2027 Finance Bills: Proposed Cuts to Severance Pay Exemptions
Published on :
06/11/2026
06
November
Nov
11
2026
With the stated goal of simplification, harmonization, and fairness, the draft 2027 Finance Act and the draft 2027 Social Security Financing Act, presented on October 1 to the Council of Ministers, propose establishing a single cap on tax and social security exemptions for severance pay.
As currently drafted, this common cap would be set at one annual social security ceiling (“PASS,” or €48,060 in 2026), which is significantly lower than the amounts currently applicable. Any total tax exemptions that may have existed for certain severance payments (e.g., in the case of a collective redundancy plan) would be eliminated. This would also apply to severance payments ordered by a judge or provided for in a settlement agreement. All special rules governing exemptions (in cases of collective redundancy plans, collective mutual termination agreements, conciliation, severance payments awarded by a judge, etc.) would be eliminated.
Please note, however, that discussions are still ongoing regarding these bills, which have already been amended by Parliament. The texts may still change significantly.
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