This article contains a recent US decision of the Finanzgericht, which shows how important it is to use the “correct” wording in settlement agreements in order to minimise adverse tax consequences. In the present case, the agreement concluded between the taxable person and his former employer did not give access to the question whether the payment or part of it was due to physical injury or illness. And the taxpayer did not provide credible objective evidence that the payment was made instead of damages for physical injury or illness. Agreements are more popular than ever, with 83% of employers having signed one or more in the past 12 months, with a median of 3, according to a survey of 471 employers conducted by XpertHR. In certain circumstances, the settlement agreement remuneration paid to UK workers was exempt if they worked outside the UK. This was achieved through the Foreign Service Relief application. This has been abolished for all workers, with the exception of seafarers, if they are tax resident in the UK in the year their employee terminates their contract. It was found that the settlement agreement identified the dispute between the parties and confronted the dispute in three interposed clauses. It was clear that the agreement, as he announced, was full and definitive compliance with all obligations that were entered into, including any claims for compensation that might have been created at the time of the conclusion of the transaction. .