As per the amended Social Security Financing Act for 2023, the social security taxes applicable to mutual termination severance will be modified.
- Elimination of the 20% employer contribution called “forfait social”
- Implementation of a new 30% tax called “contribution on the compensation paid in case of mutual termination agreement and retirement”, of the part not subject to social security contributions (so instead of 20%, companies will pay 30% of employer’s contributions on the mutual termination severance from now on)
Please note that when the employee who signs a mutual termination is entitled to a retirement pension from a legally compulsory scheme, the tax and social contributions rules remain unchanged (i.e. the indemnity is subject to full income tax and contributions from the first euro in this case).
For further information, please contact:
Nathalie Devernay, Partner, Bird & Bird