State severance pay, there is a 'fast track' in the manoeuvre but tax relief is skipped and up to EUR 750 is lost

For public employees, the 2026 manoeuvre provides for a three-month advance in the payment of TFS/TFR and other end-of-service benefits in the event of retirement due to age or service limitations. Which produces as a side effect the loss of EUR 750, i.e., the benefit of the 1.5 per cent tax deduction for treatments paid after at least 12 months from the termination of service within the limit of EUR 50,000, as denounced by the CGIL.

 With Article 44 of the Budget Bill, the first instalment of the TFS/TFR is paid after 9 months (instead of 12), preventing the workers involved from accruing the right to the 1.5% tax relief introduced by Article 24 of Decree-Law No. 4/2019 for payments made beyond the 12th month. The de-taxation served to partially compensate for the economic damage resulting from the long deferral of payment, and the government's intervention in the Budget Law was probably a response to the pronouncement of the Constitutional Court, which had admonished the legislature in its ruling no. 130/2023 to intervene on the regulation of the TFS/TFR of public employees to remove a disparity considered unreasonable and potentially harmful to the constitutional principles of equality, proportionality of pay and ageing protection.

The tax relief operates in the form of a reduction in the IRPEF rate for an amount that increases as the deferment continues: 1.5% reduction for amounts paid after at least 12 months from the termination of the employment relationship; 3% for amounts settled after at least 24 months; 4.5% for amounts settled after at least 36 months; 6% for amounts settled after at least 48 months; 7.5% for amounts settled after at least 60 months.

 "The Court hoped for a structural corrective intervention, capable of significantly reducing the time of payment and rebalancing the treatment with respect to the private sector," explained Ezio Cigna, head of CGIL social security policies. The intervention in the manoeuvre does not address the structural nodes of the deferral, it produces an unfavourable economic effect because as a result of the advance introduced by Article 44, every worker who no longer reaches 12 months of deferral automatically loses the 750 euro tax relief provided by the regulations in force. Considering that saccording to the technical report there are 30,122 old-age pensions paid to civil servants, for the State there would be a higher tax revenue estimated in a single year at about 22.6 million euro. In practice, the advance of three months of the Budget Law 2026 is entirely financed through the subtraction of the tax benefit expected in 2019'.

It should be noted that the technical report to the Manoeuvre estimates a higher burden for 2027 of EUR 321 million (gross) and EUR 272 million (net), due to the three-month advance.