Large severance payments: corporate income tax risks

In Resolution No. 59-P dated 13 October 2026, the Constitutional Court of the Russian Federation confirmed that if a severance payment is provided for in the employment contract and does not contradict the law, the employer must pay it.

At the same time, the Constitutional Court specifically noted that such a payment may turn out to be excessive or economically unjustified for the company. In that case, where there are grounds, the damage to the company may be recovered from the director who approved the payment.

Why this matters for corporate income tax

The fact that a payment to an employee is mandatory does not mean that its amount is automatically economically justified for the purposes of Article 252 of the Tax Code of the Russian Federation. The tax authority may use the Constitutional Court's position as an additional argument for excluding the payment from expenses for corporate income tax.

For large severance payments, it is important to document in advance:

• the business purpose of the payment;
• the justification for its amount;
• the link between the payment and the employee's length of service, position and contribution;
• the economic benefit to the company or the losses it prevents.