the implementation of the withholding tax is a “success”, according to the Court of Auditors

The introduction of income tax withholding at source is a “success”welcomed Tuesday, January 25 the Court of Auditors. “This project appears globally to be a success, both in terms of its favorable cost-benefit ratio and its high approval rate among the population”, considers the Court of Auditors in an evaluation report of the reform. For the tax administration, the result is also positive, with a “acceleration” tax collection, even if “its impact on the overall recovery rate, after forced recovery and control, is not yet measurable”. Another advantage: the withholding tax makes the income tax “more responsive to the economic situation and more likely to carry purchasing power measures” in a short time, notes the Court, citing the reduction in the first installment decided at the end of 2019 and which could be applied from January 2020. The reform also allows the tax to “adjust as soon as the change in income occurs (whereas in the previous system, the tax was adjusted with a one-year lag)”. Finally, the Court emphasizes the relatively controlled cost of this reform, at 215 million euros.

However, the Court of Auditors notes some areas for improvement. The financial institution notes that “Misunderstandings remain regarding the new device”, evidenced by the growing number of questions addressed by taxpayers to the tax authorities. Moreover, she considers that there are “margins of progress” in the use of the modulation of the collection rate applied to taxpayers “to adapt it as precisely as possible to the evolution of their situation” professional and personal. It therefore suggests allowing the tax administration to be informed directly of information concerning changes in the personal situation of taxpayers known to other administrations.

Finally, the Court asks the government to quickly complete the verification of the exceptional income of 2018, the year of transition. Taxpayers did not pay tax on income received that year, but windfall income was supposed to be taxed.