Taxation of dismissal compensation: new instructions for use

Summary — the original article was published in French as « Imposition de l’indemnité de licenciement : nouveau mode d’emploi ».

Negotiating a settlement payment with an employer after a dismissal can be complex, and may lead to a subtle confrontation with the tax authorities, as shown by the Conseil d’État decision of 23 January 2015.

The case concerned the tax-exemption cap on dismissal compensation: an employee had received a settlement of €315,120 in 2004, which was not declared for income tax purposes. The tax authorities added €110,596 back to his taxable income.

Read the original excerpt in French →