1. How do I set up source tax calculations for France?
  2. About this Playbook

About this Playbook

Use this playbook to understand tax calculations for French payroll.

French legal employers have the obligation of calculating, retaining and declaring the source tax due by employees. The tax rate to apply can either come directly from tax authorities (DGFip) or in absence of such rate, it will be estimated during the payroll calculation (neutral rate) starting from the monthly income.

There are two kinds of tax deductions based on the residency status of the payees:

Calculated tax amounts and the parameters and criteria that have been used to calculate them are then communicated with a monthly frequency to the tax authorities via the monthly DSN report.

In the course of the year following the one in which the tax was retained, the payee’s due tax will be recalculated by tax authorities and the amount result of this reconciliation calculation will be settled directly between the payee and the tax authorities.

The tax year in France corresponds to the calendar year, from January 1 to December 31.

Features of Tax Calculation

This section will list the features related to tax calculation which are supported by the product:

  • Upload of Tax Rates file (Fr: CRM nominatif) provided by tax authorities as a response to the monthly DSN declaration.
  • Parsing of the Tax Rates file (Fr: CRM nominatif) in order to assign to each payee both the current month rate and the future month’s rate if these are present.
  • Visualization of the uploaded rates in the UI via a dedicated calculation card
  • Determination of the rate to use in the current month calculation among the ones that have been uploaded for the payee.
  • Calculation of a neutral rate to be used in case no communicated rate was made available in the last two months.
  • Calculation of the tax deduction (Fr: Prélèvement à la Source) starting from the above determined rate.
  • Calculation of rate and tax deduction for payees working in France and resident abroad (Fr: Retenue à la Source).
  • Exemption from tax calculation for payees working in France and resident abroad not liable to taxes.
  • Processing and storing of information related to tax calculation that needs to be reported in DSN report.