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By Molly Ward
March 22—A reform to implement a withholding tax at source on individual income is to be presented to the French parliament this summer, voted on in autumn and implemented by Jan. 1, 2018, Minister of Finance and Public Accounts Michel Sapin and Secretary of State for the Budget Christian Eckhert said in speeches March 16.
In May of 2015, French President Hollande announced his intention to implement a withholding income tax on French wages by 2018.
The reform will impact employee salaries, beneficiaries from unemployment benefits and pensions, Eckhert said. For salary income, tax will be deducted at source by employers and sent directly to the Directorate General of Public Finances.
The tax authorities will communicate to taxpayers and employers a sample rate in the second half of 2017 based on tax returns for 2016 income, they said. The rate may be increased or decreased in a year if income increased or decreases.
While social insurance contributions in France are withheld by employers, income tax withholding currently only occurs on wage payments to nonresidents in France.
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Michel Sapin's speech can be found in French at http://proxy-pubminefi.diffusion.finances.gouv.fr/pub/document/18/20629.pdf.
Christian Eckhert's speech can be found in French at http://proxy-pubminefi.diffusion.finances.gouv.fr/pub/document/18/20630.pdf.
More information on payroll issues in France can be found in the France country primer.
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