By Gabriele Denaro · 6 October 2026
Tax and pension rules change often. Figures on this page were last checked on 6 October 2026 against the official sources below.
The TFR (trattamento di fine rapporto) is a severance amount that employees in Italy accrue during their job and receive when it ends, for any reason: resignation, dismissal, retirement. It is not a bonus. It is deferred pay, part of what your employer owes you for the work you have done, and it can be a sizable sum by the end of a long career.
Each year a quota equal to your annual pay divided by 13.5 is set aside, as established by article 2120 of the Civil Code. That is about 7.4% of the pay that counts for the TFR, or roughly 6.9% after a 0.50% contribution is deducted. On top of the new quota, every 31 December the amount accrued so far is revalued at a fixed 1.5% plus 75% of the increase in the ISTAT consumer price index.
Say you have €20,000 accrued and inflation for the year is 2%. The revaluation rate is 1.5% + 0.75 × 2% = 3%, so €600 is added. That €600 is taxed each year at 17% through a substitute tax, which is €102, leaving €498. The rest of the TFR is taxed separately when it is paid out. The 2% is only an example: the real rate depends on ISTAT data each year.
In the private sector you can leave the TFR with the company, where for employers above a size threshold it is paid into a treasury fund managed by INPS, or direct it to a complementary pension fund. If you make no choice, a "silent consent" rule sends it to a pension fund. The deadline to choose used to be six months from being hired, and for people hired from 1 July 2026 it is 60 days, according to the Ministry of Labour. Domestic workers and public-administration employees follow other rules.
After eight years with the same employer you can ask for an advance of up to 70% of what has accrued, only once in your career and only for medical expenses or to buy a first home, within annual limits that apply at the company. Collective agreements or individual arrangements can allow more favorable conditions.
The gross TFR figure on your payslip is not what you will receive, because tax is due when it is paid. For tracking, many people enter it as retirement or as an asset under My Assets, and keep that definition consistent. If you moved it to a pension fund it is no longer owed by your employer, and the fund's statement becomes the number to track.
General educational information, not personal financial, tax or legal advice. It may be incomplete or out of date. Terms of use.