Personal Income Tax: Modifications to the prelevement a la source (PAS) planned for 2023
To briefly summarise, the PAS (Withholding Tax on Wages) charges tax on income the same year it is earned. If you are employed or retired, the tax is collected by your employer or pension fund. If you are self-employed, a farmer, or have property income, then the tax would be paid through instalments collected directly by the tax authorities.
The tax rate is determined by the tax department, and is modified each year in accordance with the tax declarations carried out in spring. The rate can change depending on your situation: if you are married, you can carry out a joint declaration and the same rate will be applied to your income, or you can continue to have an individualised option. If you do not wish to communicate your personal rate to your employer, they will apply a neutral rate, which is generally higher than your personal one.
Due to inflation, the Finance Bill for 2023 allows for a 5.4% increase in the margins of the 2022 personal income tax scale. There would also be an increase in the neutral rate of the PAS in 2023. From now on, certain incomes from salaried activities in France paid by a foreign employer would also be subject to the PAS.
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