SteuerGo FAQs

(2022) What are remunerations for multi-year employment?

A subsequent payment or advance payment for multi-year work (e.g. severance payments) can be taxed at a reduced rate in the year of payment using the five-year method. The key factor is that the work spans two calendar years.

The so-called one-fifth rule benefits extraordinary income under German tax law (§ 34 EStG). These "income subject to favourable tax rates" are earnings generated over several years but realised and taxed in a single year.