Bill on equal treatment of foreign and domestic payment in lieu of notice of termination published

On 6 June 2017, a Bill was submitted to the parliament concerning the remediation of the difference in treatment between payments in lieu of notice of termination which are exempt on the basis of an income tax and capital tax treaty and those payments which are not exempt.

Where the latter payments in lieu of notice of termination are taxed at the average tax rate of the previous year, the former are fully taken into account in determining the tax rate (exemption with progression) on the income which is taxed globally and not exempt, leading to an increased tax liability in the year of payment on the other globally taxable income.

The proposal is to exclude exempt income which otherwise would be taxed separately from the scope of the progressive taxation of exempt income clause.

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