Wage withholding taxes for French residents, effective from 1 January 2019

Written by Nicolas de Limbourg 30 November 2018


A big change is coming for France. As from 1 January 2019, for French resident taxpayers, wage withholding tax (“prélèvement à la source” or PAS) will be applied on certain types of income (including employee’s remuneration). This measure, which was initially foreseen as of 1 January 2018 but postponed with one year, will impact many employers and employees (inbound & outbound) in France.

Current system

In the current system (which will soon be changed), tax residents of France pay their income taxes upon the filling of their tax return. The tax authorities calculate the personal income tax due and the employees have to pay their taxes in several installments during the year. Employers in France typically pay out the net salary (after deduction of French social security contributions) to their employees. The employees then have the obligation to complete and submit their personal income tax return (so under the current system, there is no involvement or collection of income taxes by the employers).

New system

In the new system, also called the “Pay-as-you-earn-principle” the personal income tax will be withheld at source (by the employers) and the employers have the responsibility to transfer the withholding tax to the tax authorities.  It is very important for employers to prepare for the new employee reporting and withholding obligations.

Please note that for non-resident taxpayers of France a withholding tax system (“retenue à la source”) is already in place since a long time.

Want to know more?

In collaboration with our colleagues of PwC France, we would be pleased to provide more insight about the French pay-as-you-earn scheme. The goal would be to address together French pay-as-you-earn rules during a conference call or face-to-face meetings if specifically required. Interested? Please contact Sylvie Dumortier at sylvie.dumortier@pwc.com  or on +32 2 710 43 27.