How are redundancy payments taxed?

The severance pay is subject to full tax deduction (other remuneration) by your employer as taxable wages. When submitting a tax return, you can apply for reduced taxation (so-called fifths rule) of the severance pay. The prerequisite for this is that the receipt of the severance payment leads to an accumulation of income and therefore generally to an increased tax burden. The tax office will request the necessary supporting documents when applying for reduced taxation of the severance payment.