TFR in Italy: severance pay, calculation, payout

The TFR (trattamento di fine rapporto) is the severance pay every employee in Italy receives when the employment ends for any reason: dismissal, resignation, the end of a fixed-term contract. For each year of work the employer sets aside the annual pay divided by 13.5 - roughly one month's salary - and the accrued amount is revalued every year. The money sits with the employer (or in an INPS fund, or in a pension fund) and you receive it when you leave. Since 1 July 2026 new private-sector workers send their TFR to a pension fund by default and can opt out within 60 days. Below: how the TFR is calculated, when you can take it early, how it is taxed and what to do if it is not paid. Rules checked on Normattiva and INPS on 01.10.2026. This is not legal or tax advice.

What the TFR is and who gets it

Article 2120 of the Civil Code opens with the words: "in every case of termination of the employment relationship the employee is entitled to a TFR". That covers:

• permanent and fixed-term contracts (the TFR is also paid when a fixed-term contract ends);
• dismissal by the employer and resignation (dimissioni);
• service of less than a year - the Constitutional Court struck down that exclusion in 1971;
• domestic work (colf, badante), which is also employment.

There is no TFR for people who work for themselves: lavoro autonomo, partita IVA, the forfettario regime. If you move from a job to a partita IVA, the accrued TFR is paid when the job ends and no new TFR builds up.

How the TFR is calculated: formula and example

The formula in art. 2120 is simple:

1. For each year of work you accrue the annual pay divided by 13.5. Annual pay includes every non-occasional payment linked to the job, including benefits in kind, but not expense refunds, unless the collective agreement (CCNL) says otherwise. A part year counts by months; 15 days or more is a full month.
2. On 31 December the accrued amount is revalued by 1.5% fixed plus 75% of the year's rise in the ISTAT consumer price index for blue- and white-collar households. The current year's accrual is not revalued.
3. During sick leave, maternity leave and Cassa integrazione the TFR accrues as if you had worked normally.

These are gross amounts before tax. Your accrued TFR shows on every payslip (busta paga) as "TFR" or "fondo TFR". To turn a RAL into net monthly pay, use the calculator:

Can you take your TFR early?

Yes, but only on the terms of art. 2120:

A collective or individual agreement can grant better terms than the law. The advance is deducted from the final TFR. How the TFR fits into buying a home with a mortgage: mortgages in Italy for foreigners.

The TFR and pension funds: what changed on 1 July 2026

Until now each worker decided whether to keep the TFR with the employer or send it to a pension fund. The 2026 Budget Law (Law 199/2025) rewrote art. 8 of Legislative Decree 252/2005, and since 01.07.2026:

• private-sector workers hired for the first time, except domestic workers, are automatically enrolled in the pension fund of their collective agreement, or, if there is none, in the residual fund set by Labour Ministry decree 85/2020; the whole TFR goes there;
• within 60 days of hiring you can opt out: keep the TFR with the employer under art. 2120 or choose another fund; an opt-out can later be reversed;
• the employer must explain the fund, the mechanism and the deadlines at hiring, and starts paying in from the month after the 60 days run out (covering the whole period since hiring).

If this is not your first job, the employer checks your earlier choice and gives you 60 days to say which fund should receive your TFR. Which option to pick is a pension decision: in a fund the money is invested, with the employer it is revalued by the formula above. How the Italian pension works: pension in Italy.

The INPS funds and employer insolvency

• Larger firms. An employer with a larger workforce pays the TFR of staff who did not choose a pension fund into the INPS Fondo di Tesoreria. According to INPS (circular 12 of 05.02.2026) the threshold is an average of 60 employees in 2026-2027, 50 in 2028-2031 and 40 from 2032.
• Bankruptcy. If the employer is insolvent, the INPS Guarantee Fund (art. 2 of Law 297/1982) pays the TFR and the pay for the last three months of employment. Employees, apprentices and managers can apply, and so can heirs. The application is online on inps.it; in a bankruptcy, no earlier than the 31st day after the list of creditors is approved. Employers fund it with 0.20% of pay.

How the TFR is taxed

The TFR is not added to the salary of the year you receive it: it is taxed separately (tassazione separata) at a rate that depends on the TFR amount and the years worked, and the tax office then recomputes the tax at your average rate for the previous five years, collecting or refunding the difference (art. 19 TUIR). The yearly revaluation is taxed separately each year and does not enter the final base. From 01.01.2027 the TUIR is replaced by a new consolidated text (Legislative Decree 117/2026); art. 19 is in force until 31.12.2026. General IRPEF rates: taxes in Italy. This is not tax advice.

What the chats say about the TFR

The community behind this site writes in Russian. In its Italy chat archive we found 12 messages on the TFR, almost all in one thread from March 2025. Three ideas recur, and not all of them match the law:

• "Make sure the TFR is not folded into your salary." Members warned that with the TFR paid "inside" the monthly pay you get nothing at the end of the contract. Under art. 2120 the TFR is paid when the employment ends, and early only as the advance above. If your payslip pays the TFR monthly, ask a union or a patronato on what basis.
• "Not every job has a TFR." By law every employment has one; only the self-employed go without.
• "You can take an advance twice." In 2025 a member advised taking the TFR for a mortgage and wrote that it can be drawn early "no more than twice". Art. 2120 allows one advance after 8 years; more only if your collective agreement says so.

Back in 2023 a member comparing Milan with Munich reminded others to add the 13th and 14th month and the TFR to an Italian annual salary. Employee rights in full (NASpI, sick pay, unions) are in work in Italy.

Related articles

• Work in Italy for Russians: jobs and permit - contracts, NASpI, employee rights.
• Pension in Italy: INPS, record, assegno - contributions and retirement age.
• Taxes in Italy: IRPEF and deductions - the 23/33/43% rates.
• Tax returns in Italy: 730 and Redditi PF - filing deadlines.
• Patronato and CAF - free help with payslips and INPS applications.

Official sources

• Art. 2120 of the Civil Code (TFR, calculation, advance): normattiva.it
• Art. 8 of Legislative Decree 252/2005 (automatic enrolment from 01.07.2026): normattiva.it
• Art. 19 TUIR (tax on the TFR): normattiva.it
• TFR Guarantee Fund: inps.it
• Fondo di Tesoreria thresholds from 2026: inps.it

Frequently asked questions

What is the TFR in simple terms?

The TFR (trattamento di fine rapporto) is a deferred part of your pay that the employer sets aside for every year of employment and pays out when the employment ends. Under art. 2120 of the Civil Code each year adds the annual pay divided by 13.5, roughly one month's salary a year. This is not legal advice.

Do I get the TFR if I resign?

Yes. Art. 2120 gives the right to the TFR 'in every case of termination' of an employment relationship: dismissal, resignation or the end of a fixed-term contract. As early as 1968 and 1971 the Constitutional Court struck down exclusions for workers dismissed for cause, workers who resigned and workers with less than a year of service. This is not legal advice.

Can I take my TFR early to buy a home?

Once per employment, after at least 8 years with the same employer: an advance of up to 70% of what you have accrued, for medical treatment recognised by the public health service or to buy a first home for yourself or your children, documented by a notarial deed. Each year the employer grants such advances to at most 10% of eligible staff and 4% of all employees; a collective agreement can be more generous. This is not legal advice.

What changed with the TFR on 1 July 2026?

Private-sector workers hired for the first time, except domestic workers, are automatically enrolled in the pension fund of their collective agreement and their whole TFR goes there. Within 60 days of hiring they can opt out and keep the TFR with the employer or pick another fund (art. 8(7)-(7-quinquies) of Legislative Decree 252/2005 as amended by Law 199/2025). Checked on 01.10.2026.

What if my employer goes bankrupt without paying my TFR?

The INPS Guarantee Fund (Fondo di garanzia, art. 2 of Law 297/1982) pays the TFR and the pay for the last three months instead of an insolvent employer. You apply online on inps.it; in a bankruptcy, no earlier than the 31st day after the list of creditors is approved. Checked on 01.10.2026.

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Documents for this topic

• Certificate of Tax Residency in Italy (Attestato di Residenza Fiscale - Agenzia delle Entrate)
• Document Checklist for Admission to Italian University (Master's, Non-EU Citizens)
• Declaration of exemption from television fee (Agenzia delle Entrate)