How the withholding tax works
To complete the withholding tax procedure, you must:
- Have a SIREN/SIRET number. Otherwise, you must first sign up for one ;
- Have a professional account at impots.gouv.fr ;
- Have a bank account in the SEPA area and have sent your bank a signed mandate ;
- Appoint a tax representative when you are legally obligated to do so, and expand his or her remit to the withholding tax.
You can be represented by a proxy, and expand his or her remit to the withholding tax.
To know what kind of formalities you need to accomplish, you can consult the simplified diagram.
How to file and pay the withholding tax
Net-entreprises.fr is the official online site for social security declarations. It is made available to companies by all of France's social welfare agencies so that they can file and pay their social security-related contributions online.
Net-entreprises.fr is also the only channel for filing withholding tax statements.
How to file online: DSN or PASRAU?
The Single Staff Reporting Statement (DSN) is based on payroll data in the broadest sense of the term, and is used to secure social security benefits for your employees. Any company, French or foreign, that pays social security contributions in France must file the DSN via net-entreprises.fr.
Thanks to this single point of contact, all companies, and their proxies or tax representatives, can file and pay all of their social contributions. Before filing for your company, however, you must first sign up.
For income that cannot be included in the DSN, the PASRAU scheme (Withholding Tax for Other Income) allows companies liable for the withholding tax but that do not pay social security contributions in France to transmit data required to set up the withholding tax for their employees who are employed in France. This is done by filing a monthly declaration on net-entreprises.fr after you have signed up. This is the case for companies employing staff seconded to France that do not pay social security contributions in France.
Please create your account on net-entreprises.fr as soon as you can. This will allow you to request the withholding rates for your employees. The Public Finances Directorate General (DGFiP) will, by electronic means, provide companies paying taxable salaries in France with the tax rate to be applied to income liable for withholding tax.
How to pay over the withholding tax?
The withholding tax is paid over by means of a SEPA B2B direct debit entered in the financial section of the DSN or PASRAU declaration.
As a result, employers established abroad paying taxable salaries in France must have a bank account in the SEPA area. This bank account must be the one that you registered in your professional account at impots.gouv.fr.
Once you have entered your banking details, you must print and sign the SEPA B2B mandate and send it to your bank before paying any withholding tax, so that your details can be recorded in your bank's computer system. Any payment incident will result in the SEPA B2B direct debit being rejected and penalties being applied.
The withholding tax for foreign companies – FAQ
Which foreign companies must pay the withholding tax?
All companies that pay taxable salaries in France must collect and pay over the withholding tax.
What is the withholding tax and what are my obligations?
The withholding tax on personal income is set to enter into force on 1 January 2019. Its purpose is to bring the tax collection for a given year into line with the taxpayer's actual situation for that year (income, changes in situation), and without changing the calculation rules. The goal is to eliminate the one-year gap between the earning of income and the tax paid on it.
From January onwards, companies must collect the withholding tax along with social security contributions. They must apply a withholding tax rate to the amounts they pay to each income beneficiary (wages, etc.). This tax rate is sent to them electronically by the DGFiP.
The withholding tax collected must be declared each month using the Single Staff Reporting Statement (DSN), which must be filed by the 5th or 15th of the month following payment of the income, or via the PASRAU scheme (Withholding Tax for Other Income), which must be filed by the 10th of the month following payment of the income.
To learn more: Tax Collector Kit (in French only)
However, there are certain specificities that foreign companies need to be aware of in terms of registration, tax representation and management.
Which department oversees the withholding tax for foreign companies?
If you are a foreign company without a permanent establishment in France and you are liable for withholding tax (i.e. you pay salaries that are taxable in France), regardless of where you are established abroad, the department with exclusive jurisdiction is the Foreign Business Tax Department, whose details are as follows:
Service des Impôts des Entreprises Étrangères (SIEE)
10 rue du centre – TSA 20011
93465 Noisy-le-Grand cedex
The SIEE will not be able to help you accomplish formalities on net-entreprises.fr.
If you are having difficulty signing up with net-entreprises.fr or if you have questions about filing and paying the withholding tax, please go to the net-entreprises.fr website, where you will find the answers you need (under « Accédez à la base de connaissances »).
Please note: in the event that foreign companies need to appoint a tax representative without being liable for the withholding tax or have a permanent establishment in France, then the local Business Tax Department (SIEE) retains jurisdiction.
Registering for the withholding tax
If I am not yet known to the French tax authorities, how and under what circumstances do I register?
If you are an employer established abroad and you pay taxable salaries in France, you must register in France if you are not yet known to the French tax authorities. This formality will allow you to obtain a SIRET number so that you can create a professional account on impots.gouv.fr, and then file and pay the withholding tax via the net-entreprises.fr website.
If you have no obligations in France other than tax-related ones, then you must register your company with the Non-Resident Tax Directorate (DINR).
To complete your registration, you must go to the site : formalites.entreprises.gouv.fr.
If I already have a SIRET number, do I need another registration number? What are the tax formalities to complete?
If you already have a SIRET number, you do not need to take any further steps. Please use the SIRET number that has been assigned to you to create and access your professional account at impots.gouv.fr, and to file and pay the withholding tax.
You must have a professional account at the impots.gouv.fr website to be able to enter the details of the bank account that will be used to pay over the withholding tax. You will enter the details of this account into the payroll software section on the financial portion of your DSN or PASRAU declaration that you file on the net-entreprises.fr website.
The bank account must be in SEPA format, since only a SEPA B2B direct debit can be used to pay the withholding tax, the same as for any other business tax.
Bank transfers and other means of payment are not accepted means for paying withholding tax.
Please note: Once you have entered your banking details, you must print and sign the SEPA B2B mandate and send it to your bank before paying any withholding tax, so that your details can be recorded in your bank's computer system.
To help you set up your professional account in basic mode, please refer to:
- Documentation available on the impots.gouv.fr website, and the tutorial "Creating my secure professional account in basic mode"
- The following information sheets (english version coming soon):
Within your account, you can also consult previous withholding tax filings and payments.
Is it mandatory? Do I need a new tax representative? What does it mean for the tax representative to be unique? What does he or she do? Who can be appointed a tax representative? How do I appoint one?
When do I need to appoint a tax representative?
When a person not established in France is liable for certain tax obligations (VAT, withholding tax, etc.), he or she is required to have an accredited representative who agrees to accomplish the various formalities incumbent on that person and, in the case of taxable transactions, to pay the tax in his or her stead.
EXCEPTION, you do not need to appoint a tax representative if you reside in:
- The European Union
- a European Economic Area (EEA) country that has entered into an administrative assistance agreement with France to prevent tax evasion and avoidance, as well as a mutual assistance agreement concerning the recovery of claims (Iceland and Norway)
The representative must be a taxpayer established in France and must be accredited by the French tax authorities. He or she must agree, on your behalf, to complete formalities relating to the withholding tax and, where applicable, to pay over the debited sums on your behalf. These commitments must be explicitly included in the contractual agreement signed by both parties.
I already have a tax representative. Do I need to appoint a new one?
You are free to keep your current tax representative or appoint a new one. However, you cannot have more than one tax representative at the same time (e.g. one for VAT and another for withholding tax). You can only have one tax representative. The same tax representative fulfils your obligations in terms of withholding tax as well as those relating to any other taxes you may owe.
If your current representative is already involved in dealing with withholding tax formalities, then you have nothing to do. As it turns out, a representative already accredited for VAT, for example, or any other tax referred to in Article 302 decies of the French General Tax Code, is automatically accredited to deal with the withholding tax.
If you wish to appoint a new representative, then you must dismiss the former representative and appoint a new one.
What formalities does the tax representative accomplish on my behalf?
As a foreign employer, you are obliged to:
- Complete and remotely file your withholding tax statements on the net-entreprises.fr website, but you may also instruct the tax representative to do so
- Calculate and debit the withholding tax from your employees' wages and pay it over to the French government.
The withholding tax is thus debited from your account. Nevertheless, a tax representative can, depending on the mandate he or she has received, pay the withholding taxes on your behalf.
A tax representative may under no circumstances use his or her own Single Staff Reporting Statement (DSN) to file the withholding tax statements concerning employees of the companies he or she represents.
Who can be appointed a tax representative?
The tax representative must be a French taxable company known as such to the French tax authorities and must be impeccably honest in matters of taxation (as demonstrated by being accredited by the Foreign Business Tax Department of the Non-Resident Tax Directorate).
You need to provide an original power of attorney signed by both parties (Sample accreditation application for the withholding tax on this page)
I want to be accredited as a tax representative, which department is responsible for processing my application?
Regardless of where the tax representative does business, the application for accreditation on behalf of a company liable for the withholding tax must be addressed to the Foreign Business Tax Department at the following address:
Service des Impôts des Entreprises Étrangères (SIEE)
10 rue du centre – TSA 20011
93465 Noisy-le-Grand cedex
To ensure that your application is processed in a timely manner, please start the process as soon as possible.
There is no particular form : you have to send a mail by attaching the accreditation. The original one must be sent to the Foreign Business Tax Department. The agreement or the refusal will be directly notify by the administration to the tax representative.
Businesses based in another EU Member State or in certain countries outside the European Union are not obliged to appoint a tax representative in France. To ensure a smooth relationship with the French authorities, you could, however, appoint a proxy who will carry out the formalities on your behalf and under your responsibility.
In this case, you should execute a power of attorney and send the original or copy to the Foreign Business Tax Department.
This power of attorney must be exclusive, written in French, signed by a person authorised.
If the proxy uses a DSN to pay social security contributions for employees, the company which he or she represents may not declare and pay its withholding tax via this DSN but must have its own account on net- entreprises.fr.
MAJ DINR le 16/10/2023