A severance payment isn't taxed uniformly: the different items that make it up receive different tax treatment, and the withholding rate applied isn't the same as the one on your regular monthly payslip.
Ordinary items are taxed like normal employment income
Pay for outstanding days worked, the proportional part of untaken holidays, and the proportional part of extra (bonus) payments are all taxed exactly like your ordinary salary: as employment income, subject to income tax withholding according to your personal circumstances.
Legal dismissal compensation: exempt up to a limit
The most distinctive part of a severance payment is compensation for unfair dismissal (or whatever cause triggers it): the statutory minimum compensation is exempt from income tax, up to the limit set by law (33 days' salary per year worked, capped at €180,000). If the agreed or awarded amount exceeds that exempt limit, the excess is taxed as employment income.
Why the withholding rate on a severance payment can look higher
When a significant amount is paid all at once (as happens with a severance payment that bundles several accumulated items), the applicable withholding rate can end up higher than on your usual monthly payslip, because withholding on employment income is calculated by projecting that amount onto an annualized base, which can push up the marginal rate applied to that specific withholding compared with your ordinary monthly salary.
A higher withholding rate doesn't mean paying more tax overall
It's important to understand that a higher withholding at the time of the severance payment doesn't mean paying more income tax overall across the year: withholding is just an advance payment on account. If the rate applied to the severance payment turns out higher than your actual effective annual rate, the difference is adjusted in your favor on your annual tax return, producing a more favorable result (or a bigger refund) on that return.
Special cases: negotiated compensation above the statutory minimum
If, as part of a negotiation with the company, compensation above the statutory minimum is agreed (common, for example, in collective dismissals or mutual agreements), only the portion up to the legal exempt limit remains tax-free; the rest is taxed normally as employment income, with the particularity that certain income generated irregularly (over more than two years) may qualify for a specific reduction on the non-exempt portion, within certain limits.
Check that your severance payment reflects these items correctly
Before signing, check that the breakdown between exempt and non-exempt items is correctly reflected, since it directly affects how much you receive net and how you need to declare it afterward.
From withholding to the final figure
The severance pay calculator on this site estimates the approximate amount of each item, and the income tax calculator helps check how additional income like this would affect the annual effective rate.