How Does Withholding Tax Work in France?

The French withholding tax system, known as prélèvement à la source, allows income tax to be collected when taxable income is paid. Foreign companies employing staff in France may therefore need to deduct tax from their employees’ salaries, report the amounts collected and transfer the payments to the French tax authorities.

To comply with these requirements, employers must complete several administrative and banking formalities, particularly when their business is established outside France.

Requirements for Setting Up Withholding Tax:PASDSN

Before declaring and paying withholding tax in France, an employer generally needs to:

• Obtain a SIREN or SIRET number. Companies that have not yet been registered with the French authorities must complete the appropriate registration procedure.
• Create a professional account on impots.gouv.fr. This account provides access to the tax services required to manage withholding tax payments and banking information.
• Register a SEPA bank account. The employer must provide the details of an eligible bank account and submit a signed SEPA business-to-business (B2B) direct debit mandate to the bank.
• Appoint a tax representative when required. Foreign businesses subject to this obligation must designate an accredited representative and ensure that the representative’s responsibilities cover withholding tax.

An employer may also appoint an authorised proxy to handle certain administrative procedures on its behalf.

To identify the formalities applicable to your situation, consult the official withholding tax procedure diagram.

How to Declare and Pay Withholding Tax

Which online platform should employers use?

Net-entreprises.fr is the official platform for submitting social security declarations and managing related payments. It is also the designated channel for filing withholding tax declarations under the applicable reporting schemes.

Before submitting declarations for your company, you must register on net-entreprises.fr.

DSN or PASRAU: Which declaration applies?

The appropriate reporting system depends on the employer’s circumstances and the type of income being declared.

1. The DSN: Déclaration sociale nominative

The DSN is based on payroll information and supports the administration of employees’ social security entitlements.

French and foreign companies that pay salaries subject to French social security reporting obligations must submit their DSN through net-entreprises.fr.

This centralised system enables employers, authorised representatives and tax representatives to complete the relevant declarations and payments through a single platform.

2. PASRAU: Withholding tax for other income

PASRAU (Prélèvement à la source pour les revenus autres) is designed for income that cannot be reported through the DSN.

It is particularly relevant to employers who must apply French withholding tax to salaries but do not pay social security contributions in France.

For example, a foreign company employing workers temporarily assigned to France may fall within this category if it does not pay French social security contributions.

The employer must submit the appropriate monthly declaration through net-entreprises.fr after registering for the service.

Practical recommendation: Register on net-entreprises.fr as early as possible. This allows you to request the withholding tax rates applicable to your employees. The French Directorate General of Public Finances (DGFiP) communicates the relevant rates electronically to employers paying taxable salaries in France.

How is withholding tax paid?

Withholding tax is paid through a SEPA B2B direct debit associated with the financial section of the DSN or PASRAU declaration.

Foreign employers paying salaries taxable in France must therefore provide the required SEPA bank details in their professional account on impots.gouv.fr.

Once the bank details have been entered, the employer must print and sign the SEPA B2B mandate and send it to the bank before making the first payment. This allows the bank to register the mandate in its systems.

A rejected direct debit can result in payment incidents and applicable penalties. Employers should therefore verify their banking information and ensure that the mandate has been properly registered before submitting payments.

Withholding Tax for Foreign Companies: Frequently Asked Questions: PASDSN

Which foreign companies must collect withholding tax?

Any company paying salaries that are taxable in France must determine its withholding tax obligations and, where applicable, deduct the appropriate amounts from employees’ remuneration and transfer them to the French tax authorities.

The obligation can apply even when the employer has no permanent establishment in France. The company’s country of establishment does not, by itself, remove its French withholding tax responsibilities.

What is the purpose of withholding tax, and what must employers do?

France introduced personal income tax withholding at source on 1 January 2019.

The system was designed to bring tax payments closer to the period in which income is received. This reduces the time lag between earning income and paying the corresponding income tax, while taking changes in the taxpayer’s circumstances into account through the applicable adjustment mechanisms.

Employers act as withholding agents for salaries subject to the system. Their principal responsibilities include:

• Applying the withholding tax rate communicated electronically by the DGFiP.
• Deducting the appropriate tax from employees’ taxable remuneration.
• Reporting the amounts withheld through the relevant declaration.
• Paying the collected tax to the French Treasury within the applicable deadlines.

Under the timetable described in the original administrative guidance, the DSN was generally due on the 5th or 15th of the month following salary payment, depending on the employer’s circumstances. PASRAU declarations were generally due by the 10th of the following month.

These deadlines and reporting requirements should be checked against the current rules applicable to the employer.

For additional information, consult the French government’s withholding tax information kit, available in French.

Foreign employers should pay particular attention to registration, tax representation and the procedures required to manage their declarations from abroad.

Which tax office handles foreign companies’ withholding tax?

A foreign company without a permanent establishment in France that pays salaries taxable in France falls, according to the administrative guidance, within the remit of the Foreign Business Tax Department (Service des Impôts des Entreprises Étrangères, or SIEE), regardless of the country in which the company is established.

The contact details provided in that guidance are:

Service des Impôts des Entreprises Étrangères (SIEE)
Cellule PAS
10 rue du Centre – TSA 20011
93465 Noisy-le-Grand Cedex, France

The SIEE does not provide technical assistance for registration or declaration procedures on net-entreprises.fr.

If you encounter difficulties registering on the platform or submitting withholding tax declarations and payments, consult the Net-entreprises knowledge base.

Where a foreign company needs to appoint a tax representative for obligations other than withholding tax, or has a permanent establishment in France, the competent tax office may differ. The applicable jurisdiction should be confirmed with the French tax authorities.

Registering for Withholding Tax in France

How can a foreign employer register if it is not yet known to the French tax authorities?

A foreign employer paying salaries taxable in France must complete the appropriate registration formalities if it has not previously been registered.

This process allows the company to obtain the identification number required to establish a professional account on impots.gouv.fr and subsequently manage its withholding tax declarations and payments through net-entreprises.fr.

Where the company’s obligations in France are limited to tax matters, registration may need to be completed with the Non-Resident Tax Directorate (Direction des Impôts des Non-Résidents, or DINR).

The registration process can be initiated through the official business formalities portal.

The precise procedure depends on the company’s existing registration status and the nature of its activities in France.

What if the company already has a SIRET number?

If your company already has a valid SIRET number, you generally do not need to obtain another one solely to manage withholding tax.

Use the existing identification number to create or access your professional account on impots.gouv.fr and complete the necessary declaration and payment procedures.

Before proceeding, ensure that the company’s registration details and tax account are correctly configured for the relevant obligations.

Why Is a Professional Account on impots.gouv.fr Necessary?

A professional account on impots.gouv.fr is required to register the bank account used to pay withholding tax and manage the relevant tax services.

The bank details entered in this account must correspond to those used in the financial section of the DSN or PASRAU declaration submitted through net-entreprises.fr.

Payment is made through the SEPA B2B direct debit procedure. Ordinary bank transfers and other payment methods are not accepted for this particular process under the administrative guidance.

After entering the banking details, the employer must print and sign the SEPA B2B mandate and send it to the bank so that the mandate can be registered before payment.

The following official resources can help employers configure their professional accounts and banking information:

• Create a professional account and subscribe to services: Professional account documentation.
• Manage bank accounts: Bank account management guide.
• Access a SEPA B2B direct debit mandate template: SEPA mandate documentation.

The professional account also allows users to consult previous withholding tax declarations and payments.

Appointing a Tax Representative: PASDSN

Foreign employers may have to appoint an accredited tax representative to fulfil certain French tax obligations. The requirement, the representative’s responsibilities and the appointment procedure depend on the company’s circumstances.

When is a tax representative required?

A business established outside France may be required to appoint a representative when it is liable for certain French tax obligations, including VAT or withholding tax.

The representative undertakes to complete the relevant administrative formalities and, where applicable, pay the taxes due on behalf of the foreign company.

Certain exceptions apply. Under the rules described in the original administrative guidance, an appointment is not required in some cases involving businesses established in the European Union or in eligible European Economic Area countries, notably Iceland and Norway, where the relevant administrative cooperation and mutual assistance agreements apply.

Because the applicable exemptions depend on the company’s establishment and tax situation, foreign employers should confirm their eligibility with the French tax authorities.

Where an appointment is mandatory, the representative must be an eligible taxable entity established in France and accredited by the competent French tax administration.

The representative’s responsibilities for withholding tax must be expressly covered by the agreement between the parties.

Can an existing tax representative continue handling withholding tax?

A foreign company may generally retain its existing tax representative if the representative’s accreditation and mandate cover the relevant obligations.

However, the rules described in the administrative guidance do not permit a company to appoint separate tax representatives for different taxes where a single representative is required. The same representative may therefore handle withholding tax and other relevant tax obligations.

A representative already accredited for VAT or another tax covered by Article 302 decies of the French General Tax Code may benefit from the corresponding accreditation for withholding tax, subject to the applicable conditions.

If the company wishes to change representatives, it must end the previous appointment and complete the procedure for appointing the replacement.

What responsibilities does the tax representative have?

A foreign employer remains responsible for ensuring that its withholding tax obligations are fulfilled, even when it delegates certain tasks to a representative.

Depending on the agreement and the powers granted, the representative may:

• Prepare and submit withholding tax declarations remotely through net-entreprises.fr.
• Assist with calculating the tax to be deducted from employees’ remuneration.
• Arrange payment of the amounts withheld on behalf of the employer, where authorised.

The withholding tax must be calculated, declared and paid in accordance with the applicable rules. The arrangements for payment depend on the mandate and the company’s banking setup.

Important: A tax representative cannot use their own DSN to submit withholding tax declarations relating to employees of the foreign companies they represent. Each employer must comply with the applicable reporting requirements for its own employees.

Who can become a tax representative?

The representative must meet the eligibility conditions established by the French tax authorities. These include being an eligible taxable entity established in France, demonstrating appropriate tax compliance and obtaining the required accreditation from the competent administration.

The representative’s appointment is subject to approval where accreditation is required.

How can a foreign company appoint a tax representative?

The company must prepare a power of attorney or other required appointment document, signed by the authorised parties, in accordance with the applicable procedure.

The original administrative guidance refers to an accreditation application associated with the withholding tax procedure. The precise documentation should be confirmed with the SIEE before the application is submitted.

Which department processes applications for tax representative accreditation?

According to the original guidance, applications for accreditation relating to withholding tax must be sent to the SIEE’s withholding tax unit:

Service des Impôts des Entreprises Étrangères (SIEE)
Cellule PAS
10 rue du Centre – TSA 20011
93465 Noisy-le-Grand Cedex, France

Applicants should begin the process early to allow sufficient time for the administration to review the request.

The original guidance indicates that there is no specific application form for this procedure and that the relevant accreditation request must be sent to the administration, with the original document provided as required. The decision is communicated directly to the applicant.

Since administrative procedures can change, confirm the current submission requirements and contact details before sending original documents.

Appointing a Proxy Instead of a Tax Representative: PASDSN

Some foreign businesses are not required to appoint an accredited tax representative under the applicable rules. Nevertheless, they may choose to appoint a proxy to facilitate communication with the French tax authorities and manage administrative formalities.

A proxy acts on behalf of the company within the limits of the authority granted. The company remains responsible for its tax obligations.

The appointment generally requires a written power of attorney that meets the administration’s requirements. According to the original guidance, the document must be exclusive, written in French and signed by an authorised person. The original must be sent to the competent department when required.

A separate DSN account may be necessary. If a proxy submits DSN declarations to pay social security contributions for employees, the foreign company cannot simply include its own withholding tax declarations in the proxy’s DSN. The company must comply with the specific reporting requirements applicable to its own withholding tax obligations.

Before appointing a proxy, verify the relevant procedure with the French tax authorities and ensure that the authorisation clearly defines the tasks that may be performed on the company’s behalf.

Key Takeaways for Foreign Employers

Foreign companies paying salaries taxable in France should establish a clear process for managing withholding tax from the beginning of their employment activities.

The essential steps are to:

1. Verify the company’s French registration status and obtain the required SIRET number.
2. Create a professional account on impots.gouv.fr.
3. Register on net-entreprises.fr and identify the appropriate reporting system, DSN or PASRAU.
4. Obtain the applicable withholding tax rates and apply them to employees’ remuneration.
5. Register an eligible SEPA bank account and complete the B2B direct debit mandate.
6. Submit declarations and payments within the applicable deadlines.
7. Determine whether an accredited tax representative or an authorised proxy is necessary.

The correct procedure depends on the company’s establishment, its employees’ circumstances and its obligations in France. Consulting the competent French tax authorities or a qualified tax adviser can help prevent administrative errors, rejected payments and potential penalties.