France: 2019 Guide to PAS (Employee Withholding Income Tax)

Effective in France January 1 2019, new obligations require companies in to pay income tax (withholding tax – Prélèvement à la Source, PAS) owed by their employees to tax authorities.

Main Principals of the Reform

The tax administration will provide employers with the previously calculated rate for withholding tax, also known as the PAS rate. This rate will be applied to employees pay slips, and the PAS amount will be deducted from their net salary and paid to the tax administration. The exchange of this information should be carried out via the DSN.

PAS Rate Applied for Your Employees

Employees PAS rate used will be the “personalized rate” provided to employees in their last online declaration. This information will no longer require to be submitted by employees to their employers. An individualized rate (for each member of the household) or a non-personalized (neutral rate) can be requested by the employee. Additionally, the tax situation of employees does not require reporting and has no effect on the modification of the PAS rate.

Things to know

What: PAS Applies to wages, pensions, disability payments, unemployment benefits, rental income, earnings of independent contractors, earnings of majority stake holders, alimony received and child support – subject to withholding by the party paying them.

When: January 1 2019 employers will make the first deductions at source on remuneration paid.

Why: To eliminate the gap between when income is collected and when tax is paid on it.

How: The withholding amount is determined from the size of the taxpayer’s household. The rate is calculated by the household taking into account the entire income and number of dependents and by applying the progressive income tax schedule.

Key Stages

Timeline Employer Employee
Until June 2018 2017 income tax return
August – September 2018 Receipt of income tax (IR) notices indicating the PAS rate.
October 2018 Tax administration provides PAS rate (or absence of a rate)
January 2019 First deduction of the deduction from the remuneration paid to employees Collection of salary minus withholding tax.
And
Payment of a monthly or quarterly instalment of property income, or BIC, BNC or BA income.
February 2019 On the 5th or 15th of the month, first deduction made from salaries is transferred to the treasury
April – June 2019 2018 income tax return for electronic fillers (and communication of the PAS rate).
August/September 2019 Tax administration communicates new 2019 PAS rate updated from reported elements by employer in April-June 2019 Receipt of income tax notices indicating the new PAS rate
April-June 2020 2019 Income Tax Return
September 2020 Receipt of 2019 tax notices/ refund or payment of supplements

 

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