France Delays Implementation of New Tax Withholding System for One Year

Michael Jaffe, Christophe Flaicher, PhD, and Bertrand Hermant, PhD, LLM
Published Date:
Sep 1, 2017

The below is an update to the piece “France: Changes to the Tax Collection System and Other Current Tax Developments,” originally published in the May TaxStringer.

In our May 2017 article, we mentioned that the implementation of a current year “pay-as-you-earn” (PAYE) withholding tax fell during an election year—and that the new president could get cold feet when confronted with this major change to the tax collection process. Indeed, after the election of Emmanuel Macron, the administration has decided to delay implementation for one year.   

Following a ministerial communiqué on June 7, 2017 and backing from the High Court (“Conseil d’Etat”), the new effective date for the change is scheduled for Jan. 1, 2019 instead of 2018. Accordingly, the “lost tax year”—which will give rise to a tax credit that essentially cancels out tax on all but “exceptional income”—will be 2018 instead of 2017. 

The government decided to postpone implementation for one year to facilitate implementation without altering the underlying objectives. It will conduct a review, including participation on an experimental basis and an audit of the measures by an outside firm. 

Some expressed concern regarding the cost of implementing the new withholding tax—especially through the use of third-party service providers—and the impact that this could have on competition and social relations. After the review, the government will be in a better position to address those concerns and eventually adjust to this monumental change.

One should expect further updates regarding the scheduled changes in the fall of 2017.

jaffeMichael Jaffe
 is a partner in the tax law department of Taylor Wessing Paris. He has over 30 years experience advising companies in their international tax and compensation and benefits issues.  Michael is also an expert in the legal issues related to remuneration packages and international mobility. He is in charge of dealing internationally with the “Private Clients” industry of the firm. A member of the international US group, Michael is principally based in New York where he supports French and other Taylor Wessing clients in the US market. Michael started his career in Los Angeles in 1981 before moving to PwC in New York in 1984 and then joining the French law firm structure in Paris in 1986, where he remained until June 2016. Since 2013, he was the Managing Partner France and Francophone Africa of PWC Société d’Avocats (ex-Landwell). Michael joined Taylor Wessing in October 2016. He is also a member of the Paris, New York and California bars. He can be reached at

 Flaicher, PhD, specializes in all aspects of taxation. His extensive experience includes international tax planning and restructuring (including  transfer pricing and streamlining studies), merger and acquisition, and assistance to tax audit and local taxes optimization. He is also involved in all incentive employee schemes. Christophe acts primarily for major Technology Press and Market information French based and international groups as well as for Japanese clients. In 1995, he joined  the Media Entertainment and Technology department of one of the "Big 4" firms before creating Taylor Wessing in France as founder since 2003. He can be reached at

HermantBertrand Hermant, PhD, LLM,
 concentrates on national and international tax advice, deal negotiations, structuring, tax optimization and tax litigation. His experience includes tax, corporate and financial aspects of French and international structures and deals. His practice also includes working with French and foreign companies to implement employee incentives plans in France (stock options, restricted stock units). He acts for both, national and international clients ranging from individuals and/or medium to large companies. Bertrand also advises entrepreneurs, business owners, fund managers and high net worth families on developing and implementing innovative income, capital gains and inheritance tax planning schemes. Bertrand worked for various firms in New York and Paris before joining Taylor Wessing in December 2008.  Bertrand is a member of the Paris and New York bar and can be reached at

Views expressed in articles published in Tax Stringer are the authors' only and are not to be attributed to the publication, its editors, the NYSSCPA or FAE, or their directors, officers, or employees, unless expressly so stated. Articles contain information believed by the authors to be accurate, but the publisher, editors and authors are not engaged in redering legal, accounting or other professional services. If specific professional advice or assistance is required, the services of a competent professional should be sought.