Tax Expenses

1. What are we talking about?

Tax burdens consist of taxes and duties that employers and employees are subject to.

These two terms are often used interchangeably. However, they refer to two different mechanisms, and it is this difference that explains why you cannot dispute a tax the same way you would dispute a bill.

2. Taxes and Fees: The Fundamental Distinction

	Tax	Tax
Definition	A mandatory levy with no direct consideration, imposed by the government to finance its activities	A levy that government agencies and local authorities may impose to fund services that entitle recipients to a benefit
Who collects it?	The government	Government agencies and local authorities
Is there a benefit in return?	No, there is no direct counterpart	Yes, the funded service
What it funds	Government activities, without being earmarked for a specific service	A specific service

The criterion that distinguishes them: direct consideration.

Paying a tax does not entitle you to anything in particular: it contributes to the general budget, and it is this budget that then funds all public services.

Paying a fee, on the other hand, entitles you to something: a specific service provided by the government agency or local authority that collects it.

A practical consequence: one cannot refuse to pay a tax on the grounds that one does not benefit from the service it funds. The direct link does not exist, and was never intended to exist.

3. Who Bears the Burden? Employers or Employees

Tax burdens can be borne by employers or employees.

	Employee-side tax burdens	Employer-paid taxes
Who bears them?	The employee	The employer
What are they based on?	The employee’s salary	The company’s payroll
Who reports them to the tax authorities?	The employer, on behalf of the employee	The employer, on its own behalf

Do not confuse “bear” with “pay.” In both cases, it is the employer who physically pays the tax authorities. But in one case, the employer remits an amount deducted from another person’s wages; in the other, the employer pays a tax liability that is its own.

It is this distinction that makes the “payroll expenses” line on the pay stub clear: it reduces the employee’s take-home pay without being an additional cost to the company.

4. Payroll Taxes: The ITS

Payroll tax liabilities consist of the Tax on Wages and Salaries (ITS) for employees covered by the Labor Code.

How it is paid:

   1. RETENUE A LA SOURCE          2. REVERSEMENT
   L'employeur preleve l'ITS   ->   L'employeur le verse
   sur le salaire du travailleur    au fisc

Two key points to remember:

Point	What it means
“Tax”	In accordance with the definition above: a levy without direct consideration, intended to finance the activities of the government
“Under the Labor Code”	The scope is defined: workers subject to this Code are liable for this tax

Why withholding tax? Because it collects the tax at the time the income is earned, rather than later. The employee never receives the amount, the government does not have to collect it, and the employer handles the collection. This is the safest mechanism for all three parties, provided that the payment to the government actually follows the withholding.

5. Employer Tax Liabilities

Employer tax liabilities require a case-by-case review, depending on the company’s situation and industry.

For more details, please contact us.

The Essentials in 5 Points

1. Tax liabilities consist of taxes and fees, and the two are not synonymous.
2. A tax is a levy collected by the government without any direct benefit in return; a fee finances a service that entitles the payer to a benefit and is administered by government agencies and local authorities.
3. They can be employer-paid (borne by the employer) or employee-paid (borne by the employee).
4. The employee’s tax burden is the ITS (Tax on Wages and Salaries) for workers covered by the Labor Code.
5. It is withheld at the source by the employer and then remitted to the tax authorities: these are two distinct obligations, not a single one.