A Plan d’épargne en actions (PEA) is a regulated investment product in France that allows you to invest in a portfolio of shares of European companies and ETFs. This article explains the PEA account in detail including some ETF examples. Personally, the PEA is the biggest component of my investment portfolio.
What is a PEA?
Basics
- PEA is a regulated investment product with certain tax advantages.
- Available only to tax residents in France.
- A person must be at least 18 years old to open a PEA.
- Limited to one PEA account per person, and a maximum of 2 accounts per tax household.
- A PEA account can be opened with French banks, insurance companies, and brokerage companies.
- The investment capital is limited to €150,000 per account. However, this limit does not take into account the capital gains made and dividends received inside the account.
- Returns depend on the market performance of the stocks and ETFs invested. So, there is no guarantee on the capital invested.
- Tax advantages are applicable only after 5 years of holding the account.
- The period of 5 years starts from the date of opening of the plan, the day of the 1st transfer into the account.
- Any withdrawals before 5 years will lead to the account closure.
Which Investments?
- European stocks and physical ETFs. Ex: ASML, LVMH, Sanofi, Stellantis, Volkswagen, Ferrari, etc.
- Non-European stocks but only via synthetic ETFs. Ex: MSCI World, S&P500, Nasdaq100, Emerging Markets, etc.
Opening a PEA account
Criteria for Choosing Your PEA
- Affordable Transactions: Reasonable transaction fees.
- No Hidden Fees: No custody or inactivity fees.
- User-Friendly Interface: Ensure it is simple, functional, and pleasant.
- Market Access: Provides access to the markets you are interested in. For example, the availability of ETFs can be different across brokerages.
Some of the best options for opening a PEA account are
- Boursedirect (my choice and referral code: 2020751090)
- Fortuneo Bank (referral code: 13455533)
- Saxo Bank
You can also open an account with any traditional French bank but the charges are slightly higher. Also, other online brokers like Yomoni.
Types of PEA accounts
There are three types of PEA accounts in France:
- PEA bancaire: This can be used to build a portfolio of shares of companies in the European Union with an investment limit of €150,000 per account. It is the most commonly used account.
- PEA assurance: This can be opened only with an insurance company and takes the form of a unit-linked capitalization contract (contrat de capitalisation). An investment limit of €150,000 per account is applicable.
- PEA-PME: Dedicated to investments in small and medium-scale enterprises, with an investment limit of €225,000 per account..
Note
- Combining a PEA bancaire or a PEA assurance with a PEA-PME is possible.
- However, the combined invested capital in the two accounts cannot cross €225,000.
How does a PEA work?
The PEA (Plan d’Épargne en Actions) functions as an investment envelope, allowing investors to hold European shares, ETFs, and shares of unlisted companies. A PEA account is composed of two parts:
- Cash Account (“Compte en espèces”)
- This account holds the funds when you deposit money into your PEA.
- It facilitates the transfer of funds during purchase or sale operations, dividend payments, and fee collection for executed orders.
- There is no risk as long as the money remains in this account, but it also earns no return because the funds are awaiting investment.
- Securities Account (“Compte Titre”)
- This is the equity portfolio where the stocks and ETFs you invest in are housed.
- The portfolio starts empty when you open a PEA and grows as you make investments.
Fees in a PEA account
When opening a PEA (Plan d’Épargne en Actions) account in France, it’s essential to understand the various fees that might apply. These fees can affect your overall investment returns, so being aware of them can help you make more informed decisions.
The financial markets regulator in France, AMF has published the account fee caps applicable to a PEA account. So, Banks, Insurance companies, and brokerages cannot charge fees above these limits. What are the official Fee limits for PEA account?
Here are the common fees associated with a PEA:
- Account Opening Fees (“frais d’ouverture”): Some financial institutions charge a fee to open a PEA. This fee can vary depending on the bank or brokerage.
- Custody Fees (“droits de garde”):
- Custody Fees: These are fees for holding your securities in the PEA. However, many institutions offer PEAs with no custody fees as a competitive feature.
- Inactivity Fees: Some institutions may charge a fee if there are no transactions over a specific period.
- Transaction Fees (“frais de transaction”):
- Brokerage Fees: These are fees for buying and selling securities. They can be a flat fee per transaction or a percentage of the transaction amount. Online brokers often offer lower fees compared to traditional banks.
- Foreign Transaction Fees: If you purchase securities listed on foreign exchanges, additional fees may apply.
- Management Fees (“frais de gestion”):
- If you invest in ETFs within your PEA, these funds may have their management fees. These fees are charged by the fund managers and are usually a percentage of the fund’s assets.
- PEA Assurance: Annual management fees on the contract is applicable. Also, arbitration fees (“frais d’arbitrage”) might be levied by your insurer when you ask them to sell securities to buy others. It can be calculated proportionally to each stock or be subject to an annual fee.
- Withdrawal Fees: Withdrawing funds from your PEA before it has been open for five years will result in the closure of the account and may incur penalties. After five years, withdrawals do not result in account closure and but will incur some fees.
- Account Transfer Fees: If you decide to transfer your PEA from one institution to another, there may be fees associated with the transfer. These fees can include charges for transferring securities and cash.
- Other Fees:
- Reporting Fees: Some institutions charge for providing detailed account statements or tax reports.
- Performance Fees: In some cases, if you invest through certain managed accounts or products, performance fees may be applied based on the returns of the investments.
Fees from a good PEA account
Here is a list of Fees from an ideal PEA account,
- Account Opening: 0€
- Account Closing: 0€
- Custody Fees: 0€
- Inactivity Fees: 0€
- Maintenance Fees: 0€
- Brokerage Fees: less than 1% of the transaction amount. Preferably around 0.5%.
- Management Fees for Funds: less than 1% of the invested amount annually.
- Account statements: 0€
- Orders not executed or canceled: 0€
An example of brokerage fees from Boursedirect’s PEA or PEA-PME accounts.
| Order Amount | PEA or PEA-PME Fees |
| Up to €500 | €0.99 |
| For orders up to €198 | 0.5% |
| Between €500 and €1,000 | €1.90 |
| Between €1,000 and €2,000 | €2.90 |
| Between €2,000 and €4,400 | €3.80 |
| Over €4,400 | 0.09% |
Dividends from a PEA account
- Dividends received within a PEA are stored in its cash account.
- They can be reinvested. This means you can use the dividends to purchase additional securities without affecting the tax advantages of the PEA.
- There is no income tax applicable on dividends received inside a PEA account.
Taxes applicable on PEA
Dividends and Capital gains from a PEA account will be taxed according to their withdrawal dates.
| Scenario | Tax Implication |
| Dividends and Capital Gains (Within PEA) | Exempt from taxes if they are not withdrawn from the account. |
| Withdrawal Before 5 Years | Income tax of 12.8% gains + Social contributions applicable at 17.2%. So, a flat tax of 30% or taxed according to the income tax bracket. |
| Withdrawal After 5 Years | Zero income tax + Social contributions applicable at 17.2% |
Certain Exemptions
- Transferring a PEA from one financial institution to another does not trigger taxation. The account maintains its tax benefits as long as the five-year holding period is respected.
- However, early withdrawals before 5 years are exempt from income tax in certain situations, such as:
- Death of the account holder
- Allocation of funds to finance the creation or takeover of an enterprise, subject to conditions
- A PEA account will not be closed due to early withdrawals before 5 years under certain conditions. This is particularly the case if you or your spouse (married or PACS) are in one of the following situations:
- Dismissal (“Licenciement”)
- Disability (2nd or 3rd category)
- Retirement
Examples of PEA ETFs
Here are some of the most common examples of Exchange Trade Funds (ETF) eligible for a PEA account.
PEA ETF Examples | Country – Expense Ratios |
| Amundi MSCI World UCITS ETF – EUR (C) | World – 0.38% |
| iShares MSCI World Swap PEA UCITS ETF | World – 0.25% |
| Lyxor PEA NASDAQ-100 UCITS ETF – Capi. | America – 0.30% |
| Amundi PEA US Tech ESG UCITS ETF Acc (ESG variant of Nasdaq100) | America – 0.30% |
| Lyxor PEA S&P 500 UCITS ETF – Capi | America – 0,.15% |
| BNP PARIBAS Easy S&P 500 UCITS ETF – EUR | America – 0.15% |
| Amundi ETF PEA Japan TOPIX | Japan – 0.20% |
| Lyxor PEA Asie Pacifique (MSCI AC Asia Pacific Ex Japan) | Asia Pacific region excluding Japan – 0.60% |
| Amundi PEA Obligations d’État Euro UCITS ETF Acc | Euro bonds – 0.40% |
| Amundi MSCI Emerging Markets UCITS ETF – EUR (C) | Developing countries including China & India – 0.20% |
| Lyxor PEA Inde (MSCI India) UCITS ETF – Capi | India – 0.85% |
| Lyxor PEA Immobilier Europe (FTSE EPRA/NAREIT) UCITS ETF – Capi | Europe Real Estate – 0.40% |
| iShares Core EURO STOXX 50 UCITS ETF | Europe – 0.10% |
| BNP Paribas Easy Stoxx Europe 600 UCITS ETF – EUR | Europe – 0.20% |
| Amundi CAC 40 UCITS ETF Acc | France – 0.20% |
Note
- ETFs investing in European stocks are regular physical ETFs that own the stocks present in the benchmark index.
- ETFs investing in non-European stocks are Synthetic ETFs. A synthetic exchange traded fund tries to replicate the performance of a benchmark index, but it does not own any of the stocks present in that index.
Conclusion
The PEA is a powerful tool for French residents seeking to invest in equities with substantial tax benefits. By understanding its structure, operational mechanics, and tax advantages, investors can make informed decisions that align with their long-term financial goals. Whether opting for a classic PEA or a PEA-PME, this investment account offers a strategic avenue for building wealth in a tax-efficient manner.
Sources & References
General
- Plan d’épargne en actions (PEA) service-public.fr
- Qu’est-ce que le plan d’épargne en actions (PEA) economie.gouv.fr
- Plafonnement des frais de transaction sur un PEA amf-france.org
- Plan d’Épargne en Actions (PEA), les retraits sont-ils imposables ? impots.gouv.fr
- Impôt sur le revenu – Comment sont imposés les revenus d’un plan d’épargne en actions (PEA) ? service-public.fr
Laws
- Définition et fonctionnement du PEA: Code monétaire et financier : articles L221-30 à L221-32
- Définition et fonctionnement du PEA PME-ETI: Code monétaire et financier : articles L221-32-1 à L221-32-3
- La loi PACTE: pour la croissance et la transformation des entreprises economie.gouv.fr
- BOFIP-Impôts n°BOI-RPPM-RCM-40-50 relatif au plan d’épargne en actions (PEA)
Disclaimers
- Any finance-related information shared is not professional legal, tax, or investment advice.
- The information provided is of an educational and general nature and is not investment advice within the meaning of Articles L. 321-1 and D. 321-1 of the French Monetary and Financial Code.
- Investment carries risks of loss and past performance does not guarantee future performance.
- You should consult a financial advisor for any professional advice.
Hi Prashant,
Some ETFs have mentioned that “Eligibilité au PEA” as No. For example Amundi MSCI India UCITS ETF – EUR (C).
Link https://www.amundietf.fr/fr/particuliers/produits/equity/amundi-msci-india-ucits-etf-eur-c/lu1681043086
I dont understand that because it allow to buy under PEA account on Borso. Can you share some insight if you already know.
Thanks,
Pratik
Hello Pratik,
For ETFs, please always refer to the DIC document (Key Info Doc) for the details.
https://www.amundietf.fr/pdfDocuments/kid-priips/FR0011869320/FRA/FRA
So, this ETF is eligible for PEA.