PEA Taxation in France: What’s the Rate in 2026?

Updated on 31 July 2026

In France, once a PEA (a French tax-advantaged equity savings account) has been held for more than 5 years, withdrawals are exempt from income tax: only the 18.6% social security contributions remain due. Before 5 years, any withdrawal closes the plan and triggers the 31.4% flat tax on the gains.

Key takeaways

• The contribution cap is €150,000 for a standard PEA, raised to €225,000 when combined with a PEA-PME.
• A withdrawal before 5 years generally closes the PEA, except in cases of business creation or takeover, redundancy, disability, or early retirement.
• Income from unlisted shares held in a PEA escapes income tax up to 10% of the amount invested.
• The social security contribution rate rose from 17.2% to 18.6% on 1 January 2026, both before and after 5 years of holding.

How Does a PEA Work?

The PEA works like a wrapper that lets you buy and sell European shares tax-free as long as no withdrawal is made; taxation only applies at the time of a withdrawal.

The PEA (Plan d’Épargne en Actions) is a tax wrapper that lets its holder buy European shares (listed or unlisted) and funds whose assets consist of at least 75% European equities.

Thanks to financial engineering, it is possible to include PEA-eligible ETFs in your equity savings plan, even when their underlying assets would not normally qualify. Indeed, synthetic ETFs replicate the performance of a basket of non-eligible securities through a swap mechanism. This makes it possible to improve your PEA’s diversification (with, for example, world ETFs, bond ETFs, commodity ETFs) while staying within the PEA’s tax framework.

The PEA’s Compartments and When Tax Becomes Due

The PEA works a bit like a savings account: it is made up of two compartments:

• a cash pocket, a kind of holding area for your contributions before they are invested in the securities you want to acquire
• the securities portfolio, made up of the assets held by the saver.

In other words, within a PEA, you can buy and sell eligible securities without triggering tax on capital gains and dividends. Only withdrawals from the PEA make tax due, and the applicable rules depend on how long the plan has been open (more on this below). Every purchase is funded from your cash pocket, and when an asset is sold, the cash pocket is credited with the sale proceeds.

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The PEA and PEA PME Contribution Caps

That said, the PEA has a €150,000 contribution cap. Your PEA’s value can exceed €150,000 due to the appreciation of the financial assets it holds, but you will not be able to make further contributions once that cap is reached. You will therefore need other tools to diversify your wealth management.

It is nonetheless possible to open a PEA-PME, whose contribution cap is €225,000. The PEA PME works like the standard bank PEA, except that it is dedicated to acquiring financial securities of small and medium-sized European companies.

Can you have several PEAs? The answer is yes! By combining a PEA-PME and a bank PEA, you can contribute up to €225,000 in total, a shared cap that cannot be exceeded, and still benefit from the income tax exemption, subject to the rules set out below.

The Tax Rules That Apply to PEAs

To know which tax rules apply to a withdrawal from a PEA, you need to distinguish two key periods counted from the date the plan was opened:

• before 5 years: a withdrawal (even a partial one) closes the plan and triggers standard taxation on the income and capital gains from the securities held
• after 5 years: every withdrawal is exempt from income tax

Good to know :The clock for the income tax exemption on withdrawals starts running from the date the PEA is opened. So even if you do not intend to invest in European shares straight away, opening a PEA early lets the 5-year tax clock start running sooner.

What Tax Applies to a PEA Before 5 Years?

Before 5 years, any withdrawal closes the PEA and the gains are taxed at the 31.4% flat tax (12.8% income tax and 18.6% social security contributions), unless you opt for the progressive income tax scale instead.

As a savings product aimed at individuals, the PEA is designed to encourage you to hold on to your assets and discourage day-trading, a practice that carries a high risk of capital loss. Indeed, the 5-year period is not chosen at random: it roughly corresponds to the point at which most listed shares’ volatility smooths out, reducing this risk.

So even though you can rebalance your holdings within a PEA, we do not recommend making a withdrawal before the 5-year mark.

Plan Closure and Standard Taxation on Income and Capital Gains

Any withdrawal from a PEA before its 5th year from opening closes the plan, along with any tax benefits attached to it.

From that point, the unrealised capital gains and income received during the plan’s holding period (mainly dividends and coupons) become taxable under standard rules, with a choice between:

• applying the 31.4% flat tax, i.e. 12.8% in income tax plus 18.6% in social security contributions (the rate raised from 17.2% to 18.6% on 1 January 2026 by the French Social Security Financing Act for 2026)
• including the gains in the corresponding categories (capital gains on securities and investment income) to calculate any applicable allowances (40% for dividends), then applying the marginal income tax brackets

Good to know : For most taxpayers, the flat tax (31.4%) remains the most advantageous option. However, if your marginal tax bracket does not exceed 11%, it is generally more attractive to opt for the progressive scale (box 2OP on your tax return): your gains are then taxed at a rate lower than the flat tax’s 12.8% income tax component. A personalised simulation is still recommended.

Special Cases: Redundancy, Disability, Business Takeover and Creation

There are a few exceptions for withdrawals made from a PEA before the 5th year:

• a withdrawal used within 3 months to create or take over a business. In this case, the withdrawal does not close the PEA and the gains are exempt from income tax (social security contributions remain due)
• in the event of redundancy, disability, or early retirement (including for a spouse or civil partnership (PACS) partner), an early withdrawal from a PEA does not close it. However, the gains realised remain taxable under the standard rules set out above.

What Tax Applies to a PEA After 5 Years?

From the 5th year onward, the PEA offers its best tax benefits:

• exemption from income tax on withdrawals (social security contributions remain due)
• the equity savings plan remains open

In other words, the PEA then works like a securities account, with a narrower range of available assets, but an income tax exemption in return.

You will nonetheless need to distinguish carefully between income from listed securities and income from unlisted ones. Under Article 157 5° bis of the French General Tax Code, income from shares and equity interests in unlisted companies held in a PEA is exempt from income tax up to 10% of the amount invested. Note, however, that capital gains are not covered by this provision.

Is There a More Advantageous Tax Wrapper Than the PEA?

Yes, in some respects: life insurance offers reduced taxation after 8 years and the employee savings plan (PEE) is fully exempt from income tax, but each of these wrappers comes with its own access requirements or purpose.

Now that you are clear on PEA taxation, it may be worth finding out whether there is a better tax wrapper to lighten the tax on your investment income. As we saw in our guide on “where to invest your money in France”, there are several tax-advantaged wrappers, notably:

• life insurance
• the PEE (the employee savings plan)

Although advantageous in several respects, life insurance only offers reduced taxation (7.5% in income tax instead of 12.8%). In 2026, life insurance also keeps social security contributions at 17.2%, against the 18.6% now applied to the PEA. So unless you are pursuing estate-planning goals, the PEA can offer a greater tax advantage than life insurance for holding certain European assets, subject to your personal situation.

Good to know : to compare your PEA’s taxation precisely against a life insurance policy based on your own situation, Finary’s life insurance tax simulator lets you estimate the tax due on a withdrawal.

Also read: PEA or life insurance: which one wins?

The employee savings plan (PEE) is certainly the most tax-efficient wrapper: contributions from profit-sharing bonuses are exempt from income tax (even though they count as remuneration) and the gains are also tax-exempt. However, the PEE is only open to employees of a company that has set up this collective savings scheme. In addition, the range of available assets is often limited, sometimes to a choice of only 2 or 3 different mutual funds...

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Good to know : The PEA therefore sits halfway between the tax benefits of the PEE and the range of eligible assets of a securities account. The PEA can appeal to individuals who want to invest in European shares.

Frequently Asked Questions

What tax rules apply to PEAs?

Before 5 years, the portion of gain included in each withdrawal is taxable at the flat tax (unless you opt for the marginal income tax brackets instead), i.e. a flat rate of 31.4%. From the 5th year onward, withdrawal proceeds are exempt from income tax, but the 18.6% social security contributions remain due.

Is there a tax difference between the PEA, PEA PME and PEA jeune?

The tax rules that apply to the standard PEA are the same as for the PEA jeune and the PEA PME. The notable difference between these wrappers lies in who can open them and which financial assets are eligible.

What are the social security contributions on a PEA in 2026?

Since 1 January 2026, gains on a PEA carry 18.6% in social security contributions, up from 17.2% previously. According to service-public.fr, this 1.4-point increase, introduced by the French Social Security Financing Act for 2026, applies both before and after 5 years: the exemption acquired after 5 years covers income tax only.

What happens if I withdraw money from my PEA before 5 years?

Any withdrawal before 5 years generally closes the plan. The gains are then taxed at the 31.4% flat tax or, if you opt for it, at the income tax scale. Certain situations (starting a business, redundancy, disability) do, however, allow an early withdrawal without closing the plan.

Is the PEA cap €150,000 or €225,000?

The contribution cap for the standard PEA is €150,000. By also opening a PEA-PME, you can pay in more, but the combined total across both plans cannot exceed €225,000. These caps apply to contributions, not to the value of the portfolio.

Do I need to declare my PEA on my tax return every year?

As long as no withdrawal is made, PEA gains do not need to be declared. Tax only becomes due at the time of a withdrawal. Your bank or broker will then send you the figures to report on your income tax return.

Sources

Service-public.fr, PEA: contribution cap and withdrawal taxation

Service-public.fr, social security contributions on investment income: 2026 rates

Service-public.fr, social security contributions on investment income

Légifrance, Article 157 5° bis of the French General Tax Code