Employers who are not subject to VAT, or who are subject to only part of their turnover, and who hire staff are liable for payroll tax.
Here is an information guide on how the payroll tax works, which employers are affected? what are the possible exemptions? How is the tax calculated, declared and paid?
Employers affected by the payroll tax
The payroll tax concerns employers domiciled or established:
Who are not subject to VAT in the year of payment of remuneration or which are paid for less than 90% of their turnover in the year preceding the year in which remuneration is paid. Make use of the taxfyle’s tax calculator in such case.
Example: a company employs staff in year N and achieved 100,000 euros in turnover excluding tax in year N-1, including 30,000 euros for an activity not subject to VAT. This company is therefore affected by the payroll tax for year N.
The person or entity subject to the payroll tax must be an employer, which means that it is affected by the tax only if it pays remuneration , therefore if it hires staff.
The following are particularly affected by the payroll tax: exempt vocational training providers, non-profit organizations, certain companies exercising a civil activity, etc.
Payroll tax exemptions
Several exemption systems are planned for payroll tax . Employers are not subject to tax:
- Who benefit from the VAT exemption,
- Who carry out an agricultural activity or who are individuals employing a childminder or an employee at home.
The basis for calculating the payroll tax
The determination of the basis for calculating the payroll tax depends on the extent of the VAT non-taxation.
Employers totally non-taxable at VAT
The calculation of the payroll tax for employers not subject to VAT on their entire turnover is made on the total amount of remunerations paid.
- Calculation basis = remuneration
Employers partially taxable for VAT
When the employer is subject to VAT on less than 90% of his turnover, he is liable for payroll tax only on only part of the remuneration paid :
The form to be used to carry out the educational and financial report is Cerfa n ° 10433 * 11, accessible on the Service-Public.fr site. It must be sent to the Direccte department to which the applicant belongs or by electronic declaration.
The annual filing of the educational and financial report is mandatory to benefit from the VAT exemption.
The consequences of the VAT exemption
Training providers who benefit from the VAT exemption and who hire staff are subject to payroll tax:
When they are not subject to VAT on all of their turnover during the year of payment of remuneration, or when they are subject to VAT on less than 90% of their turnover in the year preceding that of payment of remuneration.