The European Commission has officially asked Ireland to amend its legislation on termination payments, as it discriminates against individuals who work in group companies in other Member States.
An employment termination payment (ETP) is a lump sum payment which firms make to employees who stop working for them. ETPs are taxed at different rates depending on the employee's age and length of employment. To compute the tax relief on such payments, Irish law takes into account the number of years of service in group companies in Ireland, but not the years of service in group companies in other Member States and EEA countries (Norway, Lichtenstein and Iceland). This leads to a higher tax burden for individuals who worked in group companies in other EU/EEA Member States. The Commission considers that such rules run contrary to the free movement of workers set out in the Treaties and the European Economic Area Agreement.
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