Question to an expert
My income having decreased, I asked for a reduction in my withholding tax rate but it was refused, why?
Without intervention on your part, your withholding tax rate will, as every year, be renewed in September, on the basis of the declaration of your income for 2021 made in recent weeks.
But if your income decreases in 2022 or if your family situation justifies it, you can now request a reduction in this rate – therefore a reduction in withholding tax. This reduction, if accepted, will be applied until the end of 2022.
Confusion over reference periods
For it to be accepted, the amount of withholding tax that you estimate you owe over the calendar year must be at least 10% lower than that which would be borne without adjustment; non-compliance with this condition may explain a refusal.
Attention, there is often confusion on the part of the taxpayer on the reference periods coming into play in the calculation of these two amounts to be compared: it is not necessary to reason only in calendar year…
The amount that you estimate to owe for the whole of 2022 is to be calculated on the basis of your income (as anticipated) for this calendar year.
But to determine the total withholding tax that would be made in 2022 without modulation, the tax administration will apply, to the 2022 annual income that you estimate, a rate calculated for two-thirds on your 2020 income (without modulation, this rate would be applied to the first eight months of 2022) and for one-third on the basis of 2021 income (rate which would be applied, without modulation, the last four months of 2022).