The taxation of compensation received upon retirement depends on the terms of the latter. Depending on whether it is a voluntary departure, a departure within the framework of a social plan or retirement by the employer, these end-of-career indemnities are subject to different rules in income tax and social security contributions. Explanations.
End-of-career indemnities received at the time of voluntary retirement are considered exceptional income. As a result, they are therefore taxable in their entirety. These allowances must be mentioned on the tax return in the same way as wages.
In only one case are voluntary retirement benefits fully exempt from income tax:voluntary retirement under a social plan. These end-of-career indemnities are therefore not to be declared in this situation.
The tax system for end-of-career benefits in the event of retirement by the employer follows different rules. Indeed, these bonuses are not entirely subject to tax but only within the limit of an amount provided for by law or by a collective agreement, a company agreement, etc. Beyond this amount, the part of the retirement indemnities concerned must be declared for tax purposes.
Two scenarios then arise:either the sum received beyond this ceiling is exempt up to 50% of its amount, or it is exempt up to twice the previous gross annual civil remuneration, within the limit of €196,140. The most favorable calculation is taken into account. The fraction of the allowance above the defined threshold is declared as salary on the tax sheet.
There are two ways to pay your taxes in the year in which you receive a retirement indemnity. Devices put in place to avoid excessive taxation that year.
In order not to pay the income tax inflated by the declaration of an end-of-career indemnity in a given year in one go, it is possible to request a spread of the payment of its taxation over 4 years. Thus ¼ of the taxable portion of the allowance is declared the year of its collection, then ¼ the following 3 years.
The quotient system consists of adding ¼ of the amount of the retirement indemnity to his usual income, then multiplying the corresponding tax supplement by 4. This system involves paying the tax due in respect of the allowance in one go. Its objective is to avoid the progressiveness of its tax, that is to say that it allows you to continue to be taxed at the same rate as usual and not to go to a higher bracket.
The quotient system also has the advantage of reducing the reference taxable income. A significant element to take into account because it is this reference tax income which is used in particular to calculate the housing tax or which is taken into account for the calculation of certain social benefits.
As with income tax, retirement benefits are subject to social security contributions according to the terms of departure.
Thus, for a voluntary retirement, the benefits received are subject in their entirety to social security contributions, the general social contribution (CSG) and the contribution for the reimbursement of social debt (CRDS). If the departure takes place within the framework of a social plan, the end-of-career indemnities are partially exempt from the CSG and the CRDS, whereas they are totally exempt with regard to the contributions of the Social Security. /P>
The compensation received following retirement by the employer may be partially exempt from all social security contributions if it does not exceed 10 annual social security ceilings. Beyond that, it is subject to contributions.
