A checklist to prepare for France’s new PAYE system A checklist to prepare for France’s new PAYE system

A checklist to prepare for France’s new PAYE system
13 Dec 2018

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:

  1. 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. 

  1. 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.

  1. Identify any cases of non-standard employees

Non-standard cases may exist if your employees are:

Such cases should be looked at individually in order to establish the correct tax rate to apply to their monthly salary.

  1. 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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PAYE given go-ahead in France

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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:

  1. 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. 

  1. 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.

  1. Identify any cases of non-standard employees

Non-standard cases may exist if your employees are:

Such cases should be looked at individually in order to establish the correct tax rate to apply to their monthly salary.

  1. 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.

OTHER ARTICLES THAT MAY INTEREST YOU

Webinar: Spotlight on payroll in France

PAYE given go-ahead in France

France to trial social media monitoring of taxpayers

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  • Posted On December 17, 2018 by Wendy Webb

    I work in the Payroll industry in Australia. I find your articles interesting reading.

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