The 2026 Budget Law has introduced significant changes concerning severance pay and supplementary pension schemes. These consequences extend far beyond mere tax and contribution profiles, impacting businesses’ financial management.
INDICE
- New Tax Deductibility Limits
- Mandatory Contributions to the INPS Treasury Fund: Revised Thresholds
- The New Dynamic and Progressive System
- Analysis of the Two Regimes
- The Differential Impact on Liquidity
- From Tacit Consent to Automatic Enrolment
- Taxation of Severance Pay Retained by the Company or with the Treasury Fund
- Taxation of Severance Pay Allocated to Supplementary Pension Schemes
- Concluding Remarks
- Supporting Businesses in Assessing the Impact of the New Rules
1. NEW TAX DEDUCTIBILITY LIMITS ↑
The 2026 Budget Law primarily amends the rules governing tax deductibility of contributions paid to supplementary pension schemes, specifically modifying Article 8, paragraph 4, of Legislative Decree 252/2005. Effective from the 2026 tax year, the maximum tax deductibility limit has been raised from €5,164.57 to €5,300.00 annually.
While the overall economic impact of this change may seem modest, it forms part of a broader strategy to incentivise supplementary pension schemes. These schemes are increasingly vital to ensure adequate additional pension coverage for workers, complementing public provisions that have been progressively scaled back by reforms over recent decades.
The new deductibility limit applies to contributions paid by both employees and employers, whether voluntary or resulting from national, territorial, or company-level collective bargaining agreements.
For employees first hired after 31 December 2006, the rules for additional deductibility applicable in the twenty years following the fifth year of participation in supplementary pension schemes have also been revised.
However, a potential regulatory inconsistency has emerged: while paragraph 201 refers to an effective date from the 2026 tax year, the subsequent paragraph 202 indicates applicability of the new provisions from 1 July 2026. This temporal misalignment will require an official interpretive clarification.
2. MANDATORY CONTRIBUTIONS TO THE INPS TREASURY FUND: REVISED THRESHOLDS ↑
Undoubtedly, the most significant practical implications for businesses’ financial management stem from the comprehensive revision of the criteria determining the obligation to remit severance pay to the INPS Treasury Fund, as stipulated by paragraph 203 of the 2026 Budget Law.
Until 31 December 2025, this obligation exclusively applied to employers who, as of 31 December 2006 (or their year of establishment if later), employed at least 50 employees. This threshold remained fixed, irrespective of subsequent changes in company size.
3. THE NEW DYNAMIC AND PROGRESSIVE SYSTEM ↑
The 2026 Budget Law abandons the static criterion, introducing a dynamic and progressive system for verifying employment size, structured across three successive temporal phases:
- First period (2026-2027): The obligation to remit to the INPS Treasury Fund applies to employers who have reached or reach an average employment size of at least 60 staff members.
- Second period (2028-2031): The employment threshold decreases to 50 staff members.
- Third period (from 2032): The threshold is progressively reduced to 40 staff members, further expanding the pool of entities obligated to make monthly remittances to the Treasury Fund.
Annual Verification
The true innovation lies in the dynamic nature of this obligation. The employment threshold must be verified annually, based on the average employment level of the calendar year preceding the pay period under consideration. This transition from a static to a dynamic system carries significant operational consequences for a substantial number of businesses. All companies previously exempt from the Treasury Fund remittance obligation until 2025 – because they had not reached the 50-employee threshold in 2006 (or their first year of operation, if later) – must now monitor their employment size annually. This entails:
- Activating systematic verification procedures.
- Implementing internal control systems.
- Potentially engaging labour consultants for accurate determination of average employment.
- Timely preparation for administrative and contributory compliance should the threshold be met or exceeded.
4. ANALYSIS OF THE TWO REGIMES ↑
The regulatory changes introduced by the 2026 Budget Law present significant financial implications for businesses, which go beyond the sole contributory aspects and assume strategic importance in corporate treasury management. To fully grasp the scope of these implications, it is essential to analyse the profound differences characterising the two alternative severance pay management regimes: retention within the company and remittance to the INPS Treasury Fund.
Severance Pay Retained by the Company
When the severance pay package formally remains with the company, the business benefits from actual financial availability that can be deployed within its operational cycle. Although it constitutes a consolidated liability from an accounting perspective – requiring regular accrual in the balance sheet and revaluation according to ISTAT indices – from a financial standpoint, severance pay represents a low-cost form of financing.
The company has access to the liquidity corresponding to monthly accruals, which it can use for its operational needs. The actual financial outflow only occurs in two circumstances: upon termination of the employment relationship (for any reason: resignation, dismissal, retirement) or in the event of an employee’s request for an advance.
Remittance to the INPS Treasury Fund
The scenario changes when a company is subject to the obligation of monthly remittances to the INPS Treasury Fund. In this instance, the monthly accrual of severance pay does not remain available to the company but must be remitted to INPS within strict deadlines (alongside ordinary social security and welfare contributions).
From a financial perspective, this entails a monthly, recurring, and unavoidable cash outflow, adding to other contributory and payroll costs. The impact on corporate treasury is significant: whereas previously the company had access to the liquidity corresponding to severance pay accruals until the actual payment to the employee (which could occur many years later), this liquidity now leaves the company accounts monthly.
5. THE DIFFERENTIAL IMPACT ON LIQUIDITY ↑
This shift can generate significant strain on working capital management, especially for businesses that:
- Operate with tight liquidity margins.
- Previously used severance pay as an implicit form of self-financing for their operational cycle.
- Have particularly long or seasonal collection cycles.
- Are undergoing growth phases with a consequent need for working capital investments.
Particular attention must be paid to businesses nearing critical employment thresholds. These are companies that, within a few months or a year, could exceed employee limits even due to minor occupational variations.
6. FROM TACIT CONSENT TO AUTOMATIC ENROLMENT ↑
Effective from 1 July 2026, the 2026 Budget Law introduces an overhaul of the methods for private sector employees to enrol in supplementary pension schemes.
Until 30 June 2026, the current regulation stipulates that newly hired employees, six months after commencing employment, are tacitly considered enrolled in the supplementary pension scheme provided by collective agreements unless they express a different intention. This is known as “tacit consent.”
From 1 July 2026, this system is replaced by an automatic enrolment mechanism with significantly different and more binding characteristics. Newly hired employees (excluding domestic workers) are automatically enrolled in a supplementary pension scheme 60 days (no longer six months) from their hiring date.
Automatic enrolment operates according to a legally defined order of priority:
- First option: To the collective pension scheme provided by the agreements or collective contracts applicable to the employment relationship, whether national, territorial, or company-specific. If collective agreements allow for enrolment in multiple supplementary pension schemes, automatic enrolment will occur in the scheme to which the largest number of company employees have already enrolled, unless otherwise stipulated by specific company agreements.
- Second option: In the absence of collective agreements or contracts providing for supplementary pension schemes, automatic enrolment occurs with the COMETA Fund, identified by the Ministry of Labour Decree 31 March 2020, no. 85, as the residual destination fund.
Option to Opt-Out of Automatic Enrolment
Newly hired employees still retain the option to opt out of automatic enrolment by exercising one of the following choices within 60 days of their hiring date:
- Waiving automatic enrolment and allocating severance pay to a freely chosen pension scheme.
- Waiving automatic enrolment and retaining severance pay with the company.
However, this choice is not definitive: employees can subsequently revoke it and allocate their accruing severance pay to a freely chosen supplementary pension scheme.
7. TAXATION OF SEVERANCE PAY RETAINED BY THE COMPANY OR WITH THE TREASURY FUND ↑
Severance pays retained by the company or remitted to the INPS Treasury Fund is subject to a peculiar two-stage taxation mechanism:
- First stage – Provisional Taxation: Upon payment of severance pay (due to termination of employment or an advance request), the employer applies a withholding tax on account, calculated based on the average IRPEF tax rate applied to the employee over the last five years (or a shorter period if the employment duration was less).
- Second stage – Final Taxation: Within five years of payment, the Italian Revenue Agency recalculates the tax due on severance pay, applying the average IRPEF tax rate from the taxpayer’s entire last five years of employment. If this recalculation reveals a higher tax than that provisionally withheld, the Revenue Agency notifies the taxpayer of the additional tax due, which must be paid. Conversely, if the final tax is lower than the provisional amount, the taxpayer is entitled to a refund of the difference.
8. TAXATION OF SEVERANCE PAY ALLOCATED TO SUPPLEMENTARY PENSION SCHEMES ↑
The tax regime for severance pays allocated to supplementary pension schemes presents significantly different, and in most cases, more favourable characteristics.
- Upon Allocation: Severance pays allocated to supplementary pension schemes is not subject to any tax deduction. No withholding tax is applied, either by the employer or any other entity. The amount is transferred in full to the chosen pension scheme.
- During the Accumulation Phase: During the period when severance pays remain invested in the supplementary pension scheme, the returns generated are taxed annually with a substitute tax of 20% (reduced to 12.5% for returns derived from Italian government bonds and equivalent securities). This taxation on returns is borne by the pension fund and is deducted annually, without requiring any action from the member.
- Upon Payment: When the employee becomes entitled to pension benefits (having met the age and contribution requirements stipulated by law), the accumulated severance pay is paid out by the supplementary pension scheme, and only at that point is it subject to final taxation. The applicable rate varies depending on the length of enrolment in the supplementary pension scheme:
- It starts at a rate of 15% for the first 15 years of enrolment.
- The rate is reduced by 0.30% for each year of enrolment exceeding the 15th year.
- The maximum reduction is 6 percentage points.
- The minimum applicable rate is therefore 9%, which is reached after 35 years of enrolment.
9. CONCLUDING REMARKS ↑
The changes introduced by the 2026 Budget Law represent a far-reaching intervention that compels businesses and employees to comprehensively rethink their severance pay management and pension choices. For companies, it becomes a priority to promptly verify their position against the new employment thresholds, assess the financial effects of a potential shift to the INPS Treasury Fund remittance regime, and prepare updated procedures to comply with the new information obligations related to the automatic enrolment mechanism for supplementary pension schemes.
Financially, the transformation of severance pays from an available internal resource – often used as a low-cost form of self-financing – into a mandatory monthly outflow can significantly impact liquidity, especially for businesses with long or seasonal collection cycles. This necessitates a review of treasury strategies and an evaluation of working capital financing sources, in a context characterised by persistently high interest rates and credit conditions that are not always favourable.
Operational Perspectives
Beyond regulatory and financial implications, certain operational aspects related to the destination of severance pays also gain prominence. Remitting to the INPS Treasury via F24 allows for potential offsetting of available tax credits, but conversely, it could directly impact social security compliance: even minor delays can affect the DURC (Documento Unico di Regolarità Contributiva – a certificate of social security compliance), with significant consequences. Remittances to pension funds or insurance companies, however, follow less frequent deadlines, though they still require adequate financial planning. The timing and quality of services also differ:
- INPS generally has longer processing times.
- Funds and insurance companies offer a more structured level of assistance.
Furthermore, only supplementary pension and insurance schemes allow for the choice of investment style, and in many cases, provide greater flexibility regarding advances and redemptions.
10. SUPPORTING BUSINESSES IN ASSESSING THE IMPACT OF THE NEW RULES ↑
In light of these considerations, the choice between retaining severance pay within the company, remitting it to the INPS Treasury, or allocating it to supplementary pension schemes cannot be treated as a mere formal compliance exercise. Instead, it demands an integrated assessment that considers financial effects, administrative risks, characteristics of outflow streams, service levels, flexibility of benefits, and long-term objectives. For employees, understanding the opportunities offered by supplementary pension schemes and aligning choices with their risk profile and pension goals is an indispensable step.
In this rapidly evolving landscape, pension and financial planning assume a central role. The assistance of qualified professionals becomes crucial to support businesses in evaluating the impact of the new rules, defining strategies to optimise severance pay management, and preparing internal processes consistent with the new regulations. Caravati Pagani consultants are available to guide companies through this journey, valuing sectoral specificities and the unique treasury needs of each entity.
