Withholding income tax
The withholding income tax came into force on January 1, 2019.
Personal income tax withholding system is intended to adapt the recovery of the tax for one year to the actual situation of the user (income, life events) in respect of that same year, without changing the rules of calculation. Its objective is to eliminate the one-year lag between the collection of income and the payment of income tax.
From the first income paid in 2019, the rate of tax is applied to the salary: the levy at the source is automatic, and appears clearly on the payroll. The withholding income tax rate will be updated in September 2019 to reflect any changes that may have occurred as a consequence of the 2018 income tax return in the spring of 2019.
In the event of a change in circumstances leading to a foreseeable change in the significant tax, the taxpayer may, if he so wishes, request an update during the year from the sample rate at the source. The impots.gouv.fr site allows each taxpayer to simulate the possibility of modulation and to validate the application with the tax administration.
ARE YOU LIABLE TO INCOME WITHHOLDING TAX?
All companies that pay wages taxable in France must carry out a wage withholding tax and pay it on a monthly basis to the tax services in accordance with the conditions to be determined according to the place of tax residence of the employee and the place of his liability for social security contributions.
DO YOU NEED A SEPA BANK ACCOUNT?
The payment of the withholding income tax is carried out by means of a BtoB SEPA bank account. Transfers or other means of payment are not accepted for wage withholding tax.
Employers established abroad paying wage withholding tax in France must therefore have a SEPA-zone bank account.
DO YOU NEED A FISCAL REPRESENTATIVE?
YES, in case you are not a permanent establishment:
- in France;
- in a Member State of the EU;
- In a country of the European Economic Area (EEA) which has concluded an administrative assistance agreement with France in the context to combating fraud and tax evasion and a mutual assistance agreement on tax recovery (Iceland and Norway).
The tax representative undertakes to carry out, on behalf of the employer, the formalities concerning the wage withholding tax and, if necessary, to pay on its behalf.
YOU POST OR EMPLOY STAFF IN FRANCE – WHAT CAN WE DO FOR YOU
- We ensure the role of certified tax representative of companies established outside the European Union (EU) who are liable for the payment of the withholding income tax for their employees who are fiscal resident in France, or to non-resident employees. We also act as a tax agent for companies established in the EU;
- In the scope of the withholding income tax payment, we work in coordination with the accounting firm responsible for the preparation of payrolls, social declarations registration of its employees which are posted or employed in France
- We offer a dedicated SEPA bank account, on which the levy tax will be withheld by the French tax administration.
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