroll accounting according to individual requirements
- Preparation of payrolls for employees
- Preparation of employment tax statements, social security contributions statements and all other statements
- Preparation of all payment media for the payment of salaries, taxes and social security contributions
- Payment processing via an escrow account
- Creation of individual transaction lists for the use of payroll data in financial accounting – on request in electronic form
- Preparation of management reports
- Preparation of statements pursuant to social security laws, such as the registration and deregistration of employees and yearly income reports
- Statements to employers’ liability insurance associations and statements concerning the tax for the non-employment of disabled persons
- Advice regarding requests from the tax authorities, insurance companies and the employment office, including the preparation of certificates
- Advice and assistance with payroll tax audits and audits by the social security authorities
Our services offer the following advantages:
Time savings through efficient processes
Through established, proven processes, PwC provides the required services efficiently and on time, taking into account individual needs.
Risk minimisation through expert advice
The experience of PwC's specialists ensures that companies can count on reliable and competent service. Moreover, the PwC consulting approach guarantees that companies are always informed about the latest developments in employment tax and social security law and thus have a knowledge edge.
Globally coordinated approach with a single dedicated contact
PwC also prepares payrolls for foreign subsidiaries and branches and coordinates payroll accounting across national borders. A specialist based in Germany is the contact person for all related issues.
Accounting issues related to foreign employees
Thanks to their many years of consulting for international clients, PwC’s specialists possess profound specialised knowledge on accounting issues related to expatriate employees with net pay agreements.
Focus on core competencies in the company
Outsourcing payroll to PwC allows companies to focus on their business. They can rest assured that PwC will prepare payrolls in a timely manner and handle data with the utmost responsibility and care.
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