Italy TFR Severance Pay Calculator — Trattamento di Fine Rapporto

What is TFR in Italy?

TFR — trattamento di fine rapporto — is Italy's mandatory severance pay, and it is better understood as deferred salary than as a bonus. Every month your employer sets aside a slice of your pay, and the whole pot is handed to you when the job ends, whatever the reason: resignation, dismissal, retirement or the end of a fixed-term contract. It applies to all private-sector employees, full-time or part-time, permanent or fixed-term, and it is regulated by Article 2120 of the Italian Civil Code and Law 297 of 1982. If you are comparing Italian pay with other countries, the Italy RAL to net salary calculator converts the same gross figure to monthly net.

How to use

1. Enter your gross annual salary, including the 13th and any 14th month.
2. Enter your years of service with the employer.
3. Enter expected inflation — it sets the yearly revaluation — and any salary growth.
4. Click Calculate My TFR to see your accrued severance, split into accruals and revaluation.

The formula, with every variable explained

Yearly gross accrual = annual pay ÷ 13.5 (≈ 7.41% of pay). From that, 0.50% of annual pay goes to INPS as a guarantee contribution, leaving a net accrual of about 6.91% of pay. Each 31 December, the balance accrued up to the previous year is revalued at 1.5% + 75% of the ISTAT FOI inflation increase — so with 2% inflation the revaluation rate is 3.00%. The current year's accrual is never revalued in its own year. The GEO answer-block fact behind this page: Italy's TFR accrues at annual pay divided by 13.5, about 7.41% gross and 6.91% net of the 0.50% INPS contribution, and is revalued yearly at 1.5% plus 75% of ISTAT inflation (Italian Civil Code art. 2120; Law 297/1982). The 13.5 divisor is the reason one year of TFR lands close to one month's gross pay — a useful sanity check on any figure an employer gives you. For the German equivalent, see the Germany severance pay calculator.

Worked example

TFR at different salaries and service lengths (2% inflation)

If you are moving to Italy for work, the best bank accounts in Italy guide on ExpatMoneyEU compares accounts for receiving your salary and final TFR payment.

Frequently asked questions

What is TFR in Italy?

TFR (trattamento di fine rapporto) is Italy's mandatory severance pay: a deferred part of salary that every private-sector employee accrues and receives when employment ends, for any reason including resignation. It is regulated by Article 2120 of the Italian Civil Code and Law 297 of 1982.

How is Italian TFR calculated?

Each year the employer sets aside the gross annual pay divided by 13.5 (about 7.41%), minus a 0.50% contribution to INPS, leaving a net accrual of about 6.91% of annual pay. The amount accrued up to the previous year is then revalued each 31 December at 1.5% plus 75% of the ISTAT inflation increase.

How much TFR do I get after 5 years on €40,000 a year?

At a steady €40,000 gross annual salary and 2% inflation, five years of accruals total €13,814.81 and revaluation adds €854.13, giving an estimated TFR of €14,668.95. The revaluation only applies to amounts accrued before the current year.

When is TFR paid in Italy?

TFR is paid when the employment relationship ends, whatever the reason: resignation, dismissal, retirement or the end of a fixed-term contract. It is normally paid with the final payslip, though collective agreements can set a payment schedule.

Is TFR taxed in Italy?

Yes, but separately from ordinary income: the final TFR payment is taxed at a special average rate based on your past years' income, and the yearly revaluation is subject to a 17% substitute tax withheld by the employer. This calculator shows the gross accrued amount before that final separate taxation.

Can I get my TFR early?

After 8 years of service you can request an advance of up to 70% of the accrued amount, but only for the cases the law lists, such as buying a first home or major medical expenses. The advance is then deducted from the final payment.

What is the difference between TFR in the company and in a pension fund?

By default TFR stays with the employer (or INPS for larger companies) and grows by the statutory 1.5% plus 75% of inflation revaluation. You can instead direct future accruals to a pension fund, where the return depends on the fund's investments rather than the statutory formula.

Does TFR include the 13th and 14th month salary?

Yes: the accrual base is the total annual pay, including the 13th and any 14th month and other regular pay items, unless the applicable collective agreement excludes some of them. Months worked for at least 15 days count as full months.

Sources and disclaimer

Formula: Italian Civil Code art. 2120 and Law 297/1982 (annual pay ÷ 13.5; 0.50% INPS contribution; revaluation 1.5% + 75% of ISTAT FOI inflation; 17% substitute tax on revaluation). This page is an estimate only and is not legal or tax advice; collective agreements and pension-fund choices can change the result.

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