If you are currently wondering, what exactly is withholding tax? Well, this is an operation which consists in subtracting directly from the gross salary of the taxpayer the amount of his tax or that of his compulsory deductions, such as social contributions and the General Social Contribution or CSG.

The principle of this method of tax recovery

The withholding tax concerns, in particular, assimilated income, retirement pensions and invalidity pensions. The operation is renewed all the less and its amount is calculated according to the remuneration that was declared the previous year or the year N-1.

Generally, it is the third-party payers, ie the employer or the pension funds, who directly deduct the cost of income tax from their employees while respecting the applicable rate schedule that is already provided for by French law in force.

The benefits of withholding tax for taxpayers and the tax administration

Withholding tax proves to be advantageous for both taxpayers and tax authorities. Indeed, its implementation is very simple and painless since it is only to do subtraction operations that will slightly reduce the total amount of the net salary of the taxpayer.

Thus, the latter will not have to calculate the difference between his gross salary and his net understand his payslipbecause the changes in his income are surely related to those of the tax. In other words, the idea of ​​delaying the payment of the tax will not touch his mind. From where it is often said that the withholding tax promotes the acceptability of the tax.

Lastly, taxpayers will continue to benefit from tax cuts and tax credits, but these will be the subject of specific regulations.

The constraints linked to the withholding

If these are the principle and advantages of the withholding tax, it should be noted that there are still some constraints on it. In fact, third-party payers may be required to pay additional charges before they can apply this method of tax collection. This would be disadvantageous for the company in question as well as for its profitability.

Otherwise, taxpayers may also have confidentiality problems with information about their financial and family situations, as withholding often requires disclosure of certain information.