Nearly 5.5 billion euros will be paid by the tax authorities. The 8.8 billion taxpayers benefiting
credit or tax reduction will receive, from Tuesday, a deposit of 60%. "The average advance will be 627 euros", had specified
Minister of Public Accounts Gérald Darmanin last Wednesday at a press conference.
Childcare, home help or donations to associations … Nearly 5.5 billion euros will be paid by the tax authorities to the French eligible for the tax credit. For the vast majority of them, the money will be paid directly into the bank accounts. For the 345,000 taxpayers who have not sent their bank details to the IRS, it will be sent by letter-checks.
Advances limited to "recurring" expenses
Thanks to these down payments, corresponding to 60% of the tax credit enjoyed by taxpayers, "there will be no cash losers," the minister explained, citing a "positive shock" for the household budget. This tax boost was announced at the end of the summer by the government, anxious to minimize the negative effects of withholding tax on the purchasing power of the French. Tax credits can only be reimbursed in September, once the annual tax return has been filed.
But with the reform, taxpayers must now pay their tax as early as January. However, all tax credits are not affected by these installments. For practical reasons, advances were limited to "recurring" expenses, such as the employment of a home-based employee, donations to associations or rental investments.
A cash advance for some taxpayers
The energy transition tax credit (ISCED), the tax reduction linked to the subscription to the capital of an SME or the DOM investment in social housing, considered as occasional, are therefore not affected. Another source of complexity is the one-year lag that remains in effect for tax credits, calculated on the basis of tax returns – made in the spring from the previous year's income.
Households having incurred an expense giving right to a tax reduction in the year 2018 will not benefit from the down payment: the tax credit will be paid in September, once their income tax return is recorded. Some households, conversely, will receive a cash advance while they have suspended in 2018 the expenses that gave entitlement. "That means that it may be necessary to repay" this deposit in September 2019, warned Gérald Darmanin.
"The rocket of the tax at the source is gone straight"
For Alexandre Derigny, deputy general secretary of the CGT Public Finances, these situations "risk creating misunderstanding". "These devices are very complicated because they have to adapt to very different situations," says the union leader. Questioned on the subject, Gérald Darmanin said he was "confident", stressing that the first stage of the withholding tax – which came into effect on 1 January for pensions and unemployment benefits – had proceeded without a hitch. .
The minister also recalled that a reflection was underway to improve the mechanism of the tax credit, making it contemporary income. A report from the Inspectorate General of Finance on the subject was also submitted to the government at the end of December. "The rocket tax at the source went very straight" assured Gérald Darmanin, who has repeatedly rejected any risk of "bug", especially when employees will in turn subject to withholding tax, it that is to say in the last days of January.