Roche & Cie

The implementation of withholding for income taxes

17 Mar 2016

The Minister of Finance and Public Accounts and State Secretary for the Budget presented this morning a Communication on the implementation of the levy of tax at source.

May 19, 2015 in Carcassonne, the President of the Republic announced his willingness to implement the withholding of income tax at 1 January 2018.

The principle of the reform was confirmed by the Parliament in the Finance Act 2016.

“In a society where the linearity of the personal journey as a professional is no longer the norm, to match the moment one receives his income and when he pays taxes is a real progress. This reform also protects the French who must cope with the vagaries of life: it avoids taxpayers who undergo major changes, sometimes unpredictable, cash flow difficulties.

For all taxpayers, whether employed or not, the withholding tax will be a simple and flexible system for the collection of the tax is automatically adjusted to income. In case of change of circumstances leading to a significant change in the tax rate, taxpayers may request a modulation of the sample.

This reform preserves the method of calculating the income tax and the recognition of marital and family characteristics. “

The reform will enter into force on 1 January 2018 and will benefit almost all of the French, employees, civil servants, pensioners, alternative income beneficiaries (including unemployment benefits), independents (including farmers) and land owners receiving income.

For taxpayers whose income consists of wages and salaries or replacement income, the tax will be charged on the third side income, employers and pension funds in particular. For self-employed, tax will be paid in installments, according to relatives of those conditions existing today. These rules will also apply to property income received by owners.

The confidentiality of the tax will be preserved.

The tax administration will remain the only contact taxpayers and sole recipient of tax information in the tax return. It will continue to send the tax notice as now, or for non-taxable, the notice of declarative position to tax on income (ASDIR) 2016 innovation available from the online statement. This is also the tax authorities who will communicate to the employer the tax rate at source to apply.

Taxpayers can also opt, within a couple of different rates that will distribute samples based on income disparities.

Specifically, in 2017, nothing will change, tax will be paid on the basis of 2016 revenues.

Taxpayers will still fall to the rate of levy to be applied to income from 2018. From 1 January 2018, tax will be levied on income in 2018.

Based on these principles, a consultation will be held with parliamentarians, the social partners and all stakeholders to finalize the reform, to be presented to Parliament this summer.

“Mentioned in years, the reform of the withholding tax on income, already implemented by most economic partner of France, is now engaged. It will be passed in 2016 and implemented on 1 January 2018. “

Consult the press release

Tax withholding in 10 questions (French)