Tax savings after severance payment in case of unemployment.
September 25, 2010 | 50,00 EUR | answered by Oliver Burchardt
Hello and Good day,
I will be leaving my job, where I have been employed since January 1981, through a termination agreement as of December 31, 2010. I do not expect any waiting period as the notice period, due to a social plan, has already expired.
The severance payment will be taxed according to the 5th rule and will be paid out in January 2011 in the amount of Euro 215,930.98. My previous annual income was approximately Euro 54,000.00.
Now my question is:
Would it be tax-saving for me if I do not claim unemployment benefits in 2011, but instead in 2012, or at the earliest in November or December 2010?
This should counteract the progression clause.
I am aware that I will need to insure myself for health and pension during this period.
Could you clarify the difference in tax burden for me for the following scenarios:
- I register as unemployed as of January 1, 2011 and receive unemployment benefits of approximately 1400.00 Euros per month.
- I remain without work in 2011, in which case my income is limited to the already taxed severance payment.
My tax class is I.
Thank you for your effort.
Kind regards.
Dear inquirer,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Please note that the tax assessment is based on the information you provided. Adding, omitting, or changing information can affect the result.
If you only receive the severance payment next year, your tax burden will be 50,905 € income tax, 2,799 € solidarity surcharge, and 4,581 € church tax.
If you also receive unemployment benefits, your tax burden will increase due to the progression clause to 61,270 € income tax, 3,369 € solidarity surcharge, and 5,514 € church tax.
From a purely tax perspective, the arrangement would certainly be advantageous. However, you would be giving up a significant liquidity advantage.
If you receive both unemployment benefits and the severance payment next year, you will have income of 232,730 €, on which taxes of 70,153 € will be due. You will be left with 162,577 €.
If you only receive the severance payment, you will be left with 157,645 € after taxes. You will be giving up a total of 4,932 € for tax optimization. This calculation does not yet take into account the consequences of the health insurance you will have to pay for, which will further negatively impact the model.
Therefore, I cannot recommend this model to you.
Best regards,
Oliver Burchardt
Tax consultant
