Digital payroll and employment records from 2027: why companies should act now

Digital payroll records will become mandatory. From January 1, 2027, employers will generally be required to maintain and store payroll records electronically. Companies should use the remaining time to digitize their personnel files and prepare for future requirements under the EU Pay Transparency Directive.

Key takeaways

BVV requirement: what will apply from 2027?

Section 8 (2) of the German Contribution Procedure Ordinance (Beitragsverfahrensverordnung – BVV) clarifies that payroll records must be maintained and stored electronically in the future. This regulation has been adopted and will become binding law as of January 1, 2027.

The final opportunity to obtain an exemption from electronic record-keeping expires on December 31, 2026. All employers are affected, from small businesses to large corporations. In addition, all relevant records dating back to January 1, 2022, must generally be available in digital form, where an exemption existed, by January 1, 2027.

Among the 21 categories of documents covered by Section 8 (2) BVV are:

• Employment and apprenticeship agreements
• Payroll and salary statements
• Vacation and sick leave records
• Overtime and allowance records
• Social security notifications
• Notices issued by social security institutions
• Monthly employee registers
• Tax-related certificates and documentation.

What technical requirements must companies meet?

The technical requirements are based on the German GoBD principles (principles for the proper maintenance and storage of books, records, and documents in electronic form). Key requirements include:

• Audit-proof and tamper-proof archiving with audit trails
• Machine-readable accessibility at all times
• Compliance with GoBD and GDPR requirements, including role-based access controls and version management.

Risks of non-compliance

Companies should not delay implementation. Missing or improperly maintained payroll records can cause significant issues during payroll tax audits and social security inspections.

Possible consequences include:

• Delays during audits
• Increased audit effort
• Additional social security contribution assessments
• Compliance risks
• Reputational damage

The closer the deadline approaches, the more challenging the orderly migration of existing records becomes.

EU Pay Transparency Directive: adopted – national implementation still pending

In addition to the digitization requirement, companies should closely monitor developments surrounding the EU Pay Transparency Directive.

The Directive has been adopted at the European level and is therefore binding EU law. However, it still needs to be transposed into national legislation before it becomes directly applicable in Germany. This implementation could theoretically take place as late as December 2026, with effect from January 1, 2027.

In practical terms, this means that companies could face new legal requirements with little or no preparation time. It is therefore advisable to familiarize yourself with the Directive’s provisions at an early stage.

The Directive differentiates requirements according to company size.

Companies with fewer than 100 employees

• No regular pay reporting obligation
• Employee information rights
• Transparency obligations during recruitment processes

Companies with 100 to 249 employees

• Annual reporting obligations

Companies with 250 or More Employees

• Comprehensive reporting requirements

Key requirements of the directive include:

• Salary information in job advertisements
• Prohibition of salary history questions during recruitment
• Elimination of pay confidentiality clauses
• Detailed reporting obligations regarding the gender pay gap

Particular attention should be paid to the German concept of “Phantomlohn” (phantom wages). f an employee’s actual remuneration can be shown to be below the average pay for comparable work, the German Pension Insurance Authority (Deutsche Rentenversicherung) may claim additional social security contributions on the difference. Initially, this may include both the employer’s and the employee’s share of the contributions. In addition, the employee may have a civil law claim for an adjustment of their remuneration.

Digital personnel files as a strategic bridge: two requirements, one solution

Companies already addressing the BVV requirements for 2027 should view the introduction of a digital personnel file as a strategic investment rather than an additional burden. A GoBD-compliant digital personnel file helps address both challenges simultaneously:

1. BVV compliance: All 21 required document categories are securely archived, machine-readable, and readily available.
2. Pay transparency: Structured payroll and compensation data provide the basis for gender pay gap analyses, reporting obligations, and employee information requests.
3. Efficiency: Practical experience shows time savings of 15% to 60% in payroll administration, depending on company size and existing processes.
4. Return on investment: Case studies indicate annual ROI figures exceeding 60% for medium-sized companies.

Our recommendation for companies

Use the mandatory digitization resulting from the expiry of the BVV exemption as an opportunity to simultaneously build the infrastructure required for future pay transparency obligations.

The following steps have proven effective in practice:

1. Assess existing personnel and payroll records. Where are documents stored? Do paper archives still exist?
2. Evaluate a GoBD-compliant software solution and initiate the digitization project.
3. Review compensation structures for future pay transparency readiness.
4. Complete migration well before the end of 2026.

Conclusion

The requirement to maintain payroll records electronically from 2027 will prompt many companies to modernize their HR processes.

Organizations that implement a GoBD-compliant digital personnel file at an early stage will not only meet BVV requirements but also establish the foundation for smooth audits and future transparency and documentation obligations.

Digital payroll records: compliant, efficient and audit-ready

The transition to digital payroll records is about more than compliance. A GoBD-compliant digital personnel file creates the foundation for efficient HR processes, smooth audits, and effective preparation for future requirements under the EU Pay Transparency Directive.

We support companies in selecting suitable solutions and implementing them in a legally compliant and practical manner.

Your ACCONSIS contact

Kerstin Weidenbach-Koschnike
Diplom-Kauffrau
German CPA, Tax Consultant
Managing Director of ACCONSIS

Service phone
+49 89 54 71 43
or via email
k.weidenbach-koschnike@acconsis.de

FAQ

Is the requirement to maintain payroll records electronically already legally binding?

Yes. Section 8 (2) BVV has been adopted and will apply to all employers as of January 1, 2027. The exemption option expires on December 31, 2026.

Does the EU Pay Transparency Directive already apply in Germany?

The Directive has been adopted at EU level but still requires implementation into German law. This could occur as late as the end of 2026, leaving companies with little preparation time.

How are the BVV requirement and the EU Pay Transparency Directive connected?

Both require structured, digitally available payroll and personnel data. A GoBD-compliant digital personnel file supports compliance with the BVV while simultaneously providing the data basis needed for future reporting and transparency obligations.

Why should companies act now?

Implementing digital HR and payroll processes takes time. Companies that start early can adapt systems, workflows, and data structures without unnecessary time pressure.