French tax at source: obligations for Swiss employers as from 2019?

As from January 1st, 2019, France has introduced income tax levied at source.

The new law provides for an obligation for the employers to levy at source income tax on the salaries paid to their employees. If the levy at source is not possible, the employee shall accept automatic down-payments from his/ her bank account in favour of the French tax authorities.  

The Swiss employers having no presence in France are in principle not concerned by this new regime as they are not based in France and in general do only employ individuals working on the Swiss territory.

As far as French cross-border workers (“frontaliers”) are concerned, they are in principle subject to the system of the automatic down-payments if they perform their activities only in Switzerland (e.g. Vaud). The Swiss employer incurs no liability for the payment of income tax vis-à-vis the French tax authorities. 

Swiss employers might however incur a liability (triggering thus the levy at source of income tax) if they employ individuals working in Switzerland but also in France (e.g. weekly cross-border workers working partially in Switzerland and in France) and whose salary for the days worked on the French territory is in principle taxable in France.

Actually, based on the information available at this stage, a foreign company (irrespective of where is it based), without permanent establishment in France and which pays salaries that are taxable in France, is liable for the levy at source of income tax and shall thus register with the French tax authorities. 

We recommend to Swiss employers:

  1. to check the existence, amongst their employees, of weekly cross-border workers as defined above, i.e. employees working partially in Switzerland, but also partially in France or somewhere else, and 
  2. if applicable, to clarify their corresponding obligations vis-à-vis the French tax authorities. 

Our specialists do remain at disposal for any advice or assistance. For additional information, do not hesitate to contact us:

Denis Chahidi - T 021 552 63 63 - email: denis.chahidi[at]mercuris.legal

Laurent Kern - T 021 552 63 63 - email: laurent.kern[at]mercuris.legal

Remi Wattez - T 021 552 63 63 - email: remi.wattez[at]mercuris.legal