Glossary

In English: Taxed when paid

Income is taxed in the year you receive it. If you and the company agree, before the severance falls due, to pay it in January, it counts for the next year. Without a salary that year, the tax on it is much lower.

Watch out: Unemployment benefit is tax-free but still raises the rate on the severance.

Legal basis

EStG §11(1), §32b. Checked against the statute text on 12 November 2026.

Open the simulator See Zuflussprinzip 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.