Question 1

What is TFR (Trattamento di Fine Rapporto) in Italy?

Accepted Answer

TFR is the statutory deferred severance compensation mandated by Article 2120 of the Italian Civil Code. Every employee accrues a portion of their salary each year, which is held and paid out as a lump sum upon termination of employment.

Question 2

How is the annual TFR accrual calculated?

Accepted Answer

The annual TFR accrual is calculated by dividing total gross annual compensation (Retribuzione Annua Lorda - RAL) by 13.5, minus a statutory 0.50% contribution paid to INPS for the guarantee fund, yielding approximately 6.91% to 7.41% of gross earnings.

Question 3

How does the annual TFR revaluation formula work?

Accepted Answer

Previously accrued TFR fund capital is revalued on December 31 of each year by a statutory formula: 1.50% fixed + 75% of the increase in the ISTAT consumer price index for worker families (FOI). The revaluation gain is subject to a 17% substitute tax.

Question 4

How is TFR taxed upon termination (Tassazione Separata)?

Accepted Answer

TFR is taxed under a separate taxation regime (Tassazione Separata) to avoid pushing the lump sum into higher progressive IRPEF brackets. The applicable tax rate is the employee's average IRPEF rate over the five years preceding the termination date.

Question 5

Can an employee request an advance on their TFR (Anticipo TFR)?

Accepted Answer

Yes, an employee with at least 8 years of continuous service with the same employer may request an advance of up to 70% of their accrued TFR for eligible reasons: purchasing a primary home for themselves or their children, or documented major medical expenses.

Italy TFR Liquidazione (Severance Pay) Calculator

Tenure & Compensation Parameters

Statutory TFR Accrual & Separate Taxation Ledger