As of 2 October 2026, a detailed analysis clarifies the civil and tax treatment of advances on the End-of-Mandate Indemnity (TFM – Trattamento di Fine Mandato) for company directors (amministratori). Unlike the Employee Severance Pay (TFR), which is subject to strict statutory constraints (art. 2120 Civil Code) prohibiting advances during employment, the TFM for directors can be advanced during the mandate, provided there is a valid corporate resolution (assemblea or board) adequately motivated by the company’s financial situation and the director’s personal needs. The advance is treated as a taxable emolument in the year of receipt, subject to separate taxation (tassazione separata) under art. 17 TUIR, similar to the final TFM payment.
Key Takeaways
- Civil Law Flexibility vs. TFR Rigidity: The TFM is a contractual, not statutory, entitlement. The Civil Code does not prohibit advances, but the resolution must demonstrate that the advance does not jeopardize the company’s solvency or the director’s future indemnity. The article provides a template for the required board minutes, including the financial sustainability assessment.
- Separate Taxation Regime: The advanced amount is taxed under the separate taxation regime (tassazione separata) at the average rate of the previous two years, avoiding progressive IRPEF brackets. This is a significant advantage over normal salary supplementation. However, the advance reduces the final TFM balance, which will be taxed similarly upon mandate termination.
- Social Security and Withholding Obligations: The advance is subject to INPS contributions (Gestione Separata) if the director is enrolled, and to a 20% withholding tax (acconto) at payment. The company must report it in the Certificazione Unica. Proper documentation is essential to avoid reclassification as a loan or disguised dividend.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement