A major tax reform measure will be effective 1 January 2019—the introduction of withholding tax regime (“prélèvement à la source” or PAS) that is intended to eliminate the one-year time lag between the receipt of income by workers and the remittance of the tax on this income.
Until now, income tax has been paid in the year following the year in which income was received. However, beginning 1 January 2019, all income from employment that is taxable in France will be subject to withholding tax, regardless of whether the income is French-sourced or foreign-sourced. Withholding tax will be collected either at source or automatically by means of installments.
The new withholding tax regime, while significant for employees, will have a major impact on French employers. Beginning in 2019, they will be responsible for collecting tax on employee wages (withholding tax) and then for remitting the withheld taxes to the French tax authorities. The new measure also could affect Swiss employers that employ French tax residents working in Switzerland.
Read an October 2018 report prepared by the KPMG member firm in Switzerland
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.