Compensation payment
September 16, 2010 | 20,00 EUR | answered by StB Olaf Gayko
Dear Sir or Madam,
I will soon receive a compensation payment of €170,000.
A doctor treated me incorrectly, resulting in me being retired as a civil servant at the age of 50 due to disability. The compensation payment was offered by the opposing insurance company through a settlement shortly before the court date after some negotiation. This compensation payment only covers a part of the calculated net salary loss until death. Do I have to pay taxes on this amount? Is there a tax-free allowance? I am now 55 years old and as a pensioner I am in tax bracket 4.
Thank you.
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer based on the information provided and in the context of your initial consultation.
The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The insurance compensation is tax-free, as it is meant to compensate for the health damage that has been inflicted on you.
It is not paid due to any employment relationship within the meaning of § 19 of the Income Tax Act (income from employment), or similar, and according to the final catalog of the Income Tax Act, it is neither taxable nor subject to tax, as these benefits are not listed as income there.
I hope this information has been helpful to you and remain
Yours sincerely,
O. Gayko
Tax advisor
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