The implementation of a pay-as-you-earn (PAYE) tax system in France has been a long time in the making as the policy has been abandoned time and time again over the years due to a range of cultural and technical obstacles.
But as of 1 January 2019, ‘prélèvement à la source’ - withholding income tax at source – will officially apply for the first time, and employers must be ready to do it when they prepare the monthly payroll.
So what do employers need to do to get ready? Below is a checklist of activities, but our free eBook also provides a wider overview too:
- Ensure your employees are aware of the change
Thanks to a comprehensive government advertising campaign, most workers are aware of the forthcoming PAYE tax system, but as an employer, you are still obliged to direct your staff to the French government’s online resources and dedicated helpline.
- Check your technical readiness for PAYE
Undertake an assessment of your technical readiness to handle PAYE before the Christmas break to ensure everything is ready for the January 2019 payroll run. Your payroll software should be updated to cope and any prefiguration work must be carried out.
Also make certain that your payroll team is appropriately trained and that you are in possession of individual employee tax rates. Employers will report individual taxable incomes to the Direction Générale des Finances Publiques each month using an e-filing system but pay the total consolidated amount of employee income tax through a single automatic Single Euro Payments Area (SEPA) debit.
- Identify any cases of non-standard employees
Non-standard cases may exist if your employees are:
- Non-French tax residents;
- Living on the French islands;
- On extended sick leave;
- On a guaranteed net pay agreement;
- New to the company.
Such cases should be looked at individually in order to establish the correct tax rate to apply to their monthly salary.
- Anticipate additional costs
You should expect to incur additional costs under the new PAYE tax system if you:
- Employ expat workers with an unusual tax status;
- Are without a SEPA-ready bank account;
- Run a foreign company from a country without a tax treaty with France;
- Use a payroll service provider to pay your staff in France as you can expect to incur additional processing fees to cover the extra work required.
By TMF Group experts. TMF Group is a professional services firm that helps clients operate internationally by ensuring they are properly set up to do business in any country and compliant with local and international regulations.
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The implementation of a pay-as-you-earn (PAYE) tax system in France has been a long time in the making as the policy has been abandoned time and time again over the years due to a range of cultural and technical obstacles.
But as of 1 January 2019, ‘prélèvement à la source’ - withholding income tax at source – will officially apply for the first time, and employers must be ready to do it when they prepare the monthly payroll.
So what do employers need to do to get ready? Below is a checklist of activities, but our free eBook also provides a wider overview too:
- Ensure your employees are aware of the change
Thanks to a comprehensive government advertising campaign, most workers are aware of the forthcoming PAYE tax system, but as an employer, you are still obliged to direct your staff to the French government’s online resources and dedicated helpline.
- Check your technical readiness for PAYE
Undertake an assessment of your technical readiness to handle PAYE before the Christmas break to ensure everything is ready for the January 2019 payroll run. Your payroll software should be updated to cope and any prefiguration work must be carried out.
Also make certain that your payroll team is appropriately trained and that you are in possession of individual employee tax rates. Employers will report individual taxable incomes to the Direction Générale des Finances Publiques each month using an e-filing system but pay the total consolidated amount of employee income tax through a single automatic Single Euro Payments Area (SEPA) debit.
- Identify any cases of non-standard employees
Non-standard cases may exist if your employees are:
- Non-French tax residents;
- Living on the French islands;
- On extended sick leave;
- On a guaranteed net pay agreement;
- New to the company.
Such cases should be looked at individually in order to establish the correct tax rate to apply to their monthly salary.
- Anticipate additional costs
You should expect to incur additional costs under the new PAYE tax system if you:
- Employ expat workers with an unusual tax status;
- Are without a SEPA-ready bank account;
- Run a foreign company from a country without a tax treaty with France;
- Use a payroll service provider to pay your staff in France as you can expect to incur additional processing fees to cover the extra work required.
By TMF Group experts. TMF Group is a professional services firm that helps clients operate internationally by ensuring they are properly set up to do business in any country and compliant with local and international regulations.
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