In the context of ex gratia termination payments, which formula represents the amount that is always tax free?

• A. €10,000
• B. €10,160 plus €765 for each complete year of service
• C. 1/15th of final remuneration for each complete year of service
• D. €20,000

Answer: (B)

The main idea is that the tax-free portion of an ex gratia termination payment is a fixed base plus an amount for each complete year of service. The established relief gives you €10,160 automatically, and for every full year of service you add €765. This means the tax-free portion scales with how long you worked for the employer, and there’s a guaranteed minimum even with little or no service.

For example, with 5 complete years of service, the tax-free amount would be 10,160 + (5 × 765) = 13,985. Any amount above that tax-free portion could be taxable under employment income rules.

This formula is the best choice because it matches the official relief structure: a base amount plus a per-year increment. The other options are fixed sums or different formulas that don’t reflect how the tax-free portion is determined.