You can hire an employee in Germany without incorporating a German company. Two routes deserve assessment: employ the person directly as a registered foreign employer, or use an eligible employer of record arrangement. The right choice depends on who will employ and direct the worker, their permission to work, and the expected duration.
Germany makes that choice consequential. A client-directed EOR arrangement can constitute regulated employee leasing, with a permit requirement and an assignment limit. Direct employment avoids that three-party structure, but leaves your overseas company responsible for German employer duties.
Rules checked 30 October 2026. This guide concerns a new private-sector employee working in Germany.
Can you hire an employee in Germany without incorporating?
Yes, conditionally. German insurer TK's foreign-employer guidance explains how companies without a German registered office register employees and pay German social-insurance contributions. Temporary postings and other cross-border exceptions require a separate assessment.
Incorporation creates a company. Employer registration equips your existing overseas company to meet local obligations. Neither registration nor an EOR agreement decides whether your activities create a taxable German presence.
Before choosing a route, establish whether the person can perform this job for the proposed legal employer. A German address or permission to enter the country does not establish permission for the employment.
Choose a permitted employment route
| Route | When available | Who is the legal employer | What must be in place |
|---|---|---|---|
| Direct foreign employment | Your overseas company can meet German employment, insurance, reporting and applicable tax duties | Your overseas company | Employer registrations, a domestic records representative, payroll arrangements and the worker's employment permission |
| EOR through employee leasing | The actual arrangement and worker qualify under the German staffing rules | The named employing EOR entity | Required AÜG permit, properly documented assignment, lawful terms and an assignment-duration plan |
| Your own German company | Your operating plans justify incorporation | The new German company | Separate establishment and employer setup; outside this guide's no-incorporation objective |
For direct employment, arrange statutory accident-insurance registration and the Unternehmensnummer, then the Betriebsnummer used for social-insurance reporting. The Federal Employment Agency requires the former number when applying for the latter. A foreign employer must also appoint a representative based in Germany to maintain German-language payroll records under SGB IV Section 28f.
Have the employee identify their chosen health insurer before starting and establish certified electronic reporting through suitable payroll software or the SV-Meldeportal. TK's guidance explains these steps. An administrator can carry them out, while the foreign employer retains responsibility. The payroll-record representative and a tax-law permanent representative have different legal tests.
Tax setup needs its own decision. EStG Section 38 defines wage-tax withholding obligations by reference to facts including a German establishment or permanent representative, and separately covers foreign labor lenders. Social-insurance registration alone does not establish a withholding duty. Where withholding does not apply, arrange the employee's income-tax assessment and any assessed advance payments.
For EOR employment, inspect the actual working arrangement. Integration into your organization and subjection to your instructions are the statutory employee-leasing test in AÜG Section 1. Payroll software or a payroll processor does not itself become the employer. Calling the person a contractor also fails to resolve an employee relationship: instructions and organizational integration are indicators of employment under SGB IV Section 7.
Confirm the person, job and work location are eligible
Clear these points before issuing an unconditional offer:
- Work right: Record nationality and, where needed, the residence title and supplementary restrictions. EU and EFTA nationals have visa-free access to work under the government's employer guidance. For other workers, the employer must check employment permission and retain the relevant evidence under Section 4a. Employer-specific restrictions matter.
- Immigration stop condition: Where Federal Employment Agency consent is required, Section 40 requires refusal if the proposed work is as an agency worker. This can stop an EOR hire despite a valid staffing permit. It is not a blanket exclusion of every non-EU national: some titles do not require that consent. Identify the actual category before promising a start.
- Physical worksite: Record the German address, state and any work abroad. The agency's current AÜG guidance, effective 1 July 2026, says a foreign client's lack of a German business address does not itself remove the permit requirement. Its remote-work exception concerns workers staying entirely abroad, rather than employees working in Germany.
- Role and industry: Check professional permissions and sector restrictions. Construction labor leasing is generally prohibited for work ordinarily performed by manual workers, with specified exceptions. An office-based software example cannot establish eligibility for a building-site hire.
- Duration and prior service: For covered leasing, the default is 18 consecutive months with the same hirer, subject to qualifying collective arrangements. Earlier assignments through another lender count when gaps are no more than three months. An unlimited provider permit does not remove this worker-specific limit.
For a lasting role, assess direct foreign employment early. If using leasing initially, set a review date well before the applicable assignment limit.
Prepare the offer and country employment terms
Have the actual legal employer issue the employment documents. Your commercial offer should identify that employer and make unresolved eligibility conditions explicit.
| Decision or document | Required information | Responsible party | Deadline or dependency |
|---|---|---|---|
| Pay and schedule | Gross salary, components, payday, hours, breaks and overtime arrangements | Employer, using client role/pay inputs where relevant | Core particulars by first workday under NachwG Section 2 |
| Role and workplace | Start date, duties, work address, probation and any end date | Employer and worker | Relevant particulars within seven calendar days of agreed commencement |
| Leave and other terms | Leave, termination procedure, applicable collective agreements and promised benefits | Employer | Remaining statutory particulars within one month of agreed commencement |
| Contract form and language | Usable terms the worker understands; correct statutory form | Employer | Deliver a complete agreement before start as an operational safeguard; fixed-term clauses have a separate written-form requirement |
| Agency documentation | Permit particulars, pay between assignments, agency leaflet and client identity | EOR; client supplies assignment details | Leaflet at contract conclusion; assignment information before deployment under AÜG Section 11 |
| Permission and payroll data | Identity, relevant work-right evidence, tax ID, insurance details and bank account | Worker supplies; employer verifies | Work right before work; payroll data before the agreed processing cutoff |
The NachwG permits electronic transmission in text form where its accessibility, storage, printing and receipt-request conditions are met, subject to excluded sectors and a worker's right to paper evidence. An ordinary electronic onboarding flow does not settle every signature requirement. For non-German agency workers, Section 11 also provides requested native-language documents.
For leasing, the client agreement requires text form and information about the role and comparable working conditions under AÜG Section 12. Agree the correct pay basis before pricing: equal treatment is the starting rule, with qualified collective-agreement exceptions.
Complete the hire from agreement to first payroll
The following is a hypothetical example, not a verified worker file or provider commitment. An Irish software company selects a German national already living in Berlin. The person will develop software from Berlin for a six-month client assignment, with no earlier assignments to that client. EOR A GmbH is the assumed German legal employer, holding the required valid AÜG permit and existing employer registrations. The employment contract itself is indefinite.
Assume the role is outside restricted sectors, equal-treatment requirements are satisfied, and the employee chooses TK. The parties agree €5,000 gross for November without proration, then €5,000 monthly, with the November salary credited on Monday, 30 November 2026. These premises support the example; an actual hire needs its own evidence.
- Clear the route by Friday, 30 October. The client and EOR verify identity, work eligibility, role, location, permit and assignment history. Completion evidence is an approved eligibility record. Missing permission or a required permit prevents deployment.
- Complete both agreements before work. EOR A GmbH and the worker sign complete employment terms. The EOR and client document employee leasing and identify the worker before assignment. Keep delivered terms, the agency leaflet and assignment notification. A draft offer alone does not clear this gate.
- Release the start on Monday, 2 November. The client completes worksite safety instruction; the EOR confirms the employment documents and operational setup. The client manager authorizes access only after both confirmations. This is a planned sequence, not a universal onboarding duration.
- Validate first-payroll inputs by Monday, 16 November. This assumed commercial cutoff covers bank details, tax and insurance data, salary and approved variable inputs. The EOR submits the ordinary social-insurance registration and retains acceptance evidence. DEÜV Section 6 requires registration with the first following payroll, and no later than six weeks after employment starts. The example submits earlier.
- Receive client funds by Friday, 20 November. This is an assumed commercial funding date. The client finance owner confirms cleared funds for the employer's requested payroll amount and fees; a payment instruction alone is insufficient evidence.
- Meet contribution deadlines. EOR A GmbH sends the contribution statement so TK receives it by 24:00 on Monday, 23 November, and ensures contributions arrive by Thursday, 26 November. TK's 2026 calendar requires the statement at 00:00 on 24 November and payment on 26 November. These are official deadlines, separate from the commercial cutoff.
- Deliver first salary on Monday, 30 November. The EOR reconciles deductions, issues the payslip and arranges bank processing early enough for credit on the agreed date. Under the assumptions, the worker starts on 2 November and receives the first net salary on 30 November.
| Milestone | Must be complete | Evidence | Who confirms |
|---|---|---|---|
| Before work | Lawful route, permission, agreements and safety instruction | Permit and identity checks; delivered documents; instruction record | EOR and client |
| Before payroll | Correct employee setup and registration | Validated data and accepted filing | EOR payroll |
| Before contributions | Statement accepted and payment arranged | Submission receipt and credited payment | EOR payroll/finance |
| First payday | Correct net salary credited | Payslip and bank reconciliation | EOR; worker flags discrepancies |
Berlin's public-holiday rules create no November weekday holiday affecting this sequence. TK's contribution calendar follows its Hamburg location. Recheck both calendars for another month or insurer.
A late ordinary registration must be corrected; it does not create permission to delay wages. Employers in specified sectors must make an additional immediate notification by work commencement. Identify that duty before applying this example to another industry.
Budget and prepare the first payment
Price the employment package and the service separately:
| Cost layer | What to include | Timing |
|---|---|---|
| Gross salary | €5,000 monthly in the example; agreed variable pay separately | Recurring |
| Employer statutory costs | Employer social-insurance shares, accident insurance and applicable levies | Recurring, with their own payment schedules |
| Service charge | Agreed EOR fee, or payroll and representative fees for direct employment | Contract-specific recurring charge |
| Conditional extras | Setup, equipment, additional benefits, currency conversion and any permitted specialist work | One-time or recurring as quoted |
The federal social-security guide distinguishes employer contributions from amounts deducted from employee pay. Do not add the employee's deductions on top of gross salary as a second employer cost. The EOR's salary-and-contribution cash requirement includes both net wages and remittances.
Obtain an employee-specific calculation using applicable contribution ceilings, insurer rates and levies. Nursing-care contribution allocation also has a state-dependent rule; do not apply a Berlin calculation unchanged to Saxony.
For the example, the 20 November funding amount must cover the €5,000 gross salary, employer charges and contracted service costs, with deductions reconciled once. No all-in total is assumed. The early funding date enables the 26 November contribution payment as well as the 30 November salary.
If client funding misses the commercial cutoff after work starts, the EOR must arrange another funding solution. The agreed payday remains due; a client invoice dispute does not reset the worker's entitlement. BGB Section 614 governs remuneration due dates absent a different applicable arrangement.
What your company still manages after the hire
- Supply accurate hours, absences, overtime and variable-pay inputs. Scheduling must respect the working-time limits, alongside applicable exceptions and collective rules.
- Clear salary, role, location and assignment changes with the legal employer before implementation. Maintain the assignment clock and permission-expiry reminders.
- Provide safe working conditions and required instructions. Agency work leaves client safety duties in place under Section 11 AÜG.
- Control access to company and employee data, and agree who handles employment records and requests.
- Reassess regulated activities and tax exposure as the role changes. German law separately defines a permanent establishment and a permanent representative. Contract negotiation or sales authority deserves specific review. An EOR agreement cannot establish a general corporate-tax exemption.
Questions about hiring without an entity in Germany
Must we form a GmbH for one employee?
No automatic incorporation requirement follows solely from this hiring objective. Direct foreign employment is a supported route, provided you meet the applicable employer duties. Commercial activities and tax presence need separate assessment.
Can a payroll company employ the person for us?
Only if it actually becomes the legal employer under a permitted arrangement. Processing payroll for your overseas company leaves that company as the employer.
Can an EOR obtain permission for any overseas candidate?
No. Check the exact work-title category and employer restrictions. Where BA consent is needed for agency employment, Section 40's refusal rule can prevent the hire. Existing unrestricted permission is a different case.
Can the employee stay indefinitely through the same EOR?
Do not assume so. The default assignment limit concerns service to the same hirer. Changing lenders does not automatically reset it. Plan direct employment or another lawful arrangement before the applicable limit.
Can we start while payroll registration is pending?
Separate the gates. Ordinary employee registration has the first-payroll/six-week rule, while permission and required assignment documents must precede work. Immediate-reporting sectors have an earlier filing requirement. Confirm that the employer can meet every applicable deadline before releasing the start.
Borderless AI's EOR service covers employment onboarding, contracts, payroll and benefits administration. Bring us the proposed worker, role, German worksite and start date to discuss the arrangement. Request confirmation of the employing entity, applicable permit, worker eligibility and funding schedule before committing to an unconditional offer.
