Pillar 07 · PEA
European equities, lighter taxation
For long-term equity investing, the PEA (Plan d'Épargne en Actions, France's tax-advantaged equity savings plan) remains the most efficient wrapper in French tax law. A €150,000 cap, capital gains exempt from income tax after 5 years (social charges still apply), and deep access to European markets: a tool every growth-oriented investor should master.
PEA cap
€150,000
PEA-PME cap
€225,000
Tax pivot
5 years
After 5 years
17.2% social charges only
§ 01
Before 5 years, any withdrawal closes the plan and triggers the 30% PFU flat tax. After 5 years, gains are exempt from income tax, with only the 17.2% in social charges still due. The plan then becomes a flexible withdrawal tool with genuinely favourable, tapering taxation.
§ 02
The caps can be combined: €150,000 on the PEA and €225,000 on the PEA-PME (within an overall limit of €225,000). The PEA-PME is an excellent complement for gaining exposure to small and mid-cap European stocks, with the same favourable tax treatment.
§ 03
PEA-eligible ETFs (using synthetic replication) let you gain exposure to global indices while staying within the French wrapper. MSCI World, S&P 500, Nasdaq: you can build a diversified portfolio at very low cost (0.20 to 0.35% a year).
§ 04
Over 10 years, fewer than 20% of actively managed funds beat their benchmark index after fees. For most wealth-building profiles, a core allocation in index ETFs, possibly complemented with a few targeted active positions, is the best compromise.
§ 05
Rebalancing within the PEA is never taxable, which is a huge advantage for adjusting your allocation over time. Dividends received inside the plan are not taxed as long as they stay within it.
Frequently asked questions
Both have their place. PEA means unbeatable tax treatment after 5 years, but a universe limited to Europe (except via synthetic ETFs). Assurance-vie means flexibility, wealth transfer benefits, and direct access to global markets. Ideally, you combine the two.
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