France: A review of 2019’s new wage tax withholding system and its impact for foreign employers

January 3, 2019

On 1st January 2019, a new wage tax withholding system was implemented in France. This has meant employers are obliged to withhold personal income tax from their employees’ taxable salaries and pay it monthly to the French tax authorities.

This new system applies to all French tax residents receiving employment income, regardless of whether their employer is located in France or abroad, and involves a complicated identification procedure for foreign companies with no establishment in France.

Identification procedure – Appointment of a tax representative

Foreign companies with no establishment in France must appoint a tax representative, and have such representative accredited by the French tax authorities. This representative will be responsible for the company’s compliance with French regulations regarding the withholding and payment of personal income tax.

However, this obligation does not apply to companies established in an EU Member State, or in an EEA state which has concluded a tax treaty providing for mutual administrative assistance for the purpose of fighting tax fraud and tax evasion, as well as a mutual assistance agreement regarding tax collection with France. In such cases, the company may decide to give a simple mandate (without any necessary accreditation) to an intermediary to fulfill the withholding tax formalities on their behalf.

Other registration requirements

As a second step, foreign companies employing French tax residents must, through their tax representative or by themselves:

Monthly declaration and withholding of tax

Employers are required to withhold personal income tax on a monthly basis, applying a specific individual rate provided by the tax authorities, computed on the basis of the employee’s last reported net taxable income. The applicable tax rate is provided monthly by the tax authorities following the filing of a declaration by the employer (DSN, which applies when the employee is subject to the French social security system, or PASRAU, which is the new declaration for employees who are covered by a foreign social security system).

For employees who are not yet registered with the French tax authorities, a standard tax rate based on the level of monthly taxable salary applies.

Tax withheld is paid to the French tax authorities through a monthly direct debit.

These new requirements have been in force since 1st January 2019. Although the French tax authorities currently seem to be adopting a tolerant approach to foreign companies’ compliance with this new withholding system, it is nevertheless incumbent upon all employers of French tax residents to ensure that they act in accordance with the new obligations at the earliest opportunity. Each step of the registration process takes between two and three weeks to be fully completed, and. although unclear, penalties for non-compliance are likely to apply at some point.

For further information or to discuss any of the issues raised, please contact Stéphanie Le Men-Tenailleau at, or Nicolas Pregliasco at


CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *