France Adopts Withholding Tax for Personal Income

As of 1 January 2019, France introduced a significant shift in its personal income tax system by adopting a withholding tax model, bringing it in line with many other European countries.

Under the previous system, personal income tax was declared and paid the year after the income was received. With the new system, tax is now collected at the time the income is earned, offering a more immediate and accurate reflection of the taxpayer’s financial situation.

Here’s how it works:

• For employment income, tax is withheld directly by the employer and deducted from the salary.

• For real estate income, taxpayers make monthly or quarterly advance payments based on the previous year’s income.

This change ensures that tax payments better align with a person’s current income and circumstances — improving responsiveness and simplifying annual declarations.

France’s move reflects a broader trend across Europe to modernise tax systems for both individuals and administrations.