Withholding income taxes in France
Obligation to appoint a Tax Representative for companies not established in the EU
Since January 1, 2019, the income tax of employees is directly deducted on their pay slip regardless of whether they are employed by a French company or a foreign company on French territory.
As a result, income tax must be calculated by foreign employers if their employees work on the French territory. The employer will deduct the amount calculated in advance from their employees' pay slips and pay the income tax to the French state.
What steps must foreign companies take?
- Contact the Tax Administration Services of non-residents in Noisy-le-Grand to obtain a French registration number and proceed with the appointment of an accredited tax representative.
- European companies can appoint a tax agent who will be responsible for carrying out these various formalities if they do not wish to do so.
- Companies established outside the European Union must designate a tax representative accredited by the French Tax Administration. This representative will guarantee the payment of income tax to the French State. Companies that already have a VAT tax representative will not be able to appoint a second tax representative for the withholding taxes. A single representative will then have to carry out the procedures related to the direct debit as well as other French taxes (VAT).
- Calculate the amount of tax that will be deducted from the pay slips of each worker concerned. The applicable tax rate is calculated and transmitted monthly by the French tax authorities to the foreign company.
- Deduct this amount from the pay slips and declare them each month to the French State via the Nominative Social Declaration (DSN),
- Authorize and plan each month the withholding of income taxes by the administration from your bank account in the SEPA zone.