How does withholding tax work in wage portage?
A secure alternative to entrepreneurship, wage portage attracts more and more self-employed professionals every year. And for good reason: this system allows you to combine professional freedom and flexibility with the social benefits typically granted to salaried employees. In addition to being an appealing option for launching your business, wage portage enables you to delegate administrative tasks to an umbrella company. But what about taxation? Under which tax regime are wage portage employees taxed? How can you optimize your income? Discover our guide to optimizing your income in wage portage.
Withholding Tax in Wage Portage: How It Works and Basic Tax Rules
Which Tax Regime for Wage Portage Consultants?
When an independent worker becomes a wage portage employee, they sign an employment contract with a wage portage company, such as Weepo. The tax system applied to wage portage employees is the same as that for traditional employees. They are therefore also subject to withholding tax and cannot choose their tax regime.
How Does It Work?
Each employee is assigned a withholding rate. Based on this rate, a third party — in our case, the wage portage company — withholds the tax when the salary is paid. In this form of employment, the company acts as the employee’s employer and then transfers the amount to the tax authorities, which is considered an advance payment of income tax.
Withholding tax, effective since January 1, 2019, is a method of collecting income tax. This system has changed the tax treatment of wage portage. Its goal is to simplify workers’ tax obligations while ensuring regular taxation. It therefore plays a crucial role in our society, both for traditional employees and for independent workers who opt for wage portage.
What Income is Taxed for Wage Portage Consultants?
Income of the Wage Portage Consultant
In wage portage, the employee finds their own assignments and clients, just as an independent worker would. Consequently, their turnover may vary from month to month, but wage portage remains a more secure option than other independent statuses.
From this turnover, the wage portage company deducts employee and employer contributions as well as management fees, which typically range between 5% and 10%. The payment of these contributions—reflected on the payslip—allows the consultant to benefit from comprehensive social coverage. This coverage includes Social Security, unemployment insurance, retirement, and supplementary benefits—advantages not available under the micro-entrepreneur regime.
After these deductions, the wage portage company pays the consultant a salary that is subject to income tax. To estimate your gross salary, visit the Weepo wage portage simulator.
Allowances
Allowances received by the wage portage consultant are generally taxable. This includes daily allowances for sick leave, as well as for maternity or paternity leave. However, certain social and family benefits may be tax-exempt provided they remain below a specified threshold.
Withholding Tax in Wage Portage vs. Other Independent Workers
The Micro-Enterprise
In France, there are several legal statuses for independent workers. Under the micro-enterprise regime, for example, an independent worker is taxed on their turnover and benefits from a 34% flat-rate tax deduction for liberal professions.
Given this status, the micro-entrepreneur cannot deduct business expenses. As a result, it may be more advantageous to opt for wage portage, which permits the deduction of business expenses while offering comprehensive social protection—an advantage not available to micro-entrepreneurs.
Furthermore, independent workers under the micro-enterprise regime can choose between traditional taxation and the flat-rate withholding option, a tax system akin to corporate tax.
This option allows for the progressive payment of income tax, and many micro-entrepreneurs opt for it. However, this tax regime is subject to two conditions:
- Adherence to the turnover cap, which is set at 170,000 euros for goods-related activities and 70,000 euros for service-related activities.
- Adherence to the prior fiscal reference income (N-2), which must not exceed a threshold determined by the number of family quotient parts.
Corporations
Finally, some businesses choose to be taxed as legal entities, a system known as corporate tax. Depending on the costs incurred and the profits generated, this option may be more attractive.
Additionally, SASU, EURL, and EIRL can also opt for income tax.
Withholding Tax in Wage Portage: What is the Rate?
The Neutral Rate
Although the wage portage consultant cannot choose their tax regime, they can modify their withholding rate. By default, the neutral rate is applied at the beginning of the wage portage activity. Generally, after one month, the tax authorities transmit the personalized rate to the wage portage company.
However, there are instances when the consultant may not wish for the personalized withholding rate to be communicated to the wage portage company, as doing so would reveal their overall income.
The Individualized Rate
If the wage portage employee does not opt for the neutral rate, the individualized rate is applied. This rate can be chosen when filing income tax returns.
It considers individual income rather than household income, making it an attractive option for married or partnered individuals.
The Personalized Rate
Based on the previous year’s net taxable income and on changes in the consultant’s professional or personal circumstances (such as a salary increase or the birth of a child), the rate is adjusted. The calculation takes into account the total gross salary as well as the employee’s social contributions and non-deductible CSG/CRDS. As you can see, this personalized rate adapts to each employee’s specific situation. It ensures fiscal transparency and a clearer understanding, as the wage portage employee can review the amount of tax withheld.
The wage portage employee also has the option to modify their rate by directly contacting the tax authorities. This change may take effect within three months of the request.
Income Tax: The Role of the Wage Portage Company
In addition to applying the withholding tax rate, the wage portage company handles establishing service contracts with your clients and invoicing them with VAT. For example, Weepo manages all administrative processes, issues payslips, and pays the consultant’s salary on a monthly basis.
With this process, errors are minimized and payment delays are avoided; however, the wage portage employee is still required to declare their income to the tax authorities, adjust their withholding rate if needed, and report any changes in their situation (such as marriage, civil partnership, or the birth of a child).
Beyond relieving wage portage consultants of administrative tasks, Weepo also offers advice to help optimize your tax situation and provides a secure legal framework.
Income Tax: How to Optimize Your Income?
Tax optimization can be a powerful tool for independent workers to maximize deductible expenses and increase their net income. Although several strategies exist to significantly reduce the tax burden, business expenses must exceed the automatically applied 10% flat-rate deduction for wage portage employees to be effective.
Income Optimization: Business Expenses
The most common and effective way to optimize income in wage portage is to deduct business expenses. To reduce the taxable base, each expense must be properly justified.
The Retirement Savings Plan
In addition to business expenses, there are other options for optimizing your income. By contributing to a Retirement Savings Plan (PER), you can deduct these contributions from your taxable income.
However, if regulatory ceilings are exceeded, it is no longer possible to reduce your tax liability via the PER. In addition to optimizing your income, you are preparing for the future and securing your retirement. The PER remains locked until retirement, except in cases of early withdrawal permitted by law.
Are you an independent worker looking to launch your activity? Start today with Weepo, the wage portage company for IT professionals. Taxation, administration, accounting, and more—we handle it all! Weepo can even help you find your next assignment through its job offers platform dedicated to our wage portage consultants. Need advice on your taxation and income optimization? We’re here to provide personalized guidance.
To learn more about other compensation and funding:
Unemployment and wage portage: how does it work?
Wage portage and retirement: what contribution?
Start you wage portage adventure in 2H with WEEPO!
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