There will be new taxation. From 1 January 2027 the mechanism by which the tax on severance pay (TFR) is determined will change. The tax reform in fact cancels the safeguard clause which, until 2026, allows in certain circumstances to resort to the 2006 Irpef rates and brackets if more convenient for the worker. The direct consequence concerns employees who will end their employment relationship, for example due to retirement or a change of occupation, starting from 2027.
Update. The severance pay is safe, Meloni denies the sting and attacks: “They haven’t even read the provision”
How it worked and what changes now
To understand the effects of the change, it is necessary to return to the Irpef reform which came into force in 2007. The change in rates and income brackets could have resulted in a greater levy on severance pay, a sum that is set aside during one’s working life and taxed only when it is paid, through the separate taxation regime. To avoid this effect, specific protection was introduced.
At the time of the liquidation, a comparison was essentially made between the tax regulations applicable to the termination of the relationship and those in force on 31 December 2006. When the second system was more favourable, the worker was granted the more advantageous tax treatment. The rule also extended to equivalent indemnities and other sums received upon termination of the relationship.
And now? The new consolidated income tax law eliminates this mechanism. From 2027 it will therefore no longer be possible to compare the taxation provided for by current legislation with the old 2006 system to apply the most fiscally convenient one. In concrete terms, the “fiscal parachute” introduced to accompany the transition to the new Irpef system is no longer available. The taxation of severance pay, therefore, will be determined according to the rules established by current regulations, without the possibility of recovering the historical rates and brackets when they are more favorable.
The practical effects
It’s not a raise for everyone. The abolition of the clause does not automatically equate to an increase in severance pay for each worker. The effect will depend on the individual tax position and, above all, on the advantage that the comparison with the 2006 regime would have produced in the individual case. The old discipline could be particularly convenient for those who had accumulated severance pay over very long working periods and had medium-high incomes. For these situations, renouncing the old criterion could result in a higher withdrawal, even by a few percentage points. The impact, however, may be more limited in cases where the comparison with the 2006 rates would not have resulted in a significant benefit.
There is another important aspect: what is the fate of the sums accrued before the entry into force of the new regulations? The change does not only affect the severance pay set aside from 2027 onwards. The decisive point is in fact the date of termination of the employment relationship, not the date on which the individual quotas were accumulated. Consequently, those who have built their severance pay also in the years prior to 2027 may no longer be able to benefit from the comparison with the 2006 tax regime if the relationship ends on or after 1 January 2027. The change may therefore have more significant consequences for those who have accrued significant seniority and must receive a high amount of severance pay.
And what happens for employment relationships that end between the end of 2026 and the beginning of 2027? The law establishes that the repeal of the clause takes effect from 1 January 2027, but the identification of the applicable regulations may require coordinating the termination date with the moment in which the right to receive severance pay accrues. According to some initial professional interpretations, the new regulation could also concern certain terminations that occurred on 31 December 2026, if the right to receive the sum arises from the following day. On this point, however, it will be necessary to wait for any official indications from the Revenue Agency. For those who are close to the transition between the two years, it will therefore be essential to verify precisely both when the employment relationship ends and when the right to receive severance pay accrues.
An example
Let’s take an example. Assuming that the entire salary is relevant for the purposes of the calculation, with 24 thousand euros of annual income the amount accrued over twelve months would be approximately 1,658 euros. The amount would rise to approximately 2,073 euros with a salary of 30 thousand euros and would reach 2,764 euros in the case of an annual salary of 40 thousand euros. For higher salary levels, the provision would grow further: with 50 thousand euros gross per year it would reach approximately 3,456 euros, while a salary of 60 thousand euros would determine a theoretical amount of approximately 4,147 euros. These are gross values that do not correspond to the amount actually collected by the employee, who must also take into account separate taxation.
To give an order of magnitude, a gross provision of 2,073 euros could transform into a net sum of approximately between 1,500 and 1,600 euros. In the case of a quota of 3,456 euros, the result could be in the area of 2,400-2,500 euros, while from a gross annual severance pay of 4,147 euros there could be around 2,800-three thousand euros left.