PEA PME in France: everything you need to know
Updated on 30 July 2026
The PEA PME (the small and mid-cap variant of the PEA, France’s tax-advantaged equity savings account) lets you invest in unlisted or small-cap shares issued by European SMEs and mid-caps, under the same favorable tax treatment as the standard PEA after 5 years of holding. This article covers its cap, eligible securities, taxation, and how to invest through it.
- The PEA PME can be combined with the standard PEA, within a combined cap of €225,000 in contributions across both accounts.
- Eligible securities must come from companies with fewer than 5,000 employees (revenue under €1.5 billion or total assets under €2 billion), or from listed “small cap” companies.
- After 5 years, gains are exempt from income tax but remain subject to social security contributions (18.6% since 1 January 2026).
- Since the only eligible ETF was liquidated in 2022, no PEA PME ETF exists today: only actively managed funds allow you to invest through this account.
- Dividends from unlisted securities are exempt only up to 10% of the amount invested; beyond that threshold, they become taxable again.
What is a PEA PME?
The PEA PME is the small and mid-cap counterpart of the standard PEA. It is a tax wrapper that lets you build a portfolio of small and mid-sized European company shares (as defined by law) and benefit from a tax exemption on the gains realized, under certain conditions.
Can you combine a PEA and a PEA PME?
In principle, a single taxpayer cannot hold several PEA. However, since the PEA PME is treated as another type of PEA, it is possible to combine these two tax wrappers (provided you are of age and tax-resident in France).
You will, however, need to comply with the PEA PME cap of €225,000 (a new cap introduced by the French PACTE law) and the standard PEA cap of €150,000. Together, total contributions to both accounts cannot exceed €225,000. In other words, if you already hold a PEA on which you have paid in €150,000, the amount still available on the PEA PME would then be €75,000 (for illustration).
Read our guide to the PEA: What is the PEA (share savings plan)?
Which securities are eligible for the PEA PME?
Securities eligible for the PEA PME are those of unlisted European companies with fewer than 5,000 employees (revenue under €1.5 billion or total assets under €2 billion), or listed “small cap” shares with a market capitalization under €1 billion.
These criteria break down more precisely as follows:
- an unlisted company with fewer than 5,000 employees and revenue under €1.5 billion, or total assets not exceeding €2 billion;
- a listed company meeting the “small cap” criteria, i.e. a market capitalization under €1 billion, with no more than 25% of its capital held by a corporate entity (a company).
It is nonetheless possible to invest indirectly through an investment fund, provided it holds at least 75% of securities eligible for the PEA PME. More on that below.
PEA PME taxation: a debatable advantage for unlisted company shares
The tax regime applicable to the PEA PME is the same as for the bank-based PEA:
- If you withdraw before 5 years, investment income and capital gains are taxed at the standard rate, i.e. the flat tax (31.4% since 1 January 2026, made up of 12.8% income tax and 18.6% social security contributions), or at the progressive income tax scale. Note that even a partial withdrawal before the 5th year closes the PEA PME.
- If you withdraw after 5 years, investment income and capital gains are in principle exempt from income tax (except for the portion of investment income above 10% of the amount invested, for unlisted securities). Social security contributions of 18.6% remain due, however (versus 17.2% until 31 December 2025, the CSG increase applying even to earlier gains at the time of withdrawal).
Tax on the income and capital gains from securities held in a PEA PME is due only when you make a total or partial withdrawal. So, contrary to a common belief, you can make arbitrages within a PEA PME without triggering tax, as long as you make no withdrawal.
The exception for income from unlisted securities
The main issue with the PEA PME’s tax regime is the 10% exemption cap on investment income generated by unlisted company shares (article 157 5° bis of the French General Tax Code (CGI)). This mainly concerns securities not admitted to trading on a regulated market. Examples include:
- Shares (SAS, SA...).
- Certificates.
- Membership units (SARL) or equivalents.
Income here means dividends paid out and liquidation surpluses (investment income); realized capital gains are excluded from the cap. In other words, if cumulative dividends exceed 10% of the amount invested, the portion above that threshold does not benefit from the income tax exemption. It becomes taxable under the standard rules (flat tax or the marginal tax bracket).
Can you invest through a PEA PME without being an experienced investor?
Given these tax considerations and the complexity of eligible securities, the PEA PME is not as popular as the standard PEA.
Indeed, the securities admitted within it are relatively limited and require a genuine interest in the French and European business landscape.
Investing directly in unlisted small-company shares is not as simple as buying units in listed funds (UCITS) or PEA-eligible ETFs.
For ETFs and the PEA, read our article: PEA ETF guide: our top picks
You will need to look into each company’s business, analyze its economic viability and growth potential, and also factor in the risks arising from this type of investment.
However, you can turn to intermediate solutions to use the PEA PME without needing the skills to analyze the viability of these types of investments.
Investing in actively managed funds eligible for the PEA PME
If you are not an expert in private equity, you can still fill your PEA PME with FCPR (venture capital mutual funds), FCPI (innovation mutual funds), or any other actively managed fund eligible for the PEA PME. These funds handle company selection on your behalf and manage a portfolio made up mainly of start-ups, SMEs and European mid-caps, depending on their specialization.
As with managed-portfolio services, you delegate this complex investment step to industry specialists.
Naturally, given the work involved, these funds will charge you relatively high fees.
Purely for illustration, and without being exhaustive, existing funds eligible for the PEA PME include (this list is not a recommendation; assess it against your own situation):
- Echiquier Entrepreneurs (management fees of 2.25% + 0.09% in additional fees, entry fees capped at 3%)
- BNP Paribas Actions PME ISR (formerly Classique, management fees to be confirmed in the official KIID)
There are also funds with no entry fees (0%), charging only management fees ranging between 2% and 3%, such as:
- Lazard Investissement PEA-PME R
- AXA World Funds – Framlington Europe
- Union PME-ETI Actions C
- Sextant PME A
- Oddo BHF Active Small Cap CR-EUR
- Erasmus Small Cap Europe R
- Ostrum Actions Euro Micro Caps R
Note: These fees are charged directly by the funds in question and come on top of the PEA PME’s own management fees.
Investing in ETFs eligible for the PEA PME
If you want to limit your fees, you could turn to ETFs (trackers) compatible with the PEA PME. Unlike actively managed funds, ETFs simply replicate the value of a basket of assets without making any arbitrages.
Management fees are therefore drastically reduced while still keeping the market-risk exposure specific to SME/mid-cap shares (provided you choose a sufficiently diversified ETF).
The only ETF that was ever eligible for the PEA PME, the Lyxor ETF PEAPME (PEAP), was liquidated in 2022 and has never been replaced. As of 2026, there is therefore no PEA PME-eligible ETF left on the market. To invest through this account at a lower cost, the only option remains the actively managed funds mentioned above, while staying alert to their fees.
Frequently asked questions
How do you open a PEA PME?
To open a PEA PME, you need to apply through a bank or an insurance company (for an insurance-based PEA PME). Three conditions apply: being an adult natural person, having your tax domicile in France, and not already holding another PEA PME.
What is the PEA PME cap?
Total contributions to a PEA PME cannot exceed €225,000. When combined with a standard PEA (capped at €150,000), the total amount paid into both accounts cannot exceed €225,000 overall.
Is the PEA PME still worthwhile in 2026?
It depends on the investor’s profile: taxation remains favorable after 5 years, but the lack of an eligible ETF since 2022 means going through actively managed funds with often high fees (2% to 8%), which reduces its appeal compared with the standard PEA.
Can you withdraw money from a PEA PME before 5 years?
A withdrawal, even a partial one, before 5 years closes the PEA PME and results in gains being taxed at the flat tax rate of 31.4% (or, on election, at the progressive income tax scale), on top of permanently losing the plan’s tax seniority.
Sources
BOFiP, tax regime for the equity savings plan for financing SMEs and mid-caps (PEA-PME)
Légifrance, article 157 5° bis of the French General Tax Code
Service-public.gouv.fr, changes to the flat tax (PFU) rate in 2026
JustETF, factsheet for the Lyxor PEA PME (DR) UCITS ETF, liquidated status
La Financière de l’Échiquier, factsheet for the Echiquier Entrepreneurs fund
Regulatory disclaimers: Marketing communication. Investing carries a risk of partial or total capital loss. Past performance is not a reliable indicator of future performance. This article is provided for information and educational purposes only; it does not constitute personalised investment advice, a buy or sell recommendation, or tax advice.
Before investing, read the Key Information Document (KID) and, where relevant, consult an authorised adviser.
Finary SAS, an investment firm authorised by the ACPR (no. 19283), member of AMAFI. Insurance broker registered with ORIAS (no. 21001279), member of the CNCGP (association approved by the AMF). Crypto-Asset Service Provider (CASP) authorised by the AMF under the MiCA regime, references no. A2026-026 and no. N2026-008.
