French withholding tax
Are you a foreign company with employees in France? with withholding tax
Eurotax is the benchmark for the tax representation of foreign companies (outside the EU) with employees subject to withholding tax in France. Eurotax already provides this service to many companies thanks to the quality of its services and its competitive prices
What Eurotax offers:
An establishment of a WHT tax representation by a professional who is accredited by the French Tax Administration, which is the case of Eurotax.
A verification of the potential implications of withholding tax representation on other taxes (VAT, levy on games and bets, security activities, etc.)
An evaluation of the number of files subject to withholding tax and a definition of a clear process on exchange of information and communication (with your French payroll provider, your internal payroll service, or your accounting firm, etc.)
What is withholding tax (WHT)?
WHT is a tax that is withheld from the employee’s wages and paid by the employer directly to the government. It is applicable since the 1st of January 2019.
The French government body to which the WHT is paid to is known as the D.G.F.I.P (Direction Générale des Finances Publiques).
It is calculated from a rate which is either a common, individualized or a neutral one.
The employer is required to respect the rate defined by the DGFiP. This will be sent to the employer electronically.
What are your obligations?
If your business is not established in the EU (except EEA) *
You are required to appoint a tax representative accredited by the AFF, this obligation in principle is applicable since the entry into force of the withholding tax, i.e. since January 1, 2019, as the provides article 1671 of the CGI.
If your business is established in the EU or in a European Economic Area (EEA) state *
You must have a SEPA B2B account which will allow the French Tax Administration (AFF) to carry out direct debits. If you do not have a SEPA B2B account, the designation of a tax representative becomes mandatory in order to manage the withholding tax
Any breach of this obligation will be subject to penalties in accordance with those set by the General Tax Code: article 87-0 of the CGI and article 1759-0 Again of the CGI.
However, some companies are exempt from this obligation.
It is essential that the fiscal representation in terms of withholding tax be set up and validated by the Department of Non-Resident Taxes (DINR) even before the establishment of the 1st Registered Social Declaration (DSN).
Examples of employees concerned: Members of the management committee or those in charge of developing the French market residing in France and employed by a foreign head office, etc.
* Provided that two bilateral conventions are signed with France: one for administrative assistance in the fight against fraud and one for mutual assistance in tax recovery.
What about Brexit?
Following BREXIT, companies established in the United Kingdom and Northern Ireland are among the companies not having an obligation to appoint a tax representative in France for withholding tax. However, they are required to collect and remit withholding tax through a SEPA B2B account.