France – Withholding System Deferred until January 2019 | KPMG | GLOBAL

France – Withholding System Deferred until January 2019

France – Withholding System Deferred until January 2019

This report covers a French decree that defers the entry into force of the new personal income tax withholding system in France.

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A recent decree defers the entry into force of the personal income tax withholding system (prélèvement à la source de l’impôt sur le revenu) in France and modifies the reference years to be used for its transitional measures.1

WHY THIS MATTERS

The decree formally puts on hold the implementation of a withholding at source system for collecting income tax from salaries and other income.  This deferral relieves employers from having to put systems and processes in place according to the original timeframe envisaged under the former government of Francois Hollande.  It will be “business as usual” for the upcoming tax season – which means 2017 personal income tax will be fully collected in 2018 – but there is still no certainty as to what will happen next.

Next Steps for the Planned Withholding System

In addition to the deferral of the personal income tax withholding system in France, the reference years to be used for its transitional measures have been modified.  This had been announced in an earlier GMS Flash Alert 2017-103 (14 June 2017), but the measure has now been formalized.The decree, issued on 22 September 2017, provides for a deferral of the withholding of French personal income tax to 1 January 2019. 

The decree also modifies the reference years of the transitional measures accompanying the implementation of the withholding.  2017 personal income tax will therefore be fully collected in 2018.

It should be noted, however, that section 10 of the enabling law (no. 2017-1340) of 15 September 2017, provides that the French government is to submit to Parliament, by the end of September 2017, a report:

  • on the experimental application of the proposed system and on the review conducted by the general inspectorate of finances and an independent firm; as well as 
  • on the application of alternative solutions aimed at improving its functioning.   

Please note that it is possible further changes will occur, including, potentially, the abandonment of the proposed withholding regime. 

The information contained in this newsletter was submitted by FIDAL in France.

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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