Withholding taxes: what impact on HR?

Withholding tax: what impact on companies?

In 2019, companies will be responsible for collecting the tax on the salaries of their employees themselves. This tax reform is causing upheaval for payroll and human resources managers. It could also have an impact on the relationship between the employee and his employer.

Businesses: what impact on payroll and human resources management?

The consequences of the new system of withholding tax should be visible to employees from January 2019. On this date, the latter will receive a pay slip from which the amount of their tax will be deducted.

The consequences for HR services and some payroll management are numerous: data exchanges and monthly repayment of the levy to the tax administration (DGFIP), procedures to guarantee data confidentiality, impacts on payroll mechanisms (management of down payments, overpayments, etc.).

A need for communication and anticipation for the employer

The system is designed so that the employee’s monthly salary is not reduced, net of withholding tax. However, in the event of incorrect personal data, the tax authorities will apply a “non-personalized rate”. Calculated on the basis of a single person without children, this rate could have significant consequences on the net payable.

In the event of a problem, employers could find themselves called into question by the employees, but also by the tax administration (DGFIP), while they will only apply a rate of levy transmitted by the latter.

To avoid possible tensions, it is essential that the employer anticipates the reform as soon as possible. He will have to inform the employees, reassure them about the confidentiality of the withholding tax and remind them that the tax administration remains their main interlocutor.

Thanks to effective communication, payroll managers will be able to spend less time answering employee questions and thus avoid increased activity. To be able to respond effectively to questions from employees, the teams of the Human Resource Management and some paid should also be sufficiently trained.


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