The stock savings plan (PEA) doesn’t really make a splash. Although it was created more than thirty years ago, there were only 6.4 million at the end of December 2022. Far, far away from 56 million Livret A ! And yet, this tool, which you can subscribe to through your bank and an online broker as long as you are an adult and a French tax resident, has tangible assets to diversify your portfolio.
To do this, it must be preserved over time. Indeed, the PEA was designed to promote the emergence of popular shareholding by encouraging individuals to invest in the stock market over a long period, through the holding of direct shares, funds and ETFs (exchange-traded funds or exchange-traded funds). To achieve this, the legislator has provided it with real tax advantages… and some constraints.
First of all, the holder of a PEA is exempt from income tax (12.8%) on capital gains made and dividends received. Only social security contributions (currently 17.2%) need to be paid. Best of all, these can be deferred for as long as you want. Thus, you can buy then sell securities, realize capital gains, receive dividends and reinvest them in full. As long as you do not take these amounts out of your envelope, you are not taxed.
Exemptions after five years
In return, the saver must not withdraw money before the 5th anniversary of their plan. Otherwise, it will be closed and the benefits removed. All winnings, in particular, will be subject to the single flat-rate deduction of 30%. On the other hand, once this deadline has passed, it is possible to recover part of your assets, but also to make additional payments. When you reach retirement, you can draw on your savings or opt for a life annuity. After five years, the latter is exempt from income tax and only a fraction of its amount is subject to social security contributions (decreasing portion determined according to your age at the time of triggering the annuity).
Another limitation: the eligible investment categories. “You are, in theory, forced to hold only listed and unlisted securities of companies whose head office is located in the European Union and to invest in funds predominantly in European stocks,” underlines Marc Lefèvre, president of the Federation. individual investors and investment clubs (F2iC). But financial engineering partially allows an exception to this rule. “With the development of ETFs, it is entirely possible to ‘globalize’ your plan by selecting ETFs synthetics, continues Marc Lefèvre. They hold European stocks, but their performance is based on a non-European index such as the American Nasdaq 100 or the Japanese Nikkei 225.”
An envelope capped at 150,000 euros
Finally, this envelope is capped, since you cannot pay more than 150,000 euros into it. And if it is not possible to hold several PEA, the latter can however be combined with the PEA-PME, dedicated to small-sized companies. Taking advantage of the same tax advantages, its ceiling is set at 75,000 euros. For a couple with both envelopes, a total of 445,000 euros can thus escape tax.
As for the latest addition, the PEA Jeune, launched in 2019, it is aimed at 18-25 year olds attached to their parents’ tax household and is capped at 20,000 euros. A way to familiarize young adults with the mechanisms of the stock market.