Glossary

In English: One-fifth rule

A severance is taxed in full, but with a softer method: the tax office works out the extra tax on one fifth of it and multiplies that by five. This flattens the jump into higher tax rates. You claim it in your tax return.

Watch out: It helps most in a year with little other income.

Legal basis

EStG §34(1), §24 Nr. 1. Checked against the statute text on 12 November 2026.

Open the simulator See Fünftelregelung in action: work through a layoff case where it decides the outcome.

This page explains German employment law in general terms. It is not legal advice for your situation. If a layoff affects you, talk to an employment lawyer, your union or your Betriebsrat.