Question 7484 — income tax

Summary

The withholding tax, which does not modify the rules for calculating income tax, will eliminate the one-year gap between the receipt of income and the payment of the corresponding tax. It will be carried out on the basis of a tax rate specific to each household determined by the tax administration on the basis of the latest information available to it. This rate will be equal to the ratio between, on the one hand, the tax on income and, on the other hand, the corresponding income, it being specified that in the numerator, the amount of income tax will be assessed after reduction and rebate of tax applicable in the overseas departments, but before imputation of reductions and tax credits, except for the conventional tax credit corresponding to the tax paid in a third State by virtue of a shared conventional tax right. Reductions and credits tax will be granted as today the year following that of the associated expense. In addition, the withholding tax will be spread over the twelve months of the year, on the occasion of each salary payment, while the current payment of income tax in the form of monthly installments is spread over only the first ten months of the year, which will lead to a cash flow gain for taxpayers which will limit or even completely cancel the intra-annual cash flow effect linked to not taking into account tax reductions and credits in the withholding rate. For around 50% of taxpayers claiming tax reductions and credits, withholding tax will be favorable. Furthermore, the situation of many taxpayers usually not taxed due to reductions and tax credits is preserved. Indeed, II of article 204 H of the general code taxes allows taxpayers not usually taxed due to tax reductions and credits not to be levied. This measure will benefit the approximately 1.4 million households who have a reference tax income per share of family quotient of less than €25,000. Conversely, the integration of reductions and tax credits from year N-2 or year N 1 into the tax rate applicable during year N would be counterproductive and would not increase the incentive effect of tax reductions and credits. Indeed, the integration of reductions and tax credits would not be based on a contemporary expenditure (that of year N) giving entitlement to the benefit of the tax advantage but on a historical expenditure (that of year N-2 or year N-1). It would also be difficult to read since it would lead to the tax advantage being diluted in the rate sampling. Above all, the integration of tax reductions and credits in the calculation of withholding tax would represent a very significant budgetary cost of around 11 billion euros in 2019, the year the reform came into force. Indeed, the taxpayer will benefit, in 2019, from the effect of the reductions and tax credits acquired for the year 2018 thanks to the implementation of the tax credit for the modernization of the recovery. If the tax rate integrated, in 2019, the reductions and tax credits of 2017 or 2018, this would amount to granting two vintages of tax advantages during the same year. Finally, from 2019, it is planned that a deposit of 60% will be paid no later than January 15 of the year of liquidation of the tax relating to the income of the previous year for the main reductions and tax credits. recurring (e.g. tax credits for home employment and childcare, tax reduction for dependency, tax reduction for donations, tax reduction for investments in intermediate housing, tax credit for union dues). This measure will make it possible to take into account possible sub-annual cash flow effects of the implementation of withholding tax by compared to the current method of collecting income tax, characterized by the lag of one year between the collection of income and the payment of the corresponding tax.

Machine translation from French. The official text remains authoritative.

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