French General Tax Code
In force1. Any compensation paid on termination of an employment contract constitutes taxable remuneration, subject to the following provisions.
Do not constitute taxable remuneration:
1° The compensation referred to in articles L. 1235-1, L. 1235-2, L. 1235-3, L. 1235-3-1, L. 1235-11 to L. 1235-13, 7° of Article L. 1237-18-2 and 5° of Article L. 1237-19-1 of the French Labour Code as well as those paid under the measures provided for in 7° of the same Article L. 1237-19-1;
2° Redundancy or voluntary redundancy payments paid as part of an employment protection plan within the meaning of articles L. 1233-32 and L. 1233-61 to L. 1233-64 of the French Labour Code ;
3° The fraction of redundancy payments made outside the framework of an employment safeguard plan within the meaning of Articles L. 1233-32 and L. 1233-61 to L. 1233-64 of the Labour Code, which does not exceed:
a) Either twice the amount of gross annual remuneration received by the employee during the calendar year preceding the termination of his employment contract, or 50% of the amount of the compensation if this threshold is higher, up to a limit of six times the ceiling mentioned in l'article L. 241-3 of the Social Security Code in force on the date of payment of the compensation;
b) Either the amount of redundancy compensation provided for by the branch collective agreement, by the professional or interprofessional agreement or, failing that, by law;
4° The fraction of retirement compensation that does not exceed :
a) Either twice the amount of gross annual remuneration received by the employee during the calendar year preceding the termination of his employment contract, or 50% of the amount of the indemnity if this threshold is higher, up to a limit of five times the ceiling mentioned in Article L. 241-3 of the Social Security Code in force on the date of payment of the indemnities;
b) Either the amount of the retirement indemnity provided for by the branch collective agreement, by the professional or interprofessional agreement or, failing that, by law;
5° (Repealed)
6° The fraction of the indemnities provided for in Article L. 1237-13 of the Labour Code paid on the occasion of the contractual termination of an employee's employment contract, as well as the fraction of the indemnities provided for in Articles 3 and 7-2 of the appendix to Article 33 of the Statute of the Administrative Staff of the Chambers of Commerce and Industry and the specific indemnities for contractual termination paid pursuant to Article 39 bis of the Statute of the Administrative Staff of the Chambers of Trades and Crafts and its Appendix XXVIII, paid on the occasion of the termination by mutual agreement of an agent's employment relationship, where they are not entitled to a retirement pension from a legally compulsory scheme, which does not exceed :
a) Either twice the amount of the gross annual remuneration received by the employee during the calendar year preceding the termination of his employment contract, or 50% of the amount of the compensation if this threshold is higher, up to a limit of six times the ceiling mentioned in article L. 241-3 of the Social Security Code in force on the date of payment of the compensation;
b) Either the amount of the redundancy compensation provided for by the branch collective agreement, by the professional or interprofessional agreement, by the Statute of the administrative staff of the chambers of commerce and industry, by the Statute of the administrative staff of the chambers of trades and crafts or, failing that, by law.
This 6° is applicable to specific severance agreement compensation paid pursuant to I of Article 72 of Law no. 2019-828 of 6 August 2019 on the transformation of the civil service and Article L. 552-1 of the General Civil Service Code.
2. Any compensation paid, on the termination of their duties, to the corporate officers, directors and persons referred to in article 80 ter also constitutes taxable remuneration. However, in the event of forced termination of functions, in particular dismissal, only the fraction of compensation that exceeds three times the ceiling mentioned in article L. 241-3 of the Social Security Code is taxable.
