Non-EU companies paying salaries to French residents are liable to appoint a French Tax Representative by 01.01.2019.
Companies established outside the European Union which pays salaries to French resident persons are liable to collect the French income withholding tax for the account of French Tax Administration as of January 1st 2019.
Indeed, if French income tax of private individual used to be paid by each French employee, French government has decided to withhold all private individual income tax in order to improve the collection process and ratio. Employers will then retain from their French employees’ salary the percentage of income tax due and pay it directly to French Tax Administration. Yet, the appointment of a qualified French Tax representative is mandatory for most of non-EU employers.
In practice, this would concern companies which do not have a permanent establishment in France and, which pay salaries related to an activity performed in France, to a French resident employee.
For exemple: Board members or business developers in charge of the French market living in France and employed by a foreign company…
This tax representation obligation, set by article 1671 of French Tax Code, is applicable as of January 1st 2019, which means that you must have contracted with your tax representative before that date.
Some companies are still exempt of this tax representation obligation. It will not be mandatory, but only an option for companies established:
- In another EU Member State ;
- In a country which is part of the European Economic Area provided that two bilateral conventions are signed with France :
- One for administrative assistance to combat tax fraud ;
- One for mutual assistance with regards to tax recovery.
What about BREXIT then?
Under the reserves of exit modalities and the finalization of the negotiations, it can reasonably be presumed that – at least for a while – companies established in the United Kingdom which pay salaries liable to this French withholding tax will have to appoint a tax representative as of March 2019
Plus d’information sur le Brexit
The tax representative has to be a professional firm certified as such by French Tax Administration, like EUROTAX.
It is also possible of course that a French subsidiary of a foreign head office is designated as tax representative. However, please note that this would not be without consequences… Indeed, the head office would then face the new « unique tax representative » principle introduced by the 2017 French amending Finance Bill. The nomination of your WHT representative might namely affect your VAT representation.
Contact us in order to organize your French withholding tax representation in France asap.
EUROTAX will assist you in:
- Checking potential implications of the WHT representation on other taxes (VAT, gambling taxes, contribution on security activities…);
- Checking the number of French residents employees liable to WHT and defining a steady process of communication with your payroll provider or certified accountant;
- Setting up the WHT representation before French Tax Authorities;
- Transfer the amount of income tax due in this respect.
As a certified Tax Representative for more than 35 years, EUROTAX assists French and foreign companies in their declaratives obligations and tax refund claims in France but more widely in Europe.
Contact our experts as soon as possible so that you are up and running for 01.01.2019 ! We will provide you with our fee quotes.