The compensation stipulated by a court or agreed out-of-court consists of many different amounts associated with different causes. There are frequently asked questions about what really applies and in this article we try to gather and to present simplified and understandable data from many tax sources.
For accuracy please contact your tax advisor who knows the specifics of your case.In the event that the compensation relates to a person (vs a company where various yptyoes of companies have various tax obligations) our research showed us that the following apply:
-For moral damage and mental anguish-For medical costs (associated with original documents filed in court and are not included in any of the tax returns)
-For loss and damage of personal property during the accident (costs associated with documents filed in court, without having been included in tax)
-For Expenditure for special home care,
Not taxed (documents 100449958/4-5-1999, 1095688/6-11-2000)
-For loss of income (the difference between what took someone from Social Security Fund (IKA) & employer with what they would have received if working normally)
"The sums awarded by court judgments, to individuals who practice a particular profession, since this allowance, as compensating the loss of income due to their inability to work (loss of profit) suffered from injury in a car accident, does not lose its character as taxable income, for the reason that, whenever necessary, issue the relevant judicial decision for adjudication and determination of the amount of such claim for compensation (CTE 1121/1994)."
-For amounts paid by the insurance on a monthly basis or lump sum payments based on calculations on monthly income due to disability
"In light of the above, from what you mention in your letter and the attached with this relevant judicial decisions, indicate that the amounts awarded and which are adjusted each time, with a judicial decision, as compensation because of the incapacity for work (disability 67% and over), which suffered from serious injury in a car accident while performing a job constitute income from tenants services and taxed with the General provisions of the Tax Code. This is because this allowance facing loss of income because of the resulted inability to work exemplified by the manner of calculation of (earnings, bonuses, etc., based on the collective agreement as judged years, that one would get if one were able to work, from which there shall be deducted the amount of the disability pension that one paid to IKA). "
-For interest awarded
"Also, the interest is awarded with the above decisions constitute income from securities, subject to tax at the General provisions of income tax payment and withholding tax by subtracting a 20% tax rate by paying them. This tax is taken into account when settling the tax declaration income and deduct from the VAT corresponding to the total net tax attributable to the total net income or returned, as appropriate. "
What will be included in the calculation of the Special Solidarity Tax
Only whatever is considered as income under the provisions for the special tax.
"If these claims relate to damage coverage, cover medical costs, moral damage etc, then in accordance with 1008989/121/A0012/6.2.1995 and 1092921/1790/A0012/23.10.2000 orders, the allowances paid to cover material damage and bodily harm, according to the settled administrative and judicial jurisprudence did not constitute income and thus are not taxed, nor are calculated for the extraordinary solidarity contribution and are listed in the income tax return in the codes 781/782 as amounts you contribute to cover evidence."
Please pay attention because if some amount is considered as a dismissal compensation then this will be taxed separately on the basis of the following scale:
Incremental compensation (euro) tax rate (percent)
150,001 and above 30%