Income Tax - Termination Benefits, Termination, Retirement
Verified 17 April 2023 - Legal and Administrative Information Directorate (Prime Minister)
Did you receive a sum at the end of an employment contract? It is subject to income tax regardless of its origin (resignation, dismissal, retirement, etc.). However, an exemption is possible in certain cases.
The following amounts collected at the end of an employment contract are always taxable:
- Allowances of breach of employment contract (compensatory allowances for notice, paid leave, compensation for non-competition)
- Allowances of termination of contract or assignment (termination indemnity precarious premium paid at the end of a fixed-term contract, compensation paid in the event of an early termination of a fixed-term contract at the initiative of the employer, compensation for the termination of an interim assignment, etc.)
To complete your tax return or check your pre-filled return, you can visit the explanatory note and the practical income tax brochure.
If a pre-filled amount is inaccurate, you must correct it.
Tax returns via Internet is required if your principal residence is equipped with internet access and you are able to file your return online.
The 2022 Online Income Tax Return starts april 13, 2023.
The deadline varies depending on whether you are filing on paper or online.
You can use the following simulator to find out your date:
Know the deadline for filing your tax return
Department | Deadline for reporting |
|---|---|
01 to 19 | Thursday, May 25, 2023 at 11:59 pm |
20 to 54 (including 2A and 2B) | Thursday, June 1, 2023 at 11:59 pm |
55 to 974/976 | Thursday, June 8, 2023 at 11:59 pm |
Non-residents | Thursday, May 25, 2023 at 11:59 pm |
2023 Online Income Tax Return 2022
Redundancy payments are partly exempt from income tax. In some cases, the exemption is total.
Limited exemption from severance pay
Compensation paid in the event of dismissal (excluding job protection plan) is partly exempt from income tax.
The amount corresponding to the compensation fixed by law or collective agreement is totally exempt.
If you received more, the exemption is limited to one of the following amounts:
- 2 times the amount of gross pay you received in the year before your termination
- Half of the severance pay you received
Tax services will choose the solution that works best for you.
Warning
the exemption shall be limited to a maximum of €246,816 for allowances received in 2022 (€263,952 for 2023 allowances).
Example :
An employee shall receive severance pay of €120,000 of which €70,000 is the compensation provided for in the collective agreement. His gross remuneration for the calendar year preceding the dismissal is €40,000.
The severance pay shall be exempt up to the amount provided for in the collective agreement, i.e. €70,000.
This amount is greater than 50% of the compensation received (€120,000/2 = €60,000) but less than twice the annual gross remuneration, equal to €80,000 (€40,000 (x 2).
The compensation is therefore exempt up to the sum of €80,000.
The surplus of 40 000 (€120 000 - €80,000) is taxable.
The contractual termination indemnity is exempt under the same conditions, if you are not entitled to a statutory retirement pension.
Full exemption from severance pay
The severance pay is fully tax-exempt in the following cases:
- Allowance received under a social plan (job protection plan called PES)
- Compensation and damages awarded by the judge in case of wrongful or irregular dismissal (wrongful termination, procedure not respected)
- Special redundancy allowance due in the event of a break-up as a result of an accident at work or an occupational disease
- Compensation for termination of employment on discriminatory grounds
- Compensation paid in connection with a collective breach of contract
- Compensation paid upon termination of the contract at the end of a mobility leave
How to declare?
To complete your tax return or check your pre-filled return, you can visit the explanatory note and the practical income tax brochure
If a pre-filled amount is inaccurate, you must correct it.
For the taxable portion of severance pay, you can apply for the quotient system.
Tax returns via Internet is required if your principal residence is equipped with internet access and you are able to file your return online.
The 2022 Online Income Tax Return starts april 13, 2023.
The deadline varies depending on whether you are filing on paper or online.
You can use the following simulator to find out your date:
Know the deadline for filing your tax return
Department | Deadline for reporting |
|---|---|
01 to 19 | Thursday, May 25, 2023 at 11:59 pm |
20 to 54 (including 2A and 2B) | Thursday, June 1, 2023 at 11:59 pm |
55 to 974/976 | Thursday, June 8, 2023 at 11:59 pm |
Non-residents | Thursday, May 25, 2023 at 11:59 pm |
2023 Online Income Tax Return 2022
Your retirement or early retirement allowance is taxable. However, a total or partial exemption is possible in certain cases.
Allowance paid in the event of voluntary retirement or early retirement
The compensation paid in the event of voluntary retirement or early retirement is fully taxable.
Allowance paid in the event of retirement on the initiative of the employer
Compensation paid in the event of retirement (excluding job protection plan) is partly exempt from income tax.
The amount corresponding to the compensation fixed by law or collective agreement is totally exempt.
If you received more, the exemption is limited to one of the following amounts:
- 2 times the amount of gross pay you received in the year before your termination
- Half of the retirement allowance you received
Tax services will choose the solution that works best for you.
Warning
the exemption shall be limited to a maximum of €205,680 for retirement benefits received in 2021.
Severance benefits exempted in full
Retirement and early retirement allowances shall be fully exempt in the following cases:
- Compensation received under a social plan (job protection plan, says PES)
- Allowance for early termination of activity under the scheme asbestos early retirement
- Allowance received under the early retirement-redundancy the National Labor Fund (FNE) at the time of the company's departure, under the same conditions as the redundancy payment
How to declare?
You must report the following amounts:
- All your voluntary retirement (or early retirement) benefits
- Taxable portion of your retirement benefits
To complete your tax return or check your pre-filled return, you can visit the explanatory note and the practical income tax brochure.
If a pre-filled amount is inaccurate, you must correct it.
For the taxable portion of retirement and early retirement allowances, you can apply for the quotient system.
Tax returns via Internet is required if your principal residence is equipped with internet access and you are able to file your return online.
The 2022 Online Income Tax Return starts april 13, 2023.
The deadline varies depending on whether you are filing on paper or online.
You can use the following simulator to find out your date:
Know the deadline for filing your tax return
Department | Deadline for reporting |
|---|---|
01 to 19 | Thursday, May 25, 2023 at 11:59 pm |
20 to 54 (including 2A and 2B) | Thursday, June 1, 2023 at 11:59 pm |
55 to 974/976 | Thursday, June 8, 2023 at 11:59 pm |
Non-residents | Thursday, May 25, 2023 at 11:59 pm |
2023 Online Income Tax Return 2022
Who can help me?
Find who can answer your questions in your region
For general information
Tax Information ServiceBy telephone:
0809 401 401
Monday to Friday from 8:30 am to 7 pm, excluding public holidays.
Free service + call price
To contact the local service managing your folder
Department in charge of taxes (treasury, tax department...)
- General Tax Code: Articles 79 to 81cTax treatment of allowances paid on termination of employment contract
- Bofip-Taxes n°BOI-RSA-CHAMP-20-40-10 relating to the taxation of sums collected in the event of breach of contract of employment
- Taxes: access your Special Space
Online service
- 2023 Online Income Tax Return 2022
Online service
- Income Tax Return (Paper)
Form
- 2023 Simulator: 2022 Income Tax
Simulator
FAQ
- Termination of employment in the private sectorService-Public.fr
- Income tax: return and reportable incomeService-Public.fr
- Tax treatment of sums collected in the event of termination of the contract of employmentMinistry of Finance
- 2023 Practice Brochure - 2022 Income Tax ReturnMinistry of Finance
- Income tax: information leafletsMinistry of Finance