Rewritten tax rules for employment termination payments

Article 13 of the 2006 Social Security Financing Act rewrites paragraph 1 of Article 80 duodecies of the General Tax Code. Any payment made on termination of an employment contract is taxable, except: payments under Article L. 122-14-4 of the Labour Code; payments made under a job protection plan; the share of other severance payments not exceeding twice the previous year's gross annual pay or 50% of the payment, within six times the annual social security ceiling, or the statutory or agreed amount if higher; and, for compulsory retirement payments, the same share within five times the ceiling. These rules apply to terminations notified from 1 January 2006. The rules have been amended several times since. According to the Senate report, the exempt portion of dismissal payments outside a redundancy plan was previously capped at half of the first wealth-tax bracket (€360,000) and that of compulsory-retirement payments at a quarter of it (€180,000), so the reform lowers these caps.