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Administrator Guide
Last Updated: 2023-06-23
Setup Considerations: Income Tax Withholding (FRA)

Setup Considerations: Income Tax Withholding (FRA)

You can use this topic to help make decisions when planning your configuration and use of income tax withholding. It explains:
  • Why to set it up.
  • How it fits into the rest of Workday.
  • Downstream impacts and cross-product interactions.
  • Security requirements and business process configurations.
  • Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.

What It Is

Income tax withholding (prélèvement à la source) in Workday provides web services, tax elections, and calculations that enable you to:
  • Withhold a worker's income tax from their pay based on rates provided by the Direction Générale des Finances Publiques (DGFIP).
  • Report income tax withholding in Déclaration Sociale Nominative (DSN) reports.

Business Benefits

  • Effective-dated income tax rates on worker profiles provide an audit trail and historical record of past rates.
  • Workday-delivered calculations make it easier for you to stay up to date with income tax withholding requirements.
  • Streamlined processes, worker audits, and reporting make it easier to verify income tax calculations for each worker.
  • Integrations with DGFIP help you automatically retrieve income tax rates as soon as they’re available.

Use Cases

In addition to calculating income tax withholding for workers, you can:
  • Upload income tax withholding rates from DGFIP.
  • Display income tax withholding on payslips.
  • Create an audit to identify workers who potentially need an income tax regularization due to a negative taxable base for income tax withholding.
  • Record income tax regularizations and report them in a DSN or directly to DGFIP. Example: To regularize an incorrect tax rate.
  • Calculate income tax withholding on on-demand payments.

Questions to Consider

Questions
Considerations
How does your organization retrieve income tax withholding rates?
You can use an:
  • EIB to upload rates received in a compte-rendu métier (CRM) that you manually download from net-entreprises.fr.
  • Integration to retrieve rates directly through DSN responses from net-entreprises.fr.
Do you have workers who opted to use a neutral rate?
When you upload a worker's tax elections from DGFIP or CRM, Workday records whether a worker has opted to use a neutral rate for income tax calculations. Workday uses the tax election information as of the payment date. Workday calculates the neutral rate based on the:
  • Applicable neutral rate scale based on the postal code of the worker's primary home address.
  • Worker's monthly taxable net.
When a worker has no tax election information, Workday automatically uses a neutral rate in the income tax calculation.
What income does your organization need to subject to income tax?
By default, Workday bases the income tax withholding calculation on the taxable net for:
  • Taxable net for workers.
  • Taxable net with exemption for trainees, apprentices, and short-term contracts.
You can further configure withholding tax calculations by identifying:
  • Which benefits in kind to include.
  • Overtime hours leading to exempted overtime amounts, which Workday excludes from income tax withholding.
You can add any other income, such as paid profit-sharing and employer contributions to health care plans, to the
FRA Adds to Taxable Gross [FRA]
pay component group.
Do you need to exempt any workers from income tax withholding?
Workday calculates the standard income tax withholding for all workers based on your run category configuration for the
TAX Withholding Tax [FRA]
 deduction.
Workday doesn't deduct income tax withholding when the taxation results in a negative net pay. Example: When you use benefits in kind. You can create an audit to identify workers who potentially need an income tax regularization due to a negative income tax withholding taxable base.
Does your organization include nonresident workers?
You can configure your own deduction to calculate the specific nonresident income tax (Retenue à la Source spécifique aux non-résidents). When you configure your company's deductions for specific nonresident income tax, Workday:
  • Declares the nonresident withholding tax in DSN rubric S21.G00.81.004.
Do you need to regularize income tax withholding amounts?
You can add payroll input to adjust a worker's current pay to account for an incorrect withholding tax calculation from a previous period. You can process regularizations based on an incorrect:
  • Rate.
  • Taxable base, either resulting or not in a withholding correction.
When you accidentally overpay a worker, you generally don't need to process a regularization when the worker's net pay is positive. You must enter regularizations for workers when a correction isn't possible due to a negative net taxable pay.
When entering a regularization, you can specify whether it's for IJSS payments or not.
Do you manage income tax withholding for IJSS payments?
When adding pay input for sickness IJSS payments, you can specify for each payment whether it’s taxable or not. Example: You can separately enter:
  • Nontaxable sickness IJSS amounts if the sickness absence continues after 2 months.
  • Taxable IJSS amounts for the first 2 months of an employee’s sickness absence.
You can also identify IJSS net earnings and deductions included in the total IJSS net amount but not in a gross-up. Workday includes these pay component amounts in the IJSS amount used for income tax withholding calculations, but not in a gross-up calculation.
Example: When an IJSS payment is greater than the usual net of the worker, you can enter the:
  • IJSS amount up to the regular net amount.
  • Remaining portion in a specific tenanted pay component that you exclude from a gross-up calculation.
Do you manage workers with DSNs from other payroll systems?
When uploading income tax withholding rates through an integration or EIB, Workday identifies workers based on their Social Security number (SSN) or Temporary Technical Number (NTT). This enables you to retrieve a worker's rate whether they keep the same employee ID.

Recommendations

Create an audit based on the
Withholding Tax Taxable Base < 0
 related calculation on the
Memo - Reference Values for Withholding Tax [FRA]
 deduction. You can use this to identify workers with a negative withholding tax taxable base and who potentially need withholding tax regularizations.
To make it easier to display income tax information on your company's payslip, use a copy of the
Payslip to Print - FRA
 report in your payslip configuration.
To help you ensure that you use the same income tax rates data as DGFIP, don't modify workers' income tax rates directly in their tax elections.

Requirements

Ensure that you configure the:
  • DSN Polling (Machine to Machine)
     integration to retrieve income tax withholding rates.
  • Run category to process the appropriate workers and the
    TAX Withholding Tax [FRA]
     deduction.

Limitations

Workday doesn't provide calculations for the specific nonresident withholding tax. To calculate this tax, you must manually configure your own calculations.

Tenant Setup

No impact.

Security

Domain
Considerations
Integration Build
 in the Integration functional area.
Enables you to create an EIB to upload income tax withholding rates.
Integrations: EIBs
 in the Integration functional area.
Enables you to:
  • Create a transformation to transform income tax rates into the format required by Workday.
  • Launch an EIB to upload income tax data.
Set Up: Payroll (Calculations - Payroll Specific)
 in the Core Payroll functional area.
Enables you to add pay component groups to an earning or deduction. You can use this to identify benefits to include in the income tax calculation.
Set Up: Payroll - Pay Group Specific
 in the Core Payroll functional area.
Enables you to add the
TAX Withholding Tax [FRA]
 deduction to your run category.
Set Up: Payroll (Reporting)
in the Core Payroll functional area.
Enables you to create an audit to identify workers who potentially need an income tax regularization due to a negative income tax withholding taxable base.
Worker Data: Payroll (Company Specific) - FRA
 in the FRA Payroll functional area.
Enables you to add worker tax elections for income tax withholding.
Worker Data: Payroll (Payroll Input)
 in the Core Payroll functional area.
Enables you to add payroll input to:
  • Identify taxable IJSS amounts.
  • Record income tax regularizations.

Business Processes

No impact.

Reporting

Reports
Considerations
DSN Payments to Tax and Social Organizations by Company
View the aggregated values of income tax payments. You can also compare current payments with payments from the previous month.
FRA Pay Calculation Results - Payslip View
Verify income tax withholding results for a group of workers.
FRA Tax Elections for Group of Workers
Verify income tax withholding rates for a group of workers.

Integrations

Integration or Web Service
Considerations
DSN Polling (Machine to Machine)
Configure this integration to retrieve and upload any worker income tax rates that are included in the response from net-entreprises.fr.
Import Withholding Tax Rates
.
Create an EIB based on this web service to import tax rates received in a CRM that you manually download from net-entreprises.fr.
Workday provides an XSLT attachment transformation on Community that you can use to transform the CRM data to the format required to upload the data to Workday.

Connections and Touchpoints

Features
Considerations
Bank routing rules
When reporting income tax withholding in a DSN, Workday uses the default bank account from the bank routing rule to declare the company bank in DSN block S21.G00.20.
DSN reporting
Workday reports income tax withholding in DSN blocks:
  • S21.G00.20
  • S21.G00.50
Workday reports income tax regularizations in DSN block S21.G00.56.
Payroll input
You can add payroll input to:
  • Identify taxable IJSS amounts.
  • Record income tax regularizations.
Payslips
Workday includes income tax withholding and income tax regularizations on the French clarified payslip template provided on Community.
Smart calculations
You can use the smart payroll calculation functionality to identify changes in withholding tax rates before the period payment date. This enables you to relaunch a payroll calculation for workers with the identified changes.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.