Prizes can be explained as income derived from various missions that are not necessarily related to your monthly salary. These are usually offered to you by your employer. Among these prizes, some are taxable while others are non-taxable. Indeed, not all income is subject to tax declaration. Some of these prizes are partially exempt. One might wonder if there are specific prizes that could increase the tax burden. Additionally, what income can or cannot be declared. We will provide more details on all of this in this article.
What are the taxable and exceptionally taxable prizes and income?
You want to know if the prizes are taxable. Most prizes that may be taxed generally concern exceptional income. In other words, the taxable prizes represent the type of income you do not receive regularly and which, consequently, are not well-known or declared. Several types of income of this kind can be found. For example, the prizes paid to you by your employer are not taxable. Indeed, your employment contract does not mention this income. However, it may be that a social mandate is provided for these prizes. We also have the compensation you receive during layoffs, contract terminations, or job changes. Let’s not forget the temporary and precarious mission bonuses. Although subject to taxes, so-called exceptional income does not depend on the withholding tax to be declared.
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What are the prizes that are exempt from charges?
The Macron bonus for purchasing power is one of the prizes that are exceptionally exempt from charges. Indeed, this bonus is tax-exempt under certain conditions. For companies without any profit-sharing agreement at the time the bonus is paid, the exemption from tax is respected up to 1000 euros. On the other hand, companies that have entered into this agreement may not be exempt up to 2000 euros. This type of bonus cannot be taxable concerning income. Furthermore, when calculating the taxable income that serves as the reference, this bonus cannot be taken into account.
Are departure bonuses taxable?
The compensation received upon retirement or when leaving a company is much more complex here. Indeed, in the case of retirement, the tax deferral regime on the departure bonus has not been relevant since 2020 due to the ongoing reform related to withholding tax. To limit the taxation of income that is unavoidable in your year of departure, you can resort to the quotient system. In the case of compensation received during the termination of an employment contract, you must refer to the conditions established from the outset. But know that the compensation legally received regarding layoffs is completely tax-free. However, when a certain threshold is exceeded, and when the layoff is outside the employment protection plan, the income may be taxable.
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What about standard bonuses?
Fortunately, everything here is different from the headache faced in 2018. Indeed, it was necessary to switch to withholding tax, and the categorization of that year as a white year did not help. It took a long time to set aside the usual bonuses and then the exceptional prizes. A review was conducted on the bonuses, prizes, and salary variables that could have been received during the year 2019. All of this simply takes into account your taxable salary. If your December payslip includes this bonus, then it must obviously be considered in the so-called net taxable salary that you find on the same payslip. If it has not yet been subjected to withholding tax, you will need to declare it.