How PAYE will be collected at source
1) Collected by the paying agent through the PAYE system
PAYE on French source salaries, French source pensions
and state benefits will be collected at source by
whoever pays them. For salaries, it will be employers,
for pensions, the pension administrators, and for
unemployment benefits, the national unemployment agency.
The collecting agent is solely responsible for
collecting the correct amount of tax and taxpayers
themselves cannot be held liable for any errors or
2) Collected by the French tax authorities through
monthly direct debit from the taxpayer’s bank account
For all other types of income (including business
profits and independent income, rental income,
maintenance payments, purchased lifetime annuities and
non-French source income concerned by the PAYE), the
French tax authorities will collect the tax either
monthly or quarterly by direct debit from a bank account
provided by the taxpayer.
The monthly debit will represent 1/12 of the 2017 income
tax as calculated at the bottom of the last tax bill
issued in August.
The taxpayer will incur penalties if the tax authorities
are unable to collect the tax, for example due to
insufficient funds in the account.
Investment income not affected by the PAYE system
All other income not impacted by the PAYE, such as
interest, dividends, capital gains, gains from life
insurance policies (depending on the contract’s date)
will continue to be subject to the 30% flat tax rate.
As now, the taxpayer can elect for the progressive
income tax rate instead (keeping in mind that this
election must cover all their income).
For the year 2018, with the application of the new
system of taxation, the 30% flat tax rate applies to all
the gains deriving from investments made after 27
The favourable income tax rate of 7.5% granted to
policies held for eight or more years is still
applicable to policies which do not exceed €150,000 per
person (€300,000 for a joint policy).
For investments made before 27 September 2017, tax can
still be paid under the “Prélèvement Forfaitaire
Libératoire” system to benefit from the income tax rates
of 7.5% and 15%.
Policies held for more than eight years will continue to
receive the €4,600 allowance (€9,200 for married couples
/ PACS partners).
The existing “Prélèvement Forfaitaire non Libératoire”
system for paying tax on foreign source dividends and
distribution applies to Assurance-Vie gains deriving
from investments made after 27 September 2017. It is
French tax residents’ responsibility to file a specific
tax form and pay the 30% flat tax by the 15th of the
month following the withdrawal.
You should take personalised, professional advice to
establish which would be the best tax option for you
when filing your tax return.
The taxpayer can choose one of the following three
options to determine the withholding tax Rate for the
average income tax rate applied the previous
calendar tax year (so year 2017 for 2019 income) and
which is specified on their last tax bill issued in
may also request separate rates depending upon their
the absence of the known tax rate, a “neutral rate”
may apply for employees.
will be a certain degree of flexibility for an
individual to increase or decrease their withholding tax
rate. Adjustment must be requested via the taxpayers’
online tax account on the Ministry of Finance website
www.impots.gouv.fr. The local tax centre will be
responsible for calculating the revised withholding tax
rate and transmitting this to the employer.
Income tax return
There will still be an obligation to file an income tax
return in the year following that in which the income
was received. The tax return for income received in
calendar year 2018 will be filed in May/June 2019.
Any balance of tax due must be settled by the end of the
year (penalties will apply for non-payment). Or, where
applicable, the tax authorities will refund any