Did you receive a notice? We can help you! Since 1 January 2006, there is no tax free amount. Severance payments are income and must as such be fully taxed. After the so-called one-fifth rule, the compensation may be taxed but reduced. Under most conditions Medicare Advantage would agree. A worker to avoid dismissal employers but receives the compensation through a cancellation agreement termination of employment as social compensation for the loss of his job. In this respect, one could assume that the severance pay is tax free. In fact, it was this time. Since 1 January 2006, the compensation is however fully taxable.
The severance payment in a cancellation agreement can be taxed according to the so-called fifth regulation reduced. The compensation is legally part of the income of the employee. If you find a rule now that the severance pay in five parts can be paid out with the rest of pay of the employee, the taxable income of the employee is reduced due to a very complex formula. To the closer Calculate this Funftel-scheme, please contact your tax advisor. Regardless of which should be discussed in the cancellation agreement and above all with the human resources Department of the employer about. You save a very substantial part of income tax as a result. At a low taxable compensation, the tax can be reduced to 0. However, it is not just aim to knock out a minimum severance pay. Under this aspect, that you want to obtain a maximum compensation please urgently contact a specialist lawyer for employment law. There are many ways that you can help you to a higher compensation. Georg Schafer Attorney