Prélèvement à la Source (PAS), or withholding at source, is the French real-time income tax collection mechanism introduced in January 2019. Under PAS, the employer acts as a collection agent for the Direction Générale des Finances Publiques (tax authority), deducting income tax directly from the employee's net pay each month and remitting the amounts to the French tax administration via the monthly payroll DSN (Déclaration Sociale Nominative) filing.
The withholding rate applied to each employee is calculated by the tax authority on the basis of the previous year's tax return and communicated securely to the employer via the payroll DSN exchange. Employees can request a neutral rate if they prefer their personal tax situation to remain confidential from their employer. The neutral rate corresponds to the rate applicable to a single person with no dependants at the given salary level.
For employers new to France, PAS adds a significant operational dimension to payroll processing. The rate must be updated monthly as the tax authority transmits changes, and the employer carries the liability for under-withheld amounts if correct procedures are not followed. Foreign entities running shadow payrolls in France must include PAS deductions to ensure employee net pay reconciles correctly.