It is possible to receive a severance bonus in the event that you decide to retire or if your employer automatically retires you. However, several conditions must be met and it is important to know your rights in order to benefit from them. For example, when you apply for your retirement, it is essential to respect a given notice, the duration of which is identical to that of the notice required in the event of dismissal. If this severance bonus may sound like good news, what about the tax consequences? Is this severance bonus taxable?
If you can prove at least 10 years of seniority in your company and you decide to leave it in order to retire, you are eligible for a severance bonus. The amount of your retirement indemnity cannot be less than a certain amount, depending on your seniority in the company. Thus, in the event that you have less than 15 years of seniority, but at least 10, your compensation will be set at half a month’s salary.
For at least 15 years of seniority, but less than 20, it will amount, in this case, to one month’s salary. It is your salary that is taken into account to calculate your compensation, based on what is beneficial to you. This can be the 12th of your gross remuneration for the last 12 months preceding your retirement or a third of your gross remuneration for the last 3 months. In the latter case, any premium paid during these three months is automatically recalculated over three months.
In the event that your employer chooses to automatically retire you, you also have the option of receiving a retirement indemnity. The given amount of your compensation cannot be less than a quarter of a month’s salary per year of seniority for the first 10 years or a third of a month’s salary per year of seniority from the 11th year.
It is the reference salary that is taken into account for the calculation of this allowance, i.e. the monthly average of your salaries for the last 12 months or one third of your salaries for the last three months. Note in particular that your seniority is calculated up to the effective date of termination of your employment contract.
In order to know if your departure bonus is taxable or not, it is necessary to refer to the conditions of your retirement. If you have decided to retire voluntarily, it is fully taxable. However, for a voluntary departure, carried out under a social plan, your severance pay is exempt.
Usually, this retirement bonus is present on your declaration already pre-filled, but it may be necessary to add it in a specific box of the supplementary declaration. Do not forget to check your withholding tax rate, which may have increased, and to update it downwards in your personal space, on the tax website.
