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French tax transition The tax system in France is traditionally declarative, with taxpayers receiving a pre-filled declaration each year, which they can validate or modify based on their income from the previous year. The tax payable is then calculated on the basis of this declaration. However, the previous government made the decision to move from the declaration system to a withholding tax system .
Transition to withholding tax: adjustments and deferrals: –
Under the withholding tax system, taxes are deducted directly at source by the employer and employees receive their salary net of tax. The implementation of this new system requires adjustments and experiments on a limited number of volunteers, particularly companies, to assess the impact and the burden imposed on them.
The transition to withholding tax has been postponed for a year. Thus, income received in 2017 will be taxable in 2018, income received in 2018 will be taxable in 2019, and from 2019 the withholding tax system should be fully effective, with income tax deducted directly from salaries. The specific details and application of this postponement will be subject to voting and decision-making processes.
The DAMY law firm provided this information in its tax law update dated March 20, 2020. The delay in the switch to withholding tax and subsequent implementation procedures will require the finalization of further legislative actions and decision-making processes.
Declaration system vs withholding tax: a change in French taxation: –
In practice, the transition to withholding tax was postponed for one year. Thus, income received in 2017 will be taxable in 2018, income received in 2018 will be taxable in 2019, and from 2019 the withholding tax system should be in force, with income tax deducted directly from salaries. The terms and application of this postponement will have to be voted on soon.
This information was provided by the DAMY law firm in its tax news of March 20, 2020. The postponement of the transition to withholding tax and the specific methods of implementation will require new legislative and decision-making actions .