Deduction at source: the answers to questions that you ask – L’Express

This is a huge project that the government has put on paper. The executive has passed Thursday its bill introducing the withholding tax on income. In 2018, unless a new majority decided to cancel the reform, the tax will be levied directly on French salaries every month. If the idea is understandable, this shift raises many questions, which the government has tried to respond. Here’s everything you need to know.

For the 2016 income, nothing changes?

The transition to levy the request source of the time. The reform will not be fully effective until 2018. In fact, the 2016 income will be taxed as they have been until now. The French will declare their gross annual income in spring 2017 and will pay the amount due to the step following September.

Why do we say that 2017 is a lost year?

This is just to adjust the rate of taxation. Today, a year income is taxed the following year. This scheme is upset with the withholding tax, since they will now be taxed “live”.

The government avoids the French double taxation. It was insane that taxpayers pay 2018 taxes on income from the previous year in addition to monthly withdrawals from the current year. It was therefore decided that 2017 earnings will not be taxed.

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However it should be moderate this year white concept, reading of the information reported by the Paris . If wages, pensions, property income, business profits and non-professionals will be well-exempt, it will not be the case for other sources of income, more “exceptional”. This is the case of dividends, securities gains and estate. For these gleaned revenue in 2017, their beneficiaries will, as now, declare and pay taxes related to them at once.

There will be nothing to do next year?

Please note, this is not because the 2017 revenue will not be imposed that must not be declared. Taxpayers will indeed fill the traditional tax card. The only (and enjoyable) difference is that the tax return a tax card stating “You owe XXX but you have nothing to pay.” This is also the tax that will sort out the exempted income and extraordinary income that will be taxed them in the traditional way.

If the executive has chosen to do so is that he wishes to avoid abuse. For the champions of tax optimization might be tempted to get maximum revenue in 2017 to pay less tax. Revenues from business leaders will be such intense scrutiny. If the administration realizes that the 2017 income exceeds the average income of the last three years, they will be liable to be taxed.

The special treatment of recurring income, explained above, is also intended to prevent such abuse. Le Parisien also explains that the list of revenues that are beyond the exemption is “particularly long”. For employees, the benefits of termination of an employment contract, incentive bonuses, participation, but also those inherent in a change of workplace for example will be imposed.

It will be the same for the entrepreneur, as sales of bonus shares, the gains of stock options or activity termination benefits will not be tax-exempt.

And my tax credit?

This is one of the aspects of the transition to levy the most delicate source to manage. Today, donations to the associations are exempt charged to the income tax of 66% or even 75%. It also applies to expenses incurred to employ a homeworker or to keep her child.

How to maintain these tax credits on a white year? Christian Eckert announced that “taxpayers will benefit in 2018″. In other words, the tax credits will continue to apply under the current system, with a lag of year. A lesser evil for the government.