Who this is for
Finance, payroll and HR teams at companies outside France — particularly the United States — with an employee working in France and no French entity. It answers one question: whether you have to run French payroll withholding for that employee, and what happens if you have not been.
⚠ Disclaimer. General information, current at the date of publication. It is not advice for a specific assignment: individual circumstances, the France–US tax treaty and the France–US social security agreement change the answer. Speak to us before acting.
Contents
- The short answer
- Who is taxable in France on salary in the first place
- How French payroll withholding works
- What the 2023 simplified regime actually covers
- A decision tree
- What the obligation involves
- The bigger obligation sits next to it
- If you have not been running French payroll withholding
- The wider exposure
The short answer
Often, yes — and the exception is narrower than most articles say. France collects income tax at source, and the withholding obligation can reach employers established outside France whose employees are taxable in France. A 2023 simplification replaces withholding with employee-paid instalments for some foreign employers, but it applies only where the employee is not in French social security and works in France only occasionally. An employee who has moved to France meets neither condition.
Who is taxable in France on salary in the first place
French tax residents are taxable in France on their worldwide salary. Non-residents are taxable in France only on pay for work physically performed in France, subject to the treaty — which, in the France–US treaty as in most, leaves short stays taxed at home where the employee is in France for fewer than 183 days in the period, is paid by an employer outside France and the cost is not borne by a French establishment. The withholding question therefore starts with a residence and workday analysis: an employee who has moved to France is resident and fully in scope; an employee who visits for a week is usually not.
Two rules follow. First, keep a workday record for anyone who spends time in France — it is the evidence on which every subsequent answer rests. Second, do not assume that a treaty exemption for the employee removes the employer’s registration questions; they are analysed separately.
How French payroll withholding works
Since 2019 French income tax on salaries is collected through prélèvement à la source: the employer applies a rate supplied by the tax administration to each payslip and remits the tax monthly. How it is declared depends on whether the employee is in French social security. Where they are, it goes through the monthly social declaration (DSN). Where there are no French social security contributions — the position of an employee kept in their home system under a certificate of coverage — the withholding is declared through the PASRAU return instead, which exists precisely for payers who do not file a DSN. For an employer with French payroll this is routine. For an employer with no French presence at all, it means registering with the French tax office for foreign businesses, obtaining rates, and filing a monthly withholding return for a single employee — which is why the question comes up.
What the 2023 simplified regime actually covers
Article 3 of the 2023 Finance Act removed the withholding obligation for certain foreign employers and replaced it with instalments that the employee pays directly. The French tax administration describes the scope as follows.
| Condition | What it means in practice |
|---|---|
| Employer established in the EU, the EEA, or a state with both an administrative-assistance and a recovery-assistance agreement with France | The administration’s own summary names the EU member states, Iceland, Norway and the United Kingdom. Whether a US employer qualifies turns on the France–US treaty’s assistance provisions and is a question for your adviser, not an assumption. |
| Employee is French tax resident | The employee lives in France for tax purposes. |
| Employee is not affiliated to French mandatory social security | They remain in their home-country system — typically under a certificate of coverage. |
| Activity in France is occasional and not substantial, including remote work | The administration’s wording: the employee works in the employer’s country and France, and the French part is not the main part. |
Read the last two conditions together
An employee who has relocated to France and works there full-time is, in the ordinary case, affiliated to French social security and working in France substantially. Both conditions fail. The simplified regime is designed for the cross-border commuter and the occasional remote day — not for the relocated employee. For that employee, the full withholding obligation stands.
Even where the simplified regime applies, the employer still has to report the taxable remuneration to the French administration annually, and the employee has to set up their own instalments — the obligation moves; it does not disappear.
A decision tree
- Is the employee French tax resident, or otherwise taxable in France on the salary? If no, French withholding is not the issue. If yes, continue.
- Is the employee affiliated to French social security? If yes — as almost every relocated employee is — the simplified regime is unavailable. You are in the withholding obligation.
- Is the work in France occasional and non-substantial? If the employee lives and works in France, no. Withholding obligation.
- Is the employer established in the EU/EEA/UK, or in a state that qualifies through its agreements with France? Only if all the above are answered favourably does this become the deciding question — and for a US employer it needs a specific answer.
What the obligation involves
- Registration with the French tax office responsible for foreign businesses, which results in a French SIRET number being issued to the employer — the identifier every subsequent filing is made under
- Obtaining the withholding rate for each employee from the administration
- Applying it to French-taxable pay and filing the monthly withholding return — PASRAU where the employee is outside French social security, otherwise the DSN
- Remitting the tax monthly
- Where the employee is in French social security, the social contributions and their declarations are a separate and larger obligation, usually run through a French payroll provider
Most foreign employers in this position appoint a French payroll provider or a representative rather than run this themselves. The cost is modest against the alternative.
The bigger obligation sits next to it
Income tax withholding is the smaller of the two payroll obligations a relocated employee creates. Where the employee is affiliated to French social security — the normal case once someone lives and works in France without a certificate keeping them in their home system — the employer owes French social contributions, which are a materially larger share of payroll cost, and must file the monthly social declaration. That obligation exists whether or not the employer has a French entity, and it is the one that changes the economics of the arrangement. See our guide to payroll and HR for foreign companies in France.
If you have not been running French payroll withholding
The position is correctable, and it is far better corrected on your initiative than discovered. What matters is sequence: establish the employee’s residence date, the social security position and the period of exposure first, then approach registration — and the SIRET that comes with it — with a complete picture. Take advice before filing anything — the order of steps affects the outcome.
The wider exposure
Withholding is the employee-side question. An employee working from France for a foreign company can also raise the company-side question of a permanent establishment — a taxable presence of the business itself in France. That is a separate analysis with separate consequences, covered in our guide to global mobility for employers. Do not let the payroll question close the file on the company question.
How Expand CPA can help
We establish whether the obligation applies to your employee, handle registration and the monthly filings through our French payroll practice, and — because we are also a US tax firm — reconcile the French withholding with the employee’s US position so nothing is taxed twice without relief. Employers outside the EU are exactly the cases where the two sides have to be looked at together.
Frequently asked questions
We have no French entity. Can France really require us to withhold?
Yes. French withholding at source reaches employers established outside France whose employees are taxable in France. Having no entity does not remove the obligation; it changes how you register for it.
Does the 2023 simplified regime apply to a US company?
Only if the US qualifies as a state with the required assistance agreements — a question for your adviser — and only for an employee outside French social security whose work in France is occasional. A relocated full-time employee does not qualify regardless of the employer’s country.
Our employee works remotely from France a few weeks a year. Is that different?
Potentially, yes. Occasional, non-substantial work in France by an employee who remains in their home social security system is the case the simplified regime was written for.
What does withholding involve for a single employee?
Registration with the foreign-business tax office, which issues a French SIRET number; obtaining the employee’s rate; a monthly withholding return — PASRAU where there are no French social security contributions, otherwise the DSN — and monthly remittance. Most employers use a French payroll provider.
We have had someone in France for two years and never withheld. What now?
It is correctable. Establish the residence date, social security position and exposure period first, then register with a complete picture. Take advice before filing anything.
An employee in France and no French entity?
We will tell you whether the obligation applies, and run it if it does. Our global mobility services for employers.
