US payroll for German companies: registrations and duties

A German company employing a person in the United States generally needs an employer identification number (EIN) and federal withholding, deposit and reporting processes. Most employers file Form 941 quarterly, while an IRS-approved Form 944 filer follows the annual route. Form 940 applies if the employer is subject to federal unemployment tax (FUTA), and Form W-2 reporting generally applies to employees. State duties can include income-tax withholding, state unemployment insurance (SUI) and workers’ compensation. This guide addresses one local hire and uses 2026 federal figures, which the IRS updates every year.

Quick answer

Which registrations does a German company need for US payroll?

Four layers apply, and the first one does not replace the others:

1. Federal: an EIN, then federal withholding, deposits and returns with the IRS.
2. State tax agency: registration for state income tax withholding, where the state has an income tax.
3. State unemployment insurance agency: registration for SUI. The US Department of Labor keeps a directory of the state UI tax agencies, and each agency sets its own thresholds and rates.
4. Workers’ compensation: insurance or an equivalent arrangement under the work state’s rules. Use the work state’s official workers’ compensation authority and confirm its current coverage route.

For a person hired for employment in the US, complete Form I-9 under the current USCIS instructions. Section 2 is generally due within three business days after the first day of employment, but it is due on day one if employment will last fewer than three business days. Use the edition USCIS currently shows. The US hiring guide covers work authorisation in more detail. Whether the German company must also register as a foreign company in the state, and what its activity means for corporate tax and permanent establishment, are separate questions this guide does not decide.

How does a foreign company get an EIN?

The IRS says you need an EIN if you have employees. For a business whose principal place of business is outside the US, the IRS lists three routes on Form SS-4, Application for Employer Identification Number: telephone, fax and mail. The online application is listed for businesses with a US principal place of business.

• Telephone: 267-941-1099, Monday to Friday, 6:00 a.m. to 11:00 p.m. Eastern time. It is not toll-free and is for applicants with no US legal residence, principal place of business, or principal office or agency.
• Fax: 304-707-9471 for applicants outside the US; the IRS says the EIN typically comes back within 4 business days.
• Mail: Internal Revenue Service, Attn: EIN International Operation, Cincinnati, OH 45999. The IRS recommends completing the form at least 4 to 5 weeks before you need the EIN.

If the responsible party has no Social Security number or ITIN and cannot get one, the SS-4 instructions say to enter “foreign” or N/A on line 7b. Check the numbers and addresses on the IRS pages on the day you apply. An EIN is the federal identifier; it does not by itself complete separate state employer, withholding or unemployment registration required by the work state.

Which forms and deadlines apply?

The employee gives the employer Form W-4, the Employee’s Withholding Certificate. The employer withholds income tax according to that form and the withholding tables in Publication 15-T. The IRS advises considering a new Form W-4 each year.

The main federal 2026 figures in Publication 15:

• Social Security tax: 6.2% each for employer and employee, up to a wage base of $184,500.
• Medicare tax: 1.45% each for employer and employee.
• Additional Medicare Tax: 0.9% withheld from the employee on wages above $200,000; there is no employer share.

The IRS names two deposit schedules, monthly and semi-weekly, and requires federal tax deposits to be made by electronic funds transfer (EFT); the Electronic Federal Tax Payment System (EFTPS) is one way to pay. Under the monthly schedule, deposits are due by the 15th day of the following month. Publication 15, section 11, explains how the lookback period decides which schedule applies and contains a next-business-day rule once taxes reach $100,000; read it rather than relying on a summary.

If a due date falls on a weekend or legal holiday, the IRS allows filing on the next business day. Check the dates each January, because the IRS publishes them for each year.

What is FUTA and what is state unemployment insurance?

FUTA is a federal tax paid only from the employer’s own funds; employees do not pay it or have it withheld. For 2026, Publication 15 gives a rate of 6.0% on the first $7,000 paid to each employee in the year. A credit of as much as 5.4% may be available if the employer meets the full, timely and same-wage conditions and the applicable state is not a credit-reduction state. Check the current Form 940 instructions. The general test is wages of $1,500 or more in any calendar quarter, or employees in 20 or more weeks.

The state side is a separate registration. California’s Employment Development Department says a business must register once it pays more than $100 in wages in a calendar quarter, within 15 days. New York’s Department of Labor describes liability for a general business from the first day of the calendar quarter in which it pays $300 or more, and requires a federal EIN before registering. Those figures are two examples, not a rule: look up the work state in the Department of Labor directory.

What else can a state add?

Start with the state and locality where the employee works, then confirm whether residence, multistate work or another state rule changes the withholding analysis. California lists four payroll taxes: unemployment insurance and the Employment Training Tax paid by the employer, and State Disability Insurance and personal income tax withheld from the employee. New York’s Form IT-2104 addresses New York State, New York City and Yonkers withholding. A New York employer may owe metropolitan commuter transportation mobility tax only if the current withholding, covered-employee, MCTD-location and quarterly payroll-expense conditions are met. Paid sick leave, paid family leave and state disability schemes require their own state check; see also vacation and holidays in the US. Ask the work state’s designated agency whether and when a new hire must be reported, and use its current portal.

Does the Germany-US social security agreement change this?

For the local-hire assumption in this guide, US rules generally apply. The IRS says individuals employed in the US by a foreign employer are generally subject to Social Security and Medicare withholding by that employer. A totalization agreement can avoid double contributions, but the IRS says the person seeking an exemption must obtain a certificate of coverage from the home country’s social security agency. A person sent temporarily from Germany may instead fall under the agreement’s posting or exception route, so residence alone is not decisive. German Pension Insurance states that the agreement covers pension insurance only and not other branches of social insurance. It therefore does not remove state unemployment insurance or workers’ compensation. For employees sent from Germany, see posting employees to the US.

Who covers workers’ compensation?

The employer normally arranges the required coverage. Use each work state’s official workers’ compensation authority. New York states that virtually all employers must provide coverage, and California states that employers are required by law to have workers’ compensation insurance, including with one employee. Exemptions and the insurance route (private insurer or state fund) differ by state and were not verified here; ask the state office or an insurance broker before the start date.

When can an EOR take over payroll?

Under Deel’s documented model, Deel acts as the legal employer and runs employer payroll while the client retains day-to-day management. Confirm the exact employing entity, state coverage and allocation of filings in the contract. This is an alternative to the German company running direct-employer payroll, not a transfer of the German company’s EIN. See What is an Employer of Record? for the model.

In Deel’s dated EOR workflow, Deel is selected as legal EOR. The flow asks for country, location, visa needs, title, seniority, job scope, compensation and work arrangement, and it includes role and location restrictions before quote and agreement review. Obtain written confirmation for the exact US state, locality, role and employing entity.

If the model fits after comparison, ask Deel about EOR options for US payroll (opens in a new tab). Compare it with direct payroll and any US group entity.

When may an EOR not fit?

An EOR may not fit when the group already has a US subsidiary with payroll, when the company wants the direct employment relationship and can run the registrations, or when the provider does not accept the exact state or role. A payroll provider that files in your name, a professional employer organisation or a US subsidiary may be alternatives. Ask US and German tax advisers to assess taxable presence separately before choosing the employing model; see permanent establishment risk from remote employees.

What does this mean for your hiring model?

Payroll is only one input. Start with the employee’s real work state, then compare direct payroll, a US entity and an EOR on the same facts using employee, contractor or EOR: how to choose. A genuine contractor is not processed as an employee, but contractor reporting, possible withholding and state duties still need a separate check; see W-2 vs 1099. Dismissal rules affect the contract as much as payroll does; see terminating employees in the US and US employment law for German companies. The wider picture is in the US hiring guide for German companies and the US hub.

Further reading

• Hiring in the US from Germany: guide for German companies
• US employment law for German companies
• Employee, contractor or EOR: how to choose
• Terminating employees in the US
• Posting employees to the US (D/USA 101)

Key terms

Employee

A worker engaged under a local employment contract, with the employer responsible for payroll, social security contributions and compliance with local labour law.

Contractor

A self-employed individual or business engaged for specific services under a commercial contract, without the employment protections or payroll obligations that apply to employees.

Employer of Record (EOR)

A third-party provider that legally employs a worker on behalf of a client company in a country where the client has no local entity, handling local payroll, contracts and compliance.

Permanent establishment

A tax concept describing a fixed place of business or sufficient business activity in a country that can trigger local corporate tax obligations for a foreign company.

Misclassification

Treating a worker as a contractor when, based on the actual working relationship, local law would classify them as an employee, which can create back taxes, penalties and employment claims.

Final checklist

• Confirm the employee’s work state and whether the person is an employee or a genuine contractor.
• Apply for the EIN by phone, fax or mail well before the start date.
• Register with the state tax agency and the state unemployment insurance agency.
• Arrange workers’ compensation coverage under the work state’s rules.
• Complete Form I-9 under the current USCIS timing rules and collect Form W-4.
• Set up electronic federal tax deposits and the Form 941, Form 940 and W-2 calendar.
• Recheck federal figures such as the Social Security wage base each January.
• Compare direct payroll, a US entity and an EOR on the same facts; ask Deel for a written quote for your US state and role (opens in a new tab) and compare it with an alternative.