Income tax withholding in France

Very common in many countries, the withholding of the income tax is a new system in France.

When

The withholding of the income tax has been announced over 6 months ago, by the French government.

However, it will only become a reality in January 2018.

The is no need to stress about it yet.

Who

The withholding of the come tax will be applied to every one with a taxable income.

To put it simply if on your employee pay slip you can read an amount for the “net imposable” (taxable net), then you will need to withhold the income tax

What rate

The rate of the withholding is a personal one for each employee. Therefore, every employee must inform the employer of his rate.

The employee will be informer by the fiscal authorities of his 1st rate by the fiscal authorities in October 2017 once he has completed his 2016 income tax declaration.

If the rate changes during the year, the employer will be directly informed by the authorities.

How

In January 2018, there will be a new raw on your employee’s pay slip. It should be called “Prélèvement à la source”.

This raw will be the withholding, it will in deduction to the net to be paid.

The employer will then pay the withheld tax to the authorities. The payment period is not yet known but it will most likely be a monthly payment.

The declaration will be done via the DSN (new declaration format active in 2017), and the payment via direct debt should be recommended by the authorities.

French Payroll Expert Advises

The income tax withholding will be a non-event as long as:

  • You collect the income rate from you employees. We recommend that you add the request of this rate to your process for all newly hired employee starting October 2017.
  • You remember that the withheld tax must be paid. The fiscal authorities are even less kind about unpaid tax that the social authorities with unpaid contributions.

Source
https://www.service-public.fr/particuliers/actualites/A10458
https://www.service-public.fr/professionnels-entreprises/actualites/A10614

French Payroll Expert

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