Payslips
TFR taxation: why Italian severance has no single net-pay rate
Payslips · · 3 min read
By Lorenzo Schiavone · calculator developer
Ordinary TFR severance follows separate taxation. It is not universally taxed at 23%, and entering it as gross annual salary does not calculate its net amount. Distinguish accrued amounts, taxable base, initial withholding and possible Revenue Agency reassessment. This guide covers ordinary TFR for an Italian tax resident; international and special cases need further checks.
Initial withholding is not tax on the last salary
Article 19 of the TUIR links the initial calculation to reference income and accrual years. It is not simply the IRPEF band of your latest RAL. Revaluations already subject to substitute tax must be distinguished in the taxable base.
Ask for a settlement separating the components. The last payslip may combine TFR, ordinary pay, unused leave and other amounts. The total transfer does not identify net TFR, and different items can have different treatment.
What tax reassessment means
The Revenue Agency reassesses TFR tax using the average taxation rate for the five years preceding the year entitlement arises. This can result in additional tax or a refund; initial withholding need not be final.
A simple arithmetic average of your last five salaries does not reproduce the procedure. A reassessment requires the relevant tax information. Compare any notice with the CU, settlement and earlier payments, and follow its stated instructions and deadlines.
A bookkeeping example with assumed withholding
If the statement allocates €10,000 gross and €2,400 withholding to TFR alone, net TFR is €7,600 with no other deductions. Withholding is an assumed completed calculation; the example does not establish a universal 24% rate or reproduce the legal tax procedure.
Separate this item from the rest of the transfer. A real estimate needs the accrual and settlement statement, taxable base and withholding, relevant CU/tax information, advances, pension transfers and any earlier tax notices. Current RAL and service years alone do not reconstruct everything.
Pension-fund TFR and the tax return
The Ministry of Labour distinguishes transferred TFR from ordinary deductible pension contributions. Taxation then relates to the pension fund’s benefit; do not apply a pension-benefit rate to company-held TFR. See pension contributions.
For payments from non-withholding payers, such as the domestic-employment cases described by the Agency, Redditi section RM provides specific rules. 730 section M refers these TFR cases to RM, rather than ordinary salary in section C. QuantoNetto does not calculate TFR settlement or reassessment.
Frequently asked questions
Is all TFR taxed at 23%? ▾
No. Separate taxation uses specific criteria and may be reassessed; 23% is not a universal TFR rate.
Can current RAL alone calculate net TFR? ▾
No. Accrued components, taxable base, relevant years and settlement information are needed. The salary calculator does not cover TFR.
Does pension-fund TFR always follow company-held TFR rules? ▾
No. Transfers and pension-fund benefits have distinct tax treatment. The destination of the money matters.
Sources and method
- Department of Finance · TUIR article 19, TFR taxation
- Agenzia delle Entrate · RM, TFR paid without withholding
- Agenzia delle Entrate · 730/2026 M and reference to RM
- Ministry of Labour · pension contributions, allowance and TFR
An informational guide to the 2026 rules. Examples are annual estimates under the stated assumptions. Average pay does not reproduce a monthly payslip. Prior-year municipal rates are marked as estimates.