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 omissions.
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
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 September 2017.
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
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 /
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
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 PAYE:
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 overpayment.