Salary employees pay taxes quarterly

A serious mistake in the payroll accounting of variable salary components (commissions) for employed dentists

Income tax and social security

A serious mistake in the wage accounting of variable salary components (commissions) for employed dentists

Adam J. Janetta


It is more the rule than the exception that assistants and employed dentists receive fee-based remuneration in addition to their base salary. It is often regulated that the employee must earn at least three times his basic salary as a fee. He only receives a further 25-30% of the additional fee earned as variable remuneration.

/// Commission without reference to wage payment periods

The taxation of the commissions is usually carried out as current wages. If the commission is granted once without reference to specific wage payment periods, it is taxable as any other reference. If a mistake is made in the payroll, this will be corrected in the tax return at the latest. The wage tax is therefore rather unproblematic.

In social insurance, commissions are usually part of current wages, even if they are paid out at longer intervals than monthly. For the purpose of calculating the contributions, they must be assigned to the payroll period for which they are paid. If commissions are not regularly billed until the next month or the month after that, they can be added to the month in which the billing takes place for the purpose of calculating the premium.

/// Commissions paid later

However, if the commissions are not settled in the next month or the month after that, as is customary in the company, but rather later (e.g. quarterly or half-yearly), the pay slips must be rolled up again for the wage payment periods for which the commission payment is made. However, there is no concern if these commissions are evenly spread over the payment period (e.g. quarterly).

In the case of commissions that are only paid after the employment relationship has ended, the handling during the existing employment relationship should remain decisive as a criterion for the time allocation. This means that the commissions that are still due after the employment relationship has ended can be assigned to the last payroll period of the employment relationship if the commissions were paid monthly. If, on the other hand, they were paid out at longer intervals, then they are to be assigned to the corresponding last payroll accounting periods. This rule also applies to cancellation reserves.

/// Additional payments for quarterly commission

In many practices, the variable remuneration is calculated on a quarterly basis and only communicated to the tax advisor on a quarterly basis for the payroll. If he now processes the sales commission for a total of three months in just one monthly wage statement and the employee thereby exceeds the contribution assessment limits for social insurance, too few social contributions (pension, health, long-term care and unemployment insurance) are paid. The perpetual social security check results in unpleasant back payments.

/// Case study

A dentist (32 years old, single, no children, income tax class 1, subject to church tax, AOK insurance) receives a gross monthly salary of 4,000 euros. For the fourth quarter of 2015, the sales commission amounts to a total of 4,500 euros.

If this sales commission is billed in one month, the gross salary in the billing month is a total of 8,500 euros. The contribution assessment limits (pension and unemployment insurance 6,200 euros, health and long-term care insurance 4,687.50 euros) are significantly exceeded. In the other two months, the contribution assessment ceilings are not reached.

If it is now correctly billed, in which the sales commission is divided over three months, the dentist has a gross monthly salary of 5,500 euros. In this case, the income threshold for pension insurance is not exceeded at all and that for health insurance is exceeded to a lesser extent. So there are more social security contributions to be paid.

The disadvantage to the detriment of social security in this example is 499.10 euros in pension and unemployment insurance and 236.50 euros in health and long-term care insurance. In total, this results in an amount of 735.60 euros for just one quarter, half of which must be paid by employer and employee. With an average audit period of four years, the total in this example would be 11,769.60 euros.

/// Consequences of incorrect billing of sales commission

The incorrect billing of sales commission can have far-reaching consequences for the employer. If the employee is no longer employed at the time of the social security check, the employer no longer has the option of withholding this employee's share.

Even if the employee is still employed, it is possible that the employer remains seated on the employee's share and here too has to pay the entire contribution alone. The social security law regulates that too little paid contributions by the employees can only be made up in the next three wage or salary payments. Later deductions are only possible in certain exceptional cases.

/// Conclusion

If you are not familiar with the accounting practice for variable remuneration, you should check this in your practice. There are simple solutions that are also practicable in implementation.


Dipl.-Kfm. (FH) Adam J. Janetta, tax advisor


Janetta & Koch Steueberater Partnerschaft mbB
Tax advisor for dentists and dental laboratories
Heather 85
51427 Bergisch Gladbach

Phone: 02204/98 71 19 0
Fax: 02204/98 71 19 1

Email: [email protected]