Are social security contributions charged on German severance packages?

No, genuine severance indemnities paid for loss of employment are completely exempt from statutory social security contributions (pension, health, care, unemployment).

How is the tax relief claimed?

The tax relief is claimed on your annual personal income tax return filed with the local tax authority (Finanzamt).

DEGermany Severance Tax 1/5th RuleTaxes

Germany Severance Tax Calculator 2026 (Fünftelregelung § 34 EStG)

Calculate severance settlement net payouts and tax relief in Germany using the statutory 'one-fifth rule' (Fünftelregelung) under Sections 24 and 34 of the German Income Tax Act (EStG) in EUR (€).

Salaries & Monthly Wages Income Tax & Brackets Payroll & Deductions

Calculated Result

Net Severance Payout (With 1/5th Rule)

€0

Calculator Inputs

Regular Gross Annual Income (Excluding Severance)

€

Quick select:

Gross Severance Package Amount (EUR €)

€

Quick select:

Calculated Result

Net Severance Payout (With 1/5th Rule)

€0

Severance Tax Liability (Reduced)

€0

Tax Savings from 1/5th Rule

€0

Effective Tax Rate on Severance

€0

Calculation Methodology

Fünftelregelung Method: 1) Calculate tax on regular income (Tax A). 2) Calculate tax on regular income + 1/5th severance (Tax B). 3) Total tax on severance = (Tax B - Tax A) * 5. Net Severance = Gross Severance - Severance Tax.

Important Legal & Educational Disclaimer

This tool calculates tax relief on extraordinary termination severance payments under § 34 EStG.

This calculator is designed for educational and informational purposes only based on public statutory frameworks. The outputs do not constitute binding financial, tax, or legal advice. We assume no liability for decisions made based on these estimations. Always verify with the relevant official authorities or a certified professional advisor.

Frequently Asked Questions

The Fünftelregelung mitigates progressive tax bracket spikes. The severance amount is taxed as if only one-fifth of the lump sum were added to the taxable base, multiplied by five.

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