The areas of the French loi de finances pour 2018 which affect non-residents and which few are addressing
January 28th 2018
The main issues addressed in the French loi de finances pour
2018 appear at first glance to be purely domestic.
Have you been working on the basis that the French have only
introduced Pay As You Earn internally?
In fact the system introduced is far broader than that. It
is not limited to salaries and remuneration of that ilke.
It combines a form of flat rate tax on income, by a prélèvement
paid up front, which is then balanced out by the following year's
declaration. It is not a régime with which the current leader
of the British opposition would find himself at home in.
It is however possible to opt for the present régime of paying
income tax in the following year at the current progressive rates,
but that option has to be exercised in writing on a
The system is generalised payments in advance on income tax by
way of withholding which are likely to distort the administration
of payments made to non-residents, not only because the payers will
be introducing the new systems, and taking taxes, but aso because
the new income tax prélèvements are imbued with a facilty for
taking prélèvements sociaux at the same time. The prélèvement
social is a hybrid which the Court of Justice of the European Union
has held to be a social security or natonal insurance contribution.
That should not be levied on EU residents contributing to a
different European social security régime. The Social Security
Regulations in force in the EU only admit one social security
agency per person.
With Brexit only a year away, any UK resident receiving
income from France needs to consider their position very carefully,
as the transitional measures leading to any form of separate
agreement with the EU will have an impact upon such flows.
The same type of analysis needs to be made of income and
payments from other EU states.