Italy TFR Severance Calculator (Trattamento di Fine Rapporto)

TFR is Italy's statutory severance-pay fund: a mandatory deferred-compensation accrual that every employer sets aside for every employee, year by year, and pays out in full when employment ends -- whether through resignation, dismissal, or retirement. It is not a bonus and not discretionary; Article 2120 of the Codice Civile fixes exactly how much accrues each year and exactly how the accumulated balance is revalued over time.

Two mechanics matter, and this calculator models both precisely: the accrual formula (how much each year of work adds to the pot) and the revaluation formula (how the previously-accrued balance grows, net of a substitute tax, while it sits with the employer until payout).

Step 1 -- Annual accrual (Art. 2120, Codice Civile):

$$\text{Annual TFR Accrual} = \frac{\text{Gross Annual Salary}}{13.5}$$

The 13.5 divisor reflects 12 ordinary monthly payments plus a 13th-month payment, adjusted by a long-standing historical coefficient.

Step 2 -- Annual revaluation. Every 1 January, the balance accrued through the end of the prior year (not the current year's own new accrual, which hasn't had a chance to sit yet) is revalued at:

$$\text{Revaluation Rate} = 1.5\% + (0.75 \times \text{ISTAT FOI Inflation Rate})$$

where the ISTAT FOI index is the year-on-year Italian consumer price index for blue-collar and white-collar worker households, excluding tobacco. A 17% imposta sostitutiva (substitute tax) applies to the revaluation increment only -- never to the accrued principal itself:

$$\text{Net Revaluation} = \text{Gross Revaluation} \times (1 - 0.17)$$

$$\text{New Balance} = \text{Prior Balance} + \text{Net Revaluation} + \text{This Year's New Accrual}$$

Using the calculator's default inputs -- €39,000 gross annual salary, projected 3 years, 2% assumed ISTAT inflation, no starting balance:

1. Annual accrual = €39,000 ÷ 13.5 = €2,888.89 every year.
2. Year 1: no prior balance exists yet, so no revaluation applies. Ending balance = €2,888.89.
3. Year 2: the prior €2,888.89 is revalued at 1.5% + (0.75 × 2%) = 3.0%. Gross revaluation = €2,888.89 × 3.0% = €86.67; substitute tax (17%) = €14.73; net revaluation = €71.94. New balance = €2,888.89 + €71.94 + €2,888.89 = €5,849.72.
4. Year 3: the prior €5,849.72 is revalued at the same 3.0% rate. Gross revaluation = €175.49; tax = €29.83; net = €145.66. New balance = €5,849.72 + €145.66 + €2,888.89 = €8,884.27.

Over the 3 years: €8,666.67 in straight accrual, plus €217.60 in net revaluation, minus €44.56 withheld as substitute tax along the way -- reconciling exactly to the final €8,884.27 balance.

• "Tassazione separata" at payout. When TFR is finally paid out (on termination), the accumulated principal is taxed using a completely separate mechanism: an average of the employee's marginal IRPEF rates over roughly the preceding five years, applied via "tassazione separata" -- a materially different (and often more favorable) calculation than applying current-year IRPEF brackets. This calculator only models the accrual and revaluation, not the final payout tax.
• Advances (anticipazioni) on TFR. Employees with 8+ years of tenure can request an advance of up to 70% of their accrued TFR for specific purposes (medical expenses, first-home purchase, parental leave); withdrawing an advance reduces the base available for future revaluation, which this projection does not model.
• Diverting TFR to a supplementary pension fund (previdenza complementare). Employees can elect to redirect ongoing TFR accrual into a private pension fund instead of leaving it with the employer -- a different (and often better) growth and tax profile than the employer-held revaluation formula modeled here.
• Mid-year hires, terminations, or salary changes. This projection assumes a constant gross annual salary held for full calendar years; a raise, part-year employment, or a mid-year termination changes both the accrual and the revaluation dates in ways this simplified year-by-year model does not capture precisely.
• Company size differences. Employers with fewer than 50 employees retain the full TFR fund themselves; larger employers must transfer newly-accrued TFR to INPS's Fondo di Tesoreria, which changes who holds and revalues the balance (though the accrual and revaluation formulas themselves are unchanged either way).

• Revaluing the wrong year's accrual. Only the balance that existed at the END of the prior year gets revalued each January -- the current year's own new accrual is added afterward, without revaluation, in its own year.
• Forgetting the 17% substitute tax applies only to the revaluation increment, not to the underlying TFR principal -- the accrued capital itself is never touched by this particular tax; it's taxed separately (and differently) only when finally paid out.
• Assuming a fixed 3% revaluation rate every year. The rate moves with actual ISTAT inflation data each year (1.5% fixed plus 75% of that year's specific rate) -- 2% ISTAT inflation happens to produce exactly 3.0%, but a different inflation year produces a different rate entirely.
• Confusing TFR with a 13th-month bonus (tredicesima). The 13.5 divisor's structure reflects an accounting convention tied to 13 monthly payments, but TFR itself is a deferred severance fund paid only at the end of employment -- not an annual bonus paid during it.
• Not accounting for advances already taken. If you've withdrawn an anticipazione, your actual current TFR balance is lower than a straight accrual-since-hire calculation would suggest -- enter your actual current balance as the "existing accrued TFR balance" input rather than assuming none was ever taken.

• Article 2120, Codice Civile: statutory TFR accrual formula (salary ÷ 13.5) and the annual revaluation mechanism (1.5% fixed + 75% of ISTAT), confirmed via multiple concordant 2026 sources (fiscoinvestimenti.it, dipendenti.it, calcolatorifiscali.it, centrofiscale.com), all independently agreeing on both formulas.
• 17% imposta sostitutiva on the annual revaluation increment: confirmed via the same concordant sources above.
• Caveat: the "tassazione separata" average-rate mechanism applied to the TFR principal at final payout was not modeled or independently re-derived this session -- it requires a taxpayer's specific 5-year IRPEF history and is disclosed above as out of scope for this calculator.