Question 1

How is TFR calculated annually in Italy?

Accepted Answer

The annual TFR accrual is calculated by dividing total gross remuneration (RAL) by 13.5 and subtracting a statutory 0.5% contribution for the INPS guarantee fund, resulting in an annual accrual of approximately 6.91% of gross earnings.

Question 2

How does the annual revaluation mechanism work for TFR?

Accepted Answer

The fund accrued as of December 31 of the previous year is revalued annually using a statutory index: 1.5% fixed + 75% of the increase in the ISTAT consumer price index for blue- and white-collar households (FOI).

Question 3

Who can request an advance on their TFR (Anticipazione TFR)?

Accepted Answer

Employees with at least 8 years of continuous service with the same employer may request an advance of up to 70% of their accumulated TFR for purchasing a primary home for themselves or their children, or for extraordinary medical expenses.

Question 4

How is TFR taxed when left in the company vs a complementary pension fund?

Accepted Answer

TFR left in the company is taxed under separate taxation (Tassazione Separata) at the employee's average IRPEF rate (minimum 23%). TFR transferred to a complementary pension fund enjoys preferential taxation ranging from 15% down to 9% based on years of participation.

Question 5

What is the substitute tax on TFR revaluations?

Accepted Answer

Annual revaluation yields are subject to a flat substitute tax (imposta sostitutiva) of 17%, withheld by the employer on December 31 and remitted via F24.

Italy TFR Liquidazione Accrual Calculator

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Statutory Severance Fund Accrual Ledger