Can I receive my severance payment in the form of benefits in kind as well?
May 20, 2023 | 50,00 EUR | answered by Lorenzo Zimmermann
Dear tax advisor,
My name is Jakob Neumann and I have been working in a medium-sized company for over 10 years. Due to restructuring, I am now entitled to a severance payment. However, I have heard that there is also the possibility to receive the severance in the form of benefits in kind.
Currently, I am intensively dealing with my financial situation and considering how to best use the severance. I am concerned that a cash payment of the severance could have tax disadvantages and therefore wonder if it would be more beneficial to receive the severance in the form of benefits in kind.
My question to you is: Can I receive my severance in the form of benefits in kind and what would be the tax implications for me? What are the advantages and disadvantages of choosing between a cash payment and benefits in kind?
Thank you in advance for your help and support.
Sincerely,
Jakob Neumann
Dear Mr. Neumann,
Thank you for your inquiry regarding the severance payment that you are entitled to due to restructuring in your company. It is understandable that you are concerned about the tax implications and are considering whether it would be more beneficial to receive the severance in the form of non-monetary benefits.
In principle, it is possible to receive a severance payment in the form of non-monetary benefits. This could include, for example, a company car, a work phone, or other non-monetary benefits. However, the tax implications of receiving a severance payment in the form of non-monetary benefits are not insignificant. Non-monetary benefits are treated the same way as cash payments for tax purposes and are subject to income tax.
When choosing between a cash payment and non-monetary benefits, there are advantages and disadvantages to consider. A cash payment of the severance has the advantage that you can immediately access the money and use it flexibly. However, a cash payment of the severance is subject to normal income tax and may result in a higher tax burden.
Non-monetary benefits, on the other hand, can offer tax advantages as they may be taxed more favorably than a cash payment. However, non-monetary benefits also need to be taxed, and it is possible that you may have to pay tax on a higher taxable benefit due to the non-monetary benefits.
It is important that you seek individual advice to find the best solution for you. A tax advisor can help you calculate the tax implications of cash payments and non-monetary benefits and assist you in making a decision.
I hope that this information has been helpful to you. If you have any further questions or wish for individual advice, I am happy to assist you.
Best regards,
Lorenzo Zimmermann
