Spontaneous application

French GAAP News: Accounting for the new Withholding Tax System

New Insight
10 October 2018
Best practice

As of 1st January 2019, article 204 A of the Code Général des Impôts (Taxation Law) implements the withholding tax for employee’s earned income. 

In this article we will address the accounting treatment for the withholding tax from the perspective of the employer.


The Methodology:

ANC[1] Regulation n° 2018-02 (6 July 2018) specifies and explains the accounting for the withholding tax.

Three new account codes will be added to the PCG’s[2] chart of accounts:

  • 4421 “Prélèvements à la source (impôt sur le revenu)” – “Withholding tax (employees’ income tax)
  • 4422 “Prélèvements forfaitaires non libératoires” – “Flat-rate withholding tax
  • 4423 “Prélèvements forfaitaires non libératoires” – “Deductions and withholding tax on distributions

Account 4421 – Withholding tax (employees’ income tax) will be credited against the debit of account 421 – Net Wages/Salaries payable

Accounts 4422 – Flat-rate withholding tax and 4423 – Deductions and withholding tax on distributions are exclusively concerned with withholding tax arising on fixed-income short-term investment (produits de placement à revenu fixe) and distributions (such as dividends).



The accounting for this payroll report would be as follows:


 Cekou Coulibaly

Senior Accountant,

International Business Services


  • Règlement n° 2018-02 du 6 juillet Règlement n° 2018-02 du 6 juillet 2018 modifiant le règlement ANC N°2014-03 relatif au plan comptable général

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