• Date: 3/5/2013

France – Major Changes in the Collection of Tax on Passive Income 

FIDAL Direction Internationale in France reports that the French government introduced a compulsory levy (so-called “Prélèvement Obligatoire Non Libératoire”(PONL)) to avoid an "air pocket" of many millions of euros in the collection of its tax revenue. This is further to the demise of the optional flat-rate system in full discharge of the final taxpayer liability (Prélèvement Forfaitaire Libértoire” (PFL)). Therefore, dividends or interest paid, as from January 1, 2013, are subject to income tax at progressive income tax rates (with the new marginal rate of 45 percent). However, they are subject to an advance tax withheld at source (21 percent for dividends, 24 percent for interest) that will be creditable against the final personal income tax liability.

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