The withholding of income tax (IR) will enter into force on 1st January 2019. In relation to the application of withholding tax, the employer in his capacity as collector, has several bonds respect.

Application of the rate transmitted by the tax administration

The employer must use the rate transmitted by the tax authorities and apply it to the income subject to income tax of each employee.

• The rate of withholding tax is made available to the employer by means of a report drawn up by the tax administration in return for each registered social declaration.
• The tax administration is the only interlocutor for the calculation of the rate of the withholding tax. If an employee wants to adjust his rate, he applies to the tax authorities directly. In all cases, the employee must not give any information to his employer.
• Finally, the rate transmitted by the tax authorities to the employer is subject to professional secrecy.

Social security contributions on earned income (9.70%) apply to the part of the gross amount of dividends that exceeds the above limit. The CSG is calculated here at the rate of 9.20%, on the gross amount of dividends less any deduction of 1.75%.

The CSG deductible on dividends

The possibility of deducting part of the CSG paid on dividends depends on the tax methods chosen.

Imposition of the flat-rate IR deduction of 12.80%

In principle, dividends bear the flat-rate income tax deduction of 12.80% and social contributions at the rate of 17.20% (global deduction of 30%). In this case, the entire CSG paid is not deductible from the overall taxable income. Make the calculations with the tax return estimator for the best understanding.

Option for the taxation of dividends at the progressive IR scale

On the other hand, the company director who opts for the taxation of income from movable capital at the progressive scale of income tax can deduct part of the CSG.

In this case,  the paid CSG is deductible from the overall taxable income up to 6.80%.

The CSG deductible on the manager’s other income from movable capital

Application of the CSG on interest and capital gains

Interest paid into a partner’s current account and capital gains are subject to social security contributions at the rate of 17.20%. The CSG is here calculated at the rate of 9.90%.

The CSG deductible on interest and capital gains on disposal

The principle is exactly the same as for dividends:

In the event that interest is taxed on the flat-rate IR deduction of 12.8%, the entire CSG paid is not deductible from the overall taxable income.

In the event of an option for the taxation of income from movable capital at the progressive IR scale, the paid CSG is deductible from the overall taxable income up to 6.80%.

The deductible CSG for micro-entrepreneurs

The micro-entrepreneurs are being applied, each month or quarter, at a flat rate of social security contributions on the amount of revenue they cashed. For them, no CSG is deductible from the overall taxable income.

How to deduct the deductible part of the paid CSG?

The deductible CSG must be set off against the overall taxable income of the year in which the contribution was paid. It is therefore deducted from the income for the year of its payment. Normally, the CSG is automatically deducted from most income. It is therefore simply necessary to verify that the pre-filled amount is correct.