What happens if the advertising costs are higher than the salary as part of a severance package?
March 5, 2015 | 35,00 EUR | answered by Anton Pernitschka
Salary in 2015: January to March: 20K€
Severance pay at the end of March: 180K
Work-related expenses in 2015: 50K (I plan to start an MBA in September 2015)
My specific question:
How is the net salary (or the income tax to be paid) for 2015 calculated using the "Fünftelregelung" (five-fifths rule)?
Is the following calculation correct?
20K salary - 50K work-related expenses = 0€ salary in 2015 and 30K remaining work-related expenses
180K severance pay - 30K remaining work-related expenses = 150K severance pay which is taxed using the "Fünftelregelung," assuming that the salary in 2015 was 0€.
Additional: I also have the option to receive the salary for April (6K), but I am not sure if it will do more harm than good, as the benefit under the "Fünftelregelung" largely depends on the difference between salary and severance pay.
Dear inquirer,
In the context of an initial consultation and your fee commitment, while adhering to the regulations of this forum, I would like to answer your questions.
The tax for the severance payment amounts to five times the difference between the tax burden of the regular taxable income and the tax burden of the income increased by one fifth of the severance payment, according to § 34 EStG. If the income is 0 €, the tax advantage is maximum.
According to the severance pay calculator at "www.n heydorn-de", the net severance pay for a taxable income of 0 € and a severance payment of 180,000 € is still 140,264 €, and with joint taxation it is 157,802 €. This calculation may be incorrect for an income of 0 € or close to 0 €, as the lump sums for work-related expenses and provision are not (fully) offset against income for tax purposes.
Actually proven work-related expenses can lead to negative income. These negative incomes must first be offset against positive incomes (loss carryforward). If this is not possible, the loss carryforward according to § 10 d EStG applies.
Severance payments are considered income from employment according to § 19 para. 1 sentence 1 no. 1 EStG. The unused remaining work-related expenses - in this case amounting to 30 K - therefore reduce the severance payments.
According to the above-mentioned severance pay calculator, any desired result can be obtained by entering new parameters.
The response was based on your description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Best regards,
Anton Pernitschka
Tax advisor
