Tax withholding for French individual taxpayers: Changes that are expected from January 1, 2023
The French Government is considering several changes to the income tax withholding on salaries and wages, pensions, and self-employment income. Understanding this new information is critical to the success of your business. Let’s see what it is all about.
Update to the standard withholding table
Effective January 1, 2023 the amount of your income tax withholding or your estimated tax will be determined using an updated standard withholding table. The situation applies to you if you elected to have your taxes withheld using the standard withholding table. There are three standard withholding tables depending on whether you’re domiciled in continental France or abroad, in Guadeloupe, La Réunion (Reunion Island) or in Martinique, in French Guiana or in Mayotte.
- Table 1: continental France or abroad
- Table 2: Guadeloupe, La Réunion (Reunion Island) or in Martinique; and
- Table 3: in French Guiana or in Mayotte.
The standard withholding rate ranges from 0% to 43%. Your standard withholding rate is determined based on your monthly taxable income. The amount of taxable income has been adjusted as follows:
- Table 1: from 0% if your monthly taxable income is less than EUR1,518 to 43% if it is at least EUR51,611
- Table 2: from 0% if your monthly taxable income is less than EUR1,741 to 43% if it is at least EUR56,568
- Table 3: from 0% if your monthly taxable income is less than EUR1,865 to 43% if it is at least EUR59,770.
Tweaks to the income tax withholding system
The Government will relax the requirements to qualify for a reduction of the amount of withholding. From January 1st, 2023, you may request a reduction of the withholding amount if the amount that you’re currently prepaying exceeds the income tax that you believe you owe for the calendar year by at least 5%. This threshold was previously 10%.
Effective January 1st, 2023, the French tax administration will deduct from your bank account your income tax withholding if you meet the following requirements:
- You’re resident of France,
- You’re employed in France by a company located abroad, and
- You don’t fall under a mandatory French social security system.
Unless otherwise indicated, taxable salaries and wages, pensions or annuities, self-employment income, profit from farming, unfurnished rental income are subject to income tax prepayment the year they have been made available to you or you earned them. There are two forms of prepayment: withholding tax and estimated tax.
- Your salaries and wages, pensions, or annuities are subject to withholding tax. The payor must withhold the tax when they’re paying you.
- Your self-employment income, profit from farming, unfurnished rental income, annuities in exchange for the acquisition of a property are subject to estimated tax payment.
The amount withheld or the estimated tax that you paid is deducted from the amount of income tax that you owe the year you make the payment. If the amount that you prepaid exceeds the amount of tax that you owe, the overpayment will be refunded to you (article 204 A of the French tax code).