Salary limits and variable compensation: What actually counts towards the relevant gross salary for Blue Card, Sections 18a and 18b of the German Residence Act?

Introduction

Few questions cause as much uncertainty in my consulting practice as the calculation of salaries for EU Blue Card holders and skilled workers with residence permits under Sections 18a and 18b of the German Residence Act (AufenthG). Employers present their international skilled workers with attractive compensation packages: a base salary, plus a performance-related bonus, sales commission, a company car, and occasionally stock options or RSUs. From a recruitment marketing perspective, this is understandable – but from a residence law perspective, it quickly becomes a trap. Whether an application for an EU Blue Card or a residence permit under Sections 18a or 18b of the German Residence Act is successful depends largely on which of these compensation components the immigration authorities or the Federal Employment Agency (BA) actually recognize as "salary" within the meaning of the law.

The curious aspect of this question, which is crucial for practical application, is that neither the Residence Act nor the Employment Ordinance (BeschV) explicitly defines what constitutes the relevant gross annual salary. Section 18g of the Residence Act merely refers to the annual contribution assessment ceiling in the general pension insurance scheme for determining the salary threshold [1], and Section 2 of the Employment Ordinance regulates the percentage thresholds without specifying the composition of the salary itself [2]. The interpretation of the content is left to administrative practice – with the result that different, sometimes contradictory, opinions have emerged in legal literature, legal practice, and enforcement practice. I would like to address this dispute below and ultimately formulate my own position on the matter, based on practical experience.

I. Overview of the legal framework

1. The Blue Card: a rigid salary threshold

The EU Blue Card under Section 18g of the German Residence Act (AufenthG) requires a fixed minimum salary. For 2026, the Federal Ministry of the Interior and Community (BMI) published the thresholds in the Federal Gazette as part of its regular cycle: The general minimum salary is €50,700 gross per year (50% of the contribution assessment ceiling), while the reduced minimum salary for shortage occupations as defined in Section 2 Paragraph 2 of the Employment Ordinance (BeschV) and for recent graduates is €45,934.20 gross per year (45.3% of the contribution assessment ceiling) [3]. These values are deliberately rigid: The card is only issued if the agreed annual salary actually reaches the threshold – there is no “priority check”, but there is strict numerical verification.

2. Sections 18a and 18b of the Residence Act: the relative employment conditions test

The regulations for skilled workers with vocational training (§ 18a AufenthG) and with academic qualifications (§ 18b AufenthG) function differently. Here, there is no fixed euro threshold. Instead, § 39 para. 2 no. 1 AufenthG requires that the foreigner "is not employed under less favorable working conditions than comparable domestic employees" [4]. In the approval process, the Federal Employment Agency (BA) therefore examines a relative standard: it compares the offered remuneration with what is customary locally and in the industry, or stipulated in collective bargaining agreements, for a comparable position. This structural difference – a rigid threshold for the Blue Card versus a relative benchmark for § 18a/§ 18b AufenthG – is the starting point for most of the disagreements presented below.

In addition, it should be noted that Article 5 of Directive (EU) 2021/1883 on the EU Blue Card requires Member States to establish a salary threshold based on the average gross annual salary, without itself defining in a binding manner which salary components are to be included in the calculation [5]. Thus, even at the EU level, the question remains open and is left to the Member States' implementation practice.

II. The scientific and practical debate: Which components of remuneration count?

1. Bonuses and commissions

Restrictive view – only guaranteed fixed components. In immigration law consulting practice and in most relevant publications, a restrictive approach has prevailed: Only payments that are fixed in amount, unconditional, and independent of future events are taken into account in the employment contract – for example, a guaranteed 13th-month salary. Purely performance-related bonuses and sales-based commissions are generally disregarded according to this view because their payment is uncertain at the time of application [6][7]. This approach is clearly based on the Federal Labour Court's case law on minimum wage performance, according to which special payments are only eligible for consideration if they are made "unconditionally and irrevocably" and remain with the employee permanently [8].

A broader view – regularly paid variable compensation. This strict approach is countered by the argument that it is unrealistic, particularly in sales- and technology-driven industries. If a company can demonstrate that a bonus has been reliably paid out at a certain minimum level in previous fiscal years, it is not appropriate to completely disregard this component. Proponents of this position point to the purpose of the salary threshold – ensuring a sufficient standard of living and preventing wage dumping – which can also be achieved through a sound forecast based on experience.

A different view is held based on the residence permit. A third school of thought seeks to fully develop the different assessment structures of the two permit groups: In the case of the Blue Card, a strict guarantee requirement is justified given the rigid, EU-law-determined threshold; however, in the case of Section 18a/Section 18b of the Residence Act, where a comparison with the industry-standard remuneration structure must be made anyway, variable remuneration – insofar as it is also customary for comparable German employees – must be included in the comparative analysis, as otherwise a realistic comparison within the meaning of Section 39 Paragraph 2 No. 1 of the Residence Act is not possible.

2. Benefits in kind: company car, stock options, company apartment

The discussion becomes even more divided when it comes to benefits in kind. Here, too, three main positions can be distinguished.

• Dissenting view. According to this strict interpretation, only monetary benefits count towards the relevant gross salary. Benefits in kind are not liquid; their value can only be determined indirectly via tax valuation regulations (§ 8 EStG) and are therefore unsuitable for a salary review oriented towards legal certainty.

• Proponents argue that clearly quantified and permanently granted benefits in kind – such as a company car with a demonstrable monetary benefit – can be objectively assessed and therefore included in the calculation, similar to how this is discussed in some cases regarding the calculation of the statutory minimum wage.

• A differentiating view. A mediating position differentiates according to the type of benefit in kind: Classic, easily quantifiable benefits in kind such as company cars or company apartments could generally be included, while volatile instruments such as stock options or RSUs, whose value is uncertain at the time of application and which often only become available after vesting periods of several years, would have to be disregarded.

3. Insights from minimum wage law

Since specific higher court rulings on salary verification in immigration law – unlike in minimum wage law – are hardly apparent to date, it is worthwhile to look at related areas of law. Two recent decisions of the Federal Social Court of November 13, 2025, are particularly instructive, according to which an employer cannot fulfill the statutory minimum wage requirement by providing a company car; the minimum wage must be paid "in cash" [9]. In addition, the Federal Labor Court clarified as early as 2023 that a company car provided for private use does constitute a benefit in kind within the meaning of remuneration, but its valuation must follow strict, comprehensible rules [10]. While these assessments are not directly transferable to immigration law, they provide important guidance on the question of whether and under what conditions benefits in kind are even suitable for fulfilling a legally required income function.

III. My assessment: How to resolve the dispute

In my view, both the purely formal "guarantee-or-no guarantee" approach and a blanket inclusion of all variable compensation components fall short. Both extreme positions fail to do justice to the complexity of real-world compensation models.

In my view, the decisive factor regarding bonuses and commissions is the probability of actual payment. A predictive decision based on a free evaluation of the evidence is required – a standard that is by no means foreign to administrative law and is applied, for example, in a comparable manner when assessing the security of subsistence under Section 2 Paragraph 3 of the German Residence Act (AufenthG). The prediction must take into account, in particular, the employer's historical payment practices, the structure of the target agreement, the degree to which these targets are achievable, and industry-standard bonus practices. A bonus that has demonstrably been paid out almost in full in the last three fiscal years deserves different treatment than a purely hypothetical "optional payment" without reliable benchmarks. While this predictive approach is more complex than a rigid formula, it reflects the reality of variable compensation models – especially in sales, IT, and the financial sector – considerably better than the hitherto prevailing, purely formal guarantee criterion.

In the case of benefits in kind, I believe a two-pronged standard is appropriate: First, a benefit in kind must actually arise within the meaning of the tax valuation rules; second – and this is the crucial point, which has received too little attention in the discussion so far – the benefit in kind must actually be suitable for securing one's livelihood. A company car may constitute a significant benefit in kind, but it typically does not contribute to covering rent, food, or other ongoing expenses if it cannot be converted into liquid assets. The current case law of the Federal Social Court on the minimum wage [9] impressively supports this assessment: If even under minimum wage law, which is structurally closer to the pure remuneration function, a company car cannot fulfill the payment obligation, this must apply all the more to securing one's livelihood under immigration law. Stock options and RSUs generally do not meet this two-pronged test: At the time of application, they lack both a fixed benefit in kind and – due to vesting periods and price risk – the necessary suitability for directly securing one's livelihood.

From a legal policy perspective, I see a clear need for reform here. The fact that a crucial question for tens of thousands of cases annually remains solely at the discretion of the authorities is difficult to reconcile with the principle of legal certainty and the interest in uniform administrative enforcement nationwide. I advocate that the legislature enshrine an explicit definition of the relevant gross annual salary in Section 18g of the Residence Act (AufenthG) or in the Employment Ordinance – based on the criteria I have outlined, namely the probability forecast for variable components and the double test for benefits in kind. The recently published IW short report on the modernization of salary audits in skilled worker immigration shows that the discussion about more transparent and legally sound salary audits is also gaining momentum in economic policy [11] – an opportunity I would use for a fundamental legal clarification.

IV. Practical advice for employers and professionals

Until the law is clarified, I recommend the following to my clients: Variable compensation components should be contractually defined as precisely as possible, ideally with a guaranteed base amount that, in itself, contributes to reaching the target threshold. Historical bonus payments should be documented and included with the application as proof of the likelihood of payment. Benefits in kind should be precisely quantified in the employment contract and their actual availability described; I generally advise against a flat-rate "offsetting" of these against the base salary. Finally, those who want to play it safe should set the base salary – without any variable component – as close as possible to the relevant threshold to avoid any room for discretionary assessment by the authorities.

Conclusion

The question of which remuneration components are included in the relevant gross salary for Blue Card holders and skilled worker qualifications under Sections 18a and 18b of the German Residence Act (AufenthG) is not definitively settled by law and is the subject of controversial debate in legal literature and practice. While administrative practice predominantly pursues a restrictive approach oriented towards contractual guarantees, in my view, a more differentiated forecast-based approach for variable remuneration and a double standard of review for benefits in kind are more advisable. Until the legislature provides clarity, employers and skilled workers are left with only the option of careful, evidence-based contract drafting – and, if in doubt, early legal review of the specific remuneration model.

List of sources

Laws, guidelines and regulations

[1] Section 18g of the Residence Act – EU Blue Card, available at: gesetze-im-internet.de

[2] Section 2 of the Employment Ordinance – Highly qualified persons, EU Blue Card holders, university graduates, available at: freiRecht.de

[3] Federal Ministry of the Interior and Community, Announcement on Section 18g of the Residence Act (Minimum salaries EU Blue Card 2026), Federal Gazette AT 18.12.2025 B3, available at: bundesanzeiger.de

[4] Section 39 of the Residence Act – Consent to employment, available at: dejure.org

[5] Directive (EU) 2021/1883 of the European Parliament and of the Council of 20 October 2021 on the conditions of entry and residence of third-country nationals for the purposes of highly qualified employment (Blue Card Directive), Article 5, available at: EUR-Lex

Administrative guidelines and instructions

[6] Federal Employment Agency, Technical Instructions on the Residence Act and the Employment Ordinance, available at: arbeitsagentur.de

[7] Federal Ministry of the Interior and Community, Application Guidelines for the Skilled Immigration Act, available at: bmi.bund.de

Judgments

[8] Federal Labour Court, judgment of 25 May 2016 – 5 AZR 135/16 (crediting of holiday and Christmas bonuses towards the minimum wage), available at: hensche.de

[9] Federal Social Court, judgments of 13 November 2025 – B 12 BA 8/24 R and B 12 BA 6/23 R (company car does not meet minimum wage requirements), discussed at: efarbeitsrecht.net

[10] Federal Labour Court, judgment of 31 May 2023 – 5 AZR 273/22 (assessment of the company car as a benefit in kind/exempt amount from attachment), available at: bundesarbeitsgericht.de

Literature and essays

[11] Institute of the German Economy Cologne, IW Short Report 16/2026: Modernizing pay audits, published on 26 February 2026, available at: iwkoeln.de

[12] The Paritätische Gesamtverband, Skilled Immigration Act 2.0: The new regulations, available at: der-paritaetische.de

Online resources

[13] Federal Employment Agency, EU Blue Card information page, available at: arbeitsagentur.de

About the author

Mirko Vorreuter, LL.B., Dipl.-Jur., is a lawyer and specialist in immigration law, as well as the founder and owner of VISAGUARD.Berlin . During his studies, he specialized in German residence and immigration law and has since handled and managed more than 1,000 visa and residence permit applications.

In addition to his legal practice, Mirko Vorreuter works as a specialist author and content creator in the field of German immigration law. Besides his legal training, he holds the academic degrees of Bachelor of Laws (LL.B.) and Diplom-Jurist (Dipl.-Jur.).

He is a member of Corporate Immigration Lawyers Germany (CILG), the Working Group on Migration Law in the German Bar Association (DAV) and the Republican Lawyers' Association (RAV).