PEA simulator: capital, gain and income-tax exemption after 5 years

Simulate your PEA

The projection compares the taxation before and after the 5-year mark. Your data is neither stored nor transmitted.

Why the PEA remains the most powerful — and most neglected — equity wrapper

Many savers invest in equities through an ordinary securities account, whose gains are taxed at the 31.4% flat tax from the very first euro withdrawn. The PEA, by contrast, radically transforms the long-term tax equation, yet remains underused: opened late, poorly funded, or abandoned in favour of more visible investments. It is an allocation mistake, because no other wrapper combines equity exposure with income-tax exemption.

The mechanism rests on two engines. First, tax-free compounding: as long as you withdraw nothing, dividends and gains reinvest with no taxation — neither tax nor social levies. Taxation only triggers on withdrawal. Then, the 5-year mark, which entirely exempts gains from income tax.

Over a long horizon, the gap with an ordinary securities account is considerable. At identical performance, the PEA keeps the income tax that would have eaten into every withdrawal, and reinvests it. It is precisely this differential, compounded year after year, that this simulator highlights.

The 3 PEA levers your bank adviser rarely optimises

Lever 1 — the 5-year mark, the decisive advantage

Before 5 years, a withdrawal is taxed at the 31.4% flat tax and in principle triggers the closure of the plan. After 5 years, everything changes: withdrawals are free, the plan stays open, and gains escape income tax entirely — only the 18.6% social levies apply. Hence a golden rule too often neglected: you must “start the clock” early, even with a modest contribution, to set the 5-year counter running. The plan opened at 30 with €500 will already be mature when the one opened at 40 is barely starting.

Lever 2 — the tax exemption on internal arbitrages

Inside the PEA, you can sell one line and buy another with no taxation whatsoever: no tax, no social levy is due as long as the sums do not leave the plan. On a securities account, every winning arbitrage triggers a 30% taxation that eats into the reinvested capital. This exemption on arbitrages lets you actively steer your allocation — securing gains, rotating into other sectors — without the tax friction that silently erodes the performance of an ordinary account.

Lever 3 — gaining global exposure via PEA-eligible ETFs

The PEA in principle only holds shares of European companies and funds invested at least 75% in European Union equities. Many conclude, wrongly, that it locks you into the European market. In reality, many synthetic-replication “PEA-eligible” ETFs allow indirect exposure to global markets — the United States, emerging markets — while complying with the eligibility rule. This is the lever that turns the PEA from a “Franco-European” wrapper into a genuine tool of tax-exempt global exposure, and it remains largely unknown.

Worked example — Camille, 34, self-employed doctor in Lyon

Camille opens a PEA with €20,000 and pays in €500 a month for 15 years, on a PEA-eligible World ETF targeting 6% net of fees. Here is what the simulator projects, compared with the same investment held in an ordinary securities account taxed at 30%:

At strictly identical contributions and performance, Camille keeps nearly €7,400 more by going through the PEA rather than a securities account: the 12.8% income tax that would hit her gain is simply wiped out after 5 years. Only the 18.6% social levies remain.

The lesson is simple: for a long-term equity exposure, the choice of wrapper weighs as much as the choice of securities. Having “started the clock” young, even with a small contribution, lets Camille benefit from the exemption well before peers who open their plan later.

The 5-year mark: the decisive advantage

As long as you withdraw nothing, the PEA compounds with no taxation: dividends and gains reinvest tax-free. Taxation only triggers on withdrawal. Before 5 years, a withdrawal is taxed at the 31.4% flat tax and in principle triggers the closure of the plan.

After 5 years, everything changes: withdrawals are free, the plan stays open, and gains escape income tax entirely. Only the 18.6% social levies apply. Over a long horizon, the saving is considerable against an ordinary securities account taxed at 30%.

What you can hold in it

The PEA holds shares of European companies and funds (UCITS, ETFs) invested at least 75% in European Union equities. Many “PEA-eligible” ETFs today allow indirect exposure to global markets (the United States, emerging markets) while complying with the eligibility rule.

The PEA-PME, capped at €225,000, targets small and medium-sized companies and certain bonds; the two caps combine within an overall €225,000 limit.

The wrapper wipes out the tax, the allocation makes the performance

This simulator quantifies the tax gap between a PEA and an ordinary securities account. But the wrapper is not everything: the real value is created in the allocation — the choice between self-managed and discretionary management, the selection of genuinely diversifying eligible ETFs, the calibration of risk according to your horizon, and the articulation of the PEA with your life insurance, your PER and any PEA-PME. A well-filled but poorly invested PEA remains an underperforming PEA.

Balmont Conseil is an independent wealth-management firm, a member of ANACOFI, with no capital ties to a bank. This independence lets us select the underlyings across the whole market and build an allocation aligned with your sole interest, without pushing a network’s in-house funds. Let’s arrange a meeting to structure or optimise your PEA within a coherent wealth strategy.

Frequently asked questions

When does the PEA become tax-advantageous?

From opening, the plan compounds with no taxation: dividends and gains reinvest tax-free as long as you withdraw nothing. The decisive advantage triggers after 5 years of holding: gains are then entirely exempt from income tax, only the 18.6% social levies remaining due. Before 5 years, a withdrawal is taxed at the 31.4% flat tax and in principle triggers the closure of the plan. Hence the value of “starting the clock” early, even with a modest contribution.

What is the PEA cap?

The contribution cap of the classic PEA is €150,000. It is combinable with a PEA-PME, but the whole remains within an overall €225,000 contribution limit. Note: this cap applies to contributions, not to the plan’s value — your PEA can therefore far exceed €150,000 in value thanks to gains, with no problem.

What can be held in a PEA?

The PEA holds shares of European companies and funds (UCITS, ETFs) invested at least 75% in European Union equities. Many “PEA-eligible” ETFs nevertheless allow indirect exposure to global markets — the United States, emerging markets — while complying with the eligibility rule. That is what lets the PEA be turned into a tool of tax-exempt international exposure, rather than a mere Franco-European wrapper.

Is the PEA more attractive than an ordinary securities account?

Over the long term and for eligible equities, yes, unambiguously. The ordinary securities account taxes gains at the 31.4% flat tax from the first euro withdrawn. The PEA, after 5 years, entirely exempts the gain from income tax (12.8%), leaving only the 18.6% social levies. At identical performance, the saving compounded year after year is substantial. The securities account keeps its usefulness for securities not eligible for the PEA or beyond the cap.

How does Balmont Conseil differ from a bank adviser for my PEA?

Balmont Conseil is an independent wealth-management firm, a member of ANACOFI, with no capital ties to a bank. A bank adviser will readily steer your PEA towards the funds managed by their group, often more heavily laden with fees. Our independence allows open architecture: selection of ETFs and funds across the whole market, in the client’s sole interest, and articulation of the PEA with your other wrappers (life insurance, PER, PEA-PME) within an overall strategy.