Taxes withheld from salaries

Salaries from French sources paid to persons who are fiscal residents of foreign countries are subject to withheld tax. The withheld tax is calculated from the net salary using a scale with three brackets (article 182 A of the general tax code).

Nb > Salaries corresponding to artistic or sports performances executed or used in France are subject to a different system for withholding tax (see the file Taxes withheld from artistic performances ).

This withheld tax concerns salaries paid as compensation for professional activities exercised in France. The employer is liable for this tax.

Basis for assessment

The withheld tax is calculated from the net sum of amounts paid, determined as required by applicable income tax regulations.
The net sum includes the totality of sums and benefits paid to the employee as compensation for work performed in France, with the exception of reimbursements for exempt expenses.

After determining the net compensation, a fixed deduction of 10 % followed by a 20 % allowance is applied.

Example >
Net compensation        €    154.00
10 % deduction           €      15.40
                                    _________
                                  €    138.60
20 %  allowance          €      27.72
                                     _________

The basis for assessment can also be calculated in the following manner : € 154 x 72 % = € 110.88.


Calculating withheld tax

The withheld tax is calculated using a scale with three brackets : the first bracket is subject to a rate of 0 %, the second to a rate of 15 % and the third to a rate of 25 %. The limits of these brackets are reassessed each year.

The scale applying to salaries paid in 2004 is as follows :

Applicable rates		Bracket limits in euros according to work periods for which salary is paid
		Year	Quarter	Month	Week	Day or fraction of day
0 %	Less than	10 177	2 544	848	196	33
15 %	From	10 177	2 544	848	196	33
	To	29 528	7 382	2 461	568	94
25 %	More than	29 528	7382	2 461	568	94

The tax administration specifies that : « When the employee has not worked full time during the course of a month or week, or when compensation is not paid per month or per week, then the daily scale must be applied to the compensation divided by the number of days worked. »

Example >
A work contract is concluded with a foreign technician for 8 hours per day for June 3, 4, 5, 8, 9, 10, 21, 22, 28 and 29 for a net compensation of € 1,540 (10 days worked).

The technician thus does not work full time during a one-month or one-week period.

The withheld tax is calculated as follows :

€1,540 / 10 = € 154 per day worked.

The withheld tax owed for each day is :

• from € 0 to € 33 : € 0 ;
• from € 33 to € 94 : 61 x 15 % = € 9.15 ;
• from € 94 to € 110.88 : 16.88 x 25 % = € 4.22 ;

or a total per day worked of : € 13.37
Withheld tax is therefore € 133.70 for ten days worked.

For how to determine the basis for assessment, see the example above.

€8 deductible

Tax does not have to be withheld from salaries or paid to the tax administration if the total tax does not exceed € 8 per month (article 1671 A of the general tax code).

Example >
A foreign technician is hired for a single day of work for € 110 net.
The basis for assessment is € 79.20 (€ 110 x 72 %).
The withheld tax is (€ 79.20 - 33) x 15 % = € 6.93.
In this case, tax does not have to be withheld.

Paying withheld tax

The employer is required to pay the amount of withheld tax to the tax center where the establishment is based no later than the 15th of the month following the payment of the salary.

Payment must be accompanied by Cerfa form # 2494 (in duplicate).