After paying into a retirement savings plan, adjust the withholding tax

In the event of payment into a retirement savings plan (PER), the premiums are deductible from income tax. In this case, the tax authorities confirm the possibility of adjusting the rate of withholding tax upwards or downwards. Explanations.

If you opened a retirement savings plan (PER), the sums paid give rise to a tax deduction. This advantage can have a direct impact on the withholding tax rate used.

Modulation of the levy rate

the withholding tax rate on income tax (IR) can be modified during the year, at any time, either in the event of a change in family or marital situation, or in the event of an increase or decrease in income of more than 10% (1). Between January and August, the installment rate applied is calculated on the income received in year n-2. Between September and December, it is calculated on the basis of income for year n-1. But in order to match the tax with the income actually received and to avoid too large an advance to the tax authorities, the latter accepts a change in the rate, which will be taken into account within an average period of 1 to 3 months. . But for the revised levy rate to be taken into account from 2023, the change must be notified to the administration before 5 December.

PER premiums are eligible

If the information on the administration’s website (economie.gouv.fr) only mentions cases of significant change in income or a change in family situation (birth, marriage, PACS, death of spouse, retirement, etc. .) to request a modulation of the rate, the tax authorities confirm that this request is also possible in the event of deductible premium payments on a PER, since these premiums are deducted from the taxpayer’s overall income. As deductible charges, they reduce the tax base for income tax. The withholding tax rate can then be adapted accordingly at the request of the taxpayer to limit the amount of tax to be advanced monthly. In the event of discounting applied from the year 2023, an estimate of the income received in 2023 will be requested.

An operation to be renewed each year

If you made a request to modulate your rate during the year, this modulation is only valid for one calendar year. A new adjustment request should be made at the end of the year on the tax website (impots.gouv.fr, section “Manage my withholding tax”) to continue to benefit from this derogated rate the following year. If you have made deductible payments on your PER in 2022, resulting in a drop in income tax of more than 10% (1), you are eligible to request a reduction in the withholding tax rate. Conversely, if you made a deductible payment in 2022 and do not continue the following years, you will have to request the modulation of your rate upwards.

(1) 5% from 1er January 2023 subject to the final vote on the finance bill for 2023.

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