Understanding the functioning of the withholding tax

Often referred to in the media in recent weeks, for best accountancy training Best school of accountancy In Lahore. the withholding tax is the new method of collecting the income tax that will soon adopt the French State.

Withholding tax will be for the State to have the amount of tax deducted by a third-party payer before the taxpayers are paid taxable income. For the employees, it is the employer who will be responsible for collecting the tax directly on the income which means that they will receive less money but also that they will return less to the State.

As is already the case for social security contributions, the amount deducted for income tax will be the subject of a line on the payroll.

A reform that will affect all households

After a few discussions, it is ultimately all French people who are affected by this method of collection since wages, replacement income (retirement, unemployment, etc.) or land revenues will be subject to withholding tax. Source.

As for the rate of levy, it will obviously be personalized according to the financial and family situation of the households. The latter will receive information on the rate at which they will be submitted for the first eight months of 2018 during the second half of 2017.

The rate will then be updated each year in September on the basis of the income tax return completed by the taxpayers, since the latter will not disappear contrary to what has sometimes been said...

The advantages of this new method of recovery

For those wondering if this reform is timely, it is worth noting that it has two major advantages:

It simplifies the life of the taxpayer since the steps are now taken by the third-party payer

It eliminates the one-year lag between revenue collection and tax payment and should therefore facilitate budgetary management of households.