Direct Debit: the right questions to ask

By Arnaud Campion

The question we have when we talk about source deductions is: why? It all starts with the discrepancy between the payment of income tax and the collection of the income itself. For example, in 2017 the taxpayer paid income tax in 2016 on income that sometimes no longer corresponds at all to his or her current salary (almost 1.2 million households change their personal situation every year). So, good or bad, withholding tax?


What are the advantages of sdirect debit ?


With the withholding tax, each professional (loss of a job, retirement, resumption of training or creation of a business) or personal change (birth of a child, divorce or death) is directly taken into account in the calculation of taxes spread over 12 months, which will immediately and automatically adapt to the amount of income received.


What are the revenues teken into consideration ?


All employees and pensioners who receive a monthly income will be subject to the withholding tax, except forsavings income (dividends, interest, certain employee shareholding gains and capital gains on the disposal of securities) and capital gains (tax recovered by the notary in charge of the sale).

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When does the source sampling start?


While it was to have officially entered into force on 1 January 2018, the withholding tax was postponed to 1 January 2019 by theOrder No. 2017-1390 of 22 September 2017. The rate will therefore apply only as of the January 2019 payroll, which will be indicated on the tax notice during the summer of 2018 and calculated based on the information provided by the taxpayer in his 2018 return for his 2017 income.


Is it possible to choose a rate?


Calculated on the basis of the total household income, the rate of the levy does, however, offer a right of option to avoid possible disparities in income within the couple: the spouses may opt for either a individualized deduction rateor for a single rate for both spouses (to be elected at the time of receipt of the tax notice in August 2018).


Points to remember


- income exemption 2018


In order to avoid the taxpayer paying income tax twice in 2019 (with the current scheme and the scheme applicable from 1 January), the non-exceptional current income received in 2018 will be tax-exempt.


- tax return still mandatory


Because the amount of tax is based on the family situation (number of tax shares), income other than salary or possible tax reductions, the tax return will still have to be submitted to the tax authorities once a year.

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