The draft law on the withholding of income tax has just been published. It will be implemented as of 1 January 2018.
It is in any case what Michel SAPIN and his Secretary of State for the Budget, Christian ECKERT, confirmed in a communication to the Council of Ministers on 3 August.
The option of employees to a neutral rate
Each month, employers will receive, via registered social statement, the levy rate applying to the remuneration they pay to their employees. This custom sampling rate will be calculated based on the last tax return filed by the employee. He, however, may indicate to the tax authority his refusal to see the custom rate transmitted to his employer. In this case, a neutral rate, calculated solely on the basis of the remuneration granted by the employer, shall apply. And when a complement to the WHT will be due, the taxpayer will have to pay each month directly to the administration.
Rules for applying the levy rate
The administration has indicated how to apply the tax rate and calculate the remuneration to be paid to employees. Specifically, the base of the levy at source will consist of net taxable amount of the salary, after deduction of social security contributions and the deductible portion of the CSG, all before the deduction for business expenses.
In the event that the administration did not provide sampling rate, the employer will proceed to withholding from a rate schedule, which is established every year by the finance law. The first grid would be:
|Monthly sampling rate||Proportional basis|
|Less than or equal to 1.361 €||0 %|
|De 1.362 € à 1.493 €||2 %|
|De 1.494 € à 1.647 €||4 %|
|De 1.648 € à 1.944 €||7 %|
|De 1.945 € à 2.602 €||9 %|
|De 2.603 € à 3.250 €||12,5 %|
|De 3.251 € à 4.685 €||17 %|
|De 4.686 € à 7.288 €||21,5 %|
|De 7.289 € à 9.639 €||25,5 %|
|De 9 640 € à 17.356 €||33 %|
|De 17.357 € à 33.681 €||39 %|
|More than 33.681 €||43 %|
Precision: there is also a rate schedule for taxpayers domiciled in Guadeloupe and Reunion and another for those domiciled in Guyana and in Mayotte.
Modulating the levy rate
The taxpayer may modulate, under its responsibility, its rate of levy at source. it is enough for him to connect to his personal space on the website www.impots.gouv.fr and make the desired change, given that the new rate will apply on or before the third month following the month in during which the decision has been taken modulation until 31 December of that year.
Furthermore, the tax rate of the taxpayer may change following a change of circumstances: marriage, conclusion of a PACS, death of spouse, divorce, breaking a PACS.
This change must be declared within 60 days.
Note: couples may opt, with the tax authorities, for individualized rate according to their income.
Precision: the statement of revenue may give rise to a refund or a tax supplement handled directly between the tax authorities and the taxpayer.
However, to avoid double payment of tax in 2018, tax income applicable to non-recurring income earned in 2017 will be offset by the application of an “exceptional tax credit of modernization of recovery”.
This tax credit is allegedly equal to the amount of income tax due for the year 2017, given that the tax authorities may request the taxpayer of supporting all the factors used to determine the amount.
Also note that the effect of reductions and tax credits related to 2017 will be preserved.
Warning: specific rules for calculating the non-recurring income and anti-optimization measures will be provided in order not to grant unjustified advantages to taxpayers likely to “drive” their income.