Sunday, May 27, 2018

The New French System of PAYE

On January 1, 2019, the revolution that is PAYE will hit French taxpayers. Up until now, we paid tax on income from the previous year's tax declaration. The main problem with this is that it is inflexible in the case of major life changes, like redundancy.

So from next year, if something changes, we will be able to reflect this immediately in our tax payments. All good.

Except that, and there's always an except that, it's not all good. Last year, I enjoyed the services of a cleaner. She was employed through a service agency and thus made social payment contributions, got holiday pay, sick leave and all other advantages of the legally employed. I got half the money I paid to the agency directly taken off my taxes.

It's one of those French tax niches that are widely popular, and that the government have been trying to reduce. It meant that instead of paying, for example, 200EUR/month for the cleaner, with the tax relief I was effectively paying 100EUR because my monthly tax direct debit was 100EUR/month cheaper than it would have been.

Now though, with the new system, the reimbursement will not occur immediately, but will come as a lump sum twice a year. The result of this is that I will probably never be able to have a cleaner again.

Why? Well, if I pay, for example, 400EUR/month in tax, I will not be able to add a further 200EUR to pay for the cleaner. It's just too much. Even I get a reimbursement in a lump sum, the monthly total is just too high.

So does this mean that the government has found a way to kill off the niche? By making it impossible for people like me who are not rich enough to pay full taxes AND a cleaner, or gardener, or any other regular personal service?

I should think the people employed in the previously flourishing personal services industry must be horrified at the (intended?) potential consequences of this nasty little tax manoeuvre. And it makes the tax system a system of finance rather than economy. Obviously it gives the government the opportunity to use the tax income before paying out on the 'credit impots', but doesn't take into consideration the probability that the personal services industry will take a huge knock, and jobs will be at risk. Jobs done by those who are often in a vulnerable situation.

So thanks Macron. WBanker extraordinaire.


  1. As usual, something not thought through...or, just as likely, something to shrug off as unfortunate for those affected but not important.
    Macron's France...and I thought Hollande was the pits...

    1. I know! They must have done some risk analysis on the potential outcomes!

    2. Yes...let us see, risk to the rich, zero...O.K., go ahead.


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