Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
French business groups called for “completely rethinking” a planned withholding-at-source system for which the new government has announced a one-year postponement, keeping a promise that President Emanuel Macron made during his campaign.
The plan will now take effect Jan. 1, 2019, instead of in 2018, the country’s minister of public action and accounts, Gerald Darmanin, said in a June 7 statement.
When the government unveiled the plan in August 2017 under then-President Francois Hollande, it said it would modernize France’s tax collection, which it said creates difficulties for certain taxpayers because of a year-long time lag between when income is earned and when it’s taxed. But business groups protested that the plan to require withholding for taxpayers’ earned income starting Jan. 1, 2018, didn’t allow enough time, and would be especially burdensome for small and medium-sized enterprises.
France’s federation of business associations (MEDEF) said in a statement that Macron’s decision to postpone the system “goes in the right direction,” but the delay should be just a “first step to completely rethink the plan.”
Darmanin said the delay will allow for an audit “examining the technical and operational robustness of the system and to evaluate the reality of the burden caused for collectors, particularly companies.” It will also allow for testing, he said.
The government said that the withholding plan will use the same IT system underlying France’s new “declaration sociale nominative” system that lets companies electronically transmit payroll data via their payroll software programs or through their third-party payroll providers or certified accountants. Darmanin said the system will be “progress for French workers,” because it will allow adapting to a person’s job changes and life events in real time.
In particular, the IT system will allow for taxing income as soon as it’s earned. However, he said the delay will allow for considering business concerns more thoroughly.
Darmanin said the government’s audit will be conducted by a team from the General Finance Inspectorate and an independent team. Testing of the system under “real conditions” will begin in early July with voluntary participants. He said he will also be consulting business, public employers, labor unions, and software publishers, as well as government experts who worked on the system.
MEDEF said that when its representatives recently met with Macron, getting the withholding system delayed was one of its biggest priorities, to avoid “a potential economic and organizational disaster” linked to a costly, time-consuming system.
If it is necessary to collect tax in real time, rather than with a one-year delay as done currently, the government should find a way to do it without forcing SMEs to be collectors, it said.
MEDEF said the government’s digitalization of income tax declarations and payments makes it possible for the tax authority to instead implement a system to directly collect taxes on a monthly basis from individuals, a system that would not require companies’ participation.
To contact the reporter on this story: Rick Mitchell in Paris at firstname.lastname@example.org
To contact the editor responsible for this story: Molly Moses at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)