If living in France you will now have heard about the “Prélèvement a la source” but you might still wonder how this will impact you.
What is the “prélèvement a la source”?
Until today, people would need to fill in their taxes for the previous year and pay them as a one off payment, three months or ten months payment plans. With the new system of “prelevement a la source”, taxes will be estimated and deducted from salaries directly as they would under PAYE in the UK.
Instead of having the worry of paying their taxes on their previous wages, workers will now pay their taxes on what they earn.
When will the change happen?
The new system is now implemented since the 1st January 2019.
What do I need to do?
You will need to estimate how much taxes you will need to pay as a percentage of your revenue. Then, this percentage will be used by the accountant to calculate what they need to deduct from your wages.
Some transparency concerns have also been raised. Indeed, in France, married couples or couples under civil partnerships fill in their taxes together and can get tax relief. Therefore, the deduction percentage might inform your employer of your personal situation. To avoid this, you can decide to use a standard percentage, instead of a personalised percentage.
Note that you will still have to fill in the annual “impot” form. This is so the amount you paid can be actualised if you under or over-paid.
Expat financial solution
The French government has put together an FAQ in French to help navigate through those murky waters.
Harrison Brook is Europe’s leading expat financial adviser. As your local partner in France, located in Nice, we provide the expat community in France with:
Get in touch today and speak to one of our international expert financial advisers.