Question 8714 — income tax

Summary

Regarding the new burden that withholding tax imposes on businesses, the audit report from the General Inspectorate of Finance (IGF) sent to Parliament on October 10, 2017 on the conditions for implementing withholding tax objectifies and puts this burden into perspective. The IGF mission thus estimates that the financial burden would be between €310 and €420 million for companies and not €1.2 billion. as previously mentioned in a report produced by a private firm. More than 70% of this cost comes from the use of internal resources which would be mobilized for software configuration, user training and communication with employees. Indeed, the implementation of the withholding tax is based on the nominative social declaration which is an existing and now proven declaration vector. THE Companies will also benefit from a cash effect since they will only remit the withholding tax they have collected after a period of several days. Companies with fewer than fifty employees will make this payment on the 15th of the month following the deduction. The mission goes on to specify that this burden can nevertheless be mitigated by an adequate communication plan from the administration. This plan has started in spring 2018 with the income declaration campaign. Online declarants were able to view their withholding rate and exercise their options for individualizing or not transmitting their rate. All taxpayers will learn their withholding rate in summer 2018 upon receipt of their tax notice. The IGF report also includes proposals to simplify the modalities and management rules for collectors. They aim in particular to strengthen the system of support for employers by the administration, in particular thanks to a starter kit for the attention of all collectors which has been online on the site impots.gouv.fr since March 5, 2018. This kit has been the subject of a consultation with the stakeholders of the withholding tax and is scalable according to requests for adaptation which emerge as it spreads. For all of these reasons, it is not envisaged that the Government will engage in a compensation process for the benefit of companies. Regarding the sanctions applicable to companies, the Minister of Action and Public Accounts announced on April 27, 2018 the abandonment of the criminal sanction specifically provided for by the general tax code relating to breaches of secrecy professional in the context of withholding tax. This principle is currently being translated into legislation in the bill for a State serving a society of trust. More broadly, regarding the question of sanctions applicable to businesses, the tax administration will demonstrate moderation and discernment in their application, as with any entry into a major reform. In this context, the sanctions which will have been applied will be published on the impots.gouv.fr website in order to demonstrate that they will be taken to repress only truly reprehensible behavior. Regarding privacy issues, the only information that will be transmitted to the employer will be the withholding tax rate of its employee, which is between 0% and 10% for 90% of tax households. This rate is not indicative in itself of a particular tax situation and can cover a multitude of family situations and income types. This being said, the legislator has provided for the possibility for taxpayers to opt for individualization of their rate, thus allowing married or civil partnership couples in which there is a significant disparity in income not to reveal the household rate to the employer of the person with the lowest income. Taxpayers who wish can finally opt not to transmit their personalized rate to their employer. It is then a non-personalized rate which is applied automatically, resulting from a scale provided for by the general tax code and determined by the payroll software according to the income paid. When the employer does not receive a personalized rate, he does not know the reason and therefore cannot assume that this non-transmission is the consequence of an option taken by its employee. Finally, thanks to the one-year postponement of the entry into force of the withholding tax, the Government has implemented several simplification measures, including the simplification of the rules for applying the non-personalized rate scale or the reduction in the minimum amount of sanction applicable to collectors from 500 euros to 250 euros.

Machine translation from French. The official text remains authoritative.

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