You've probably heard "Gross 1" and "Gross 2" thrown around a hundred times and wondered what the catch is. They sound almost identical, and both are way bigger than the Net amount that hits your bank account. But here’s the thing – the difference between them is crucial for understanding who actually pays for what!
This is the amount you usually negotiate during a job interview and the one that appears in your employment contract. All the levies that "you" pay (like pension contributions) are deducted from this number.
Now, this is the actual, total cost an employer pays just to have you on the payroll every month. In addition to your Gross 1, the employer must pay the government additional contributions out of their own pocket.
If all this still sounds a bit confusing, just try to remember this simple formula:
Note on insurance: Fun Fact: Did you ever notice this quirk? You technically "pay" for your own pension (it comes out of your Gross 1), while your employer pays for your health insurance (it’s added on top of your salary, creating Gross 2). That little legal twist is what creates all the fuss around these two different gross amounts!