What is TFM?
The End-of-Mandate Treatment is a sum that the company may pay to the director at the end of his or her term of office.
It is not required by law, but may be provided for by by-laws, assembly resolution o contract of appointment.
It is a way to rewarding the administrator for work done, similar to the severance pay for employees, but with specific rules.
TFM with Insurance Policy: a smart choice
The most efficient solution to manage TFM is set it aside in an insurance policywith the company as contractor and beneficiary.
The benefits are concrete:
- The company avoids a high outlay all at once;
- Capital is revalues over time;
- The sums paid to the company are impeachable and unseizable (Art. 1923 of the Civil Code).
In addition, the policy allows keep TFM out of business riskproviding greater financial peace of mind.
Data Certa: The Obligatory Step for Separate Taxation
Please note: to obtain the tax benefits of the separate taxationthe commitment to pay the TFM must be evidenced by a document with a certain date prior to the beginning of the mandate.
In practice, you must be able to prove that the TFM was intended first for the administrator to start working.
You can get the date certain via:
- registration with the Internal Revenue Service;
- PEC or digital signature with time stamp;
- registered mail with return receipt;
- notarial deed or notarised private contract.
If the date is not certain, the tax authorities may deny separate taxation and apply theOrdinary IRPEFwith rates up to 43%.
Separate taxation: less tax, more efficiency
If everything has been planned correctly, the TFM can be taxed in a manner lighter.
The Internal Revenue Service applies the separate taxationby choosing the most favourable rate from:
- the average of the previous two years' incomes, or
- that of the year of payment.
In addition, the administrator does not have to declare the TFM in your tax return: the Agency takes care of it directly.
What if the administrator is deceased?
Even then, separate taxation applies to the heirs.
Why rely on a consultant
Planning TFM correctly it is not just a technical issueIt is a strategic choice for the company and the administrator.
An error on a certain date, provision or documentation can cost very expensive.
As a financial advisor, I can help you
- check whether your company is in compliance;
- structuring the insurance policy correctly;
- prepare date-stamped documentation;
- optimise taxation for company and administrator.
