How to set up direct deposit for your employees in Germany

Payday shouldn’t be a pain — for you or your team. If you’re still printing checks, coordinating manual transfers, or asking employees to chase down payments, it might be time to level up.

Direct deposit is the gold standard for modern, reliable, and seamless employee payments, and setting it up is easier than you think.

In this article, we’ll walk you through the process of setting up direct deposits for your Germany-based employees — and show you how an automated payroll platform can make the process faster, safer, and fully compliant from day one. So let’s begin.

How does payroll direct deposit work in Germany?

In Germany, employers typically pay their employees through SEPA (Single Euro Payments Area) credit transfers — a standard across the European Union (EU) for euro-denominated bank payments.

SEPA is:

• Widely supported across German and EU banks

• Fast and cost-effective, compared to international wire transfers

• A standardised format (IBAN and BIC), reducing errors and simplifying automation

• Legally compliant for wage disbursements

With SEPA, transfers are made in euros, even if the bank is outside Germany (but within the SEPA zone). Payments are usually settled within one business day, depending on bank processing times.

How to set up payroll direct deposit in Germany: Step by step

If you’re using a local payroll provider or managing payroll manually, here’s what the direct deposit setup process looks like in Germany:

1. Choose a payroll provider that supports SEPA

You’ll need access to SEPA to send direct deposits. This can happen in a few ways:

• Through a local payroll provider or accountant

• Through a centralised, global payroll platform like Remote

2. Collect your employees’ banking information

To process payroll and make payments, you’ll need each employee’s:

Full name and residential address

• IBAN (International Bank Account Number)

• BIC (Bank Identifier Code, especially if the bank is outside Germany)

• Steuer-ID (Tax ID)

• Sozialversicherungsnummer (Social security number)

• Chosen health insurance provider (if public)

It’s crucial that you store all this information securely, and follow best practices for data protection.

3. Prepare and execute the SEPA salary transfers

Once you have calculated your employees’ net wages, you’ll typically need to:

• Create a SEPA XML file with the payment details

• Submit the file to your bank using online banking or treasury software

Transfers should be scheduled to arrive on or before the contractual payday. Most German employees expect wages on the last working day of the month, unless otherwise stated.

Simplifying setup with Remote Payroll

If you handle payroll direct deposits in-house or through a local provider, this process can be pretty manual and time-consuming.

But if you use an automated platform like Remote Payroll, the entire process is simple, quick, and straightforward.

With Remote, you don’t need to manage SEPA files, submit reports, or juggle deadlines. We handle everything, saving you time, resources, and countless headaches.

To give you an idea, here’s how simple the setup process is:

1. Log into your Remote account and navigate to ‘Add payment method’ for your German entity. Choose ‘SEPA direct debit’.

2. Provide your bank information.

3. Authorize Remote to debit your account for payroll. This enables fully automated, on-time direct deposit for every payroll run.

That’s it. From here, Remote:

• Runs your German payroll accurately and on time, in full compliance with all German payroll tax and employment laws.

• Delivers payslips to your employees.

• Deposits net wages directly into your employees’ accounts.

You don’t have to touch a SEPA file, hire a German accountant, or worry about compliance slipping through the cracks: we handle everything.

To see a full, in-depth breakdown of the setup process with Remote, check out our step-by-step support guide.

Is direct deposit legally required in Germany?

While not mandated, direct bank transfer (SEPA) is the standard and expected method of salary payment in Germany. Employees rarely accept other formats like cheques or cash.

Can I use a non-German bank account to pay employees in Germany?

Yes, if it’s SEPA-compliant and euro-denominated. But having a local German or EU-based bank account simplifies currency management and reduces transfer issues.

How else can Remote help?

A simplified direct deposit setup process isn’t the only benefit of using a centralized payroll platform like Remote. 

You also get:

• Automated calculations, reducing the risk of human errors and ensuring your people are getting paid the right amount.

• Full compliance with all payroll tax laws, even when they change.

• The ability to scale compliantly across countries without adding complexity.

• Bank-grade security for your employee and financial data.

To learn more about how we can remove your payroll headaches, simplify the process, and provide a seamless payroll experience, speak to one of our friendly experts today.

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