Life insurance, PEA: set the date as soon as possible to avoid tax

Avoiding tax on savings is not as difficult as you might think. It is enough to take advantage of the slew of existing tax envelopes. Open at least an equity savings plan (PEA) and multi-support life insurance, even if you only put 500 euros there at the start. The main thing is to take a date: in the first case, your future capital gains will be exempt after five years and, in the second, all of your gains (from the stock market, real estate or euros without risk) will be able to escape the tax authorities after eight years.

Multi-support life insurance

A tax oasis after eight years for capital gains and interest. With its funds in euros devoid of risk and whose yield still exceeds 1.50% per year for the best of them, life insurance has the reputation of being an investment for a good father. But with “multi-media” contracts, which are the majority on the market today, you can also invest in real estate, with SCPIs, but also on the stock market, via equity or bond funds covering all the major regions of the world (Europe, United States, Asia, etc.). This is tax-free – but not social tax – provided that you remain invested in the contract for a minimum period of 8 years.

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To grow, sheltered from the tax authorities, shares and equity funds in the European zone. Shares of companies in the European zone and funds invested at least 75% in European shares: this is what you can accommodate in a share savings plan. With a big tax advantage, since dividends and capital gains will be tax exempt after five years of detention (only the 17.2% of social security contributions will be due).

Good to know : To open a PEA, online banks and brokers specializing in equity investment (Bourse Direct, Degiro, Saxo Banque, etc.), with unbeatable brokerage fees, only require a modest first deposit, generally less than 500 euros. The maximum amount of payments per person is 150,000 euros (double for a married or PACS couple), knowing that the gains made following the valuation of securities or the distribution of dividends are not considered as payments.

To note that the Pacte law of 2019 has erased the rigidities of the PEA: after 5 years, it is now possible to make cash withdrawals without closing the plan, while retaining the ability to make other payments afterwards (withdrawals n were previously authorized only from the age of 8, and any new deposit was prohibited).

Last clarification: since July 2021, brokerage fees on a PEA cannot exceed 0.50% for orders placed over the Internet.

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With this package of small business securities, no taxes after five years. Little brother of the PEA, the PEA-PME is intended to contribute to the financing of small and medium-sized enterprises, as well as intermediate-sized enterprises (ETI). You can therefore only accommodate securities issued by European SMEs or ETIs, or even units of funds invested at least 75% in this type of securities. In return, you benefit from very advantageous taxation, identical to that of the PEA: the accumulated gains are exempt from tax after five years.

With regard to the payment ceiling, the Pacte law of 2019 has brought improvements, by allowing up to 225,000 euros to be placed in a PEA-PME (instead of 75,000 euros), after subtracting, however, the sums invested in the AEP. If you have paid 100,000 euros into your PEA, you can therefore deposit 125,000 euros into your PEA-PME.

To note that the Pacte law also authorized the storage of SME bond securities acquired via crowdfunding sites.

Youth AEP

The same advantages as the classic PEA, but with payments limited to 20,000 euros. Adult children still attached to their parents for tax purposes (this is particularly the case for many students) have long not been authorized to open a PEA. The Pacte law of 2019 lifted this restriction, creating the “young PEA”. The only difference with the classic PEA: payments are limited to 20,000 euros, a ceiling which will be automatically raised to 150,000 euros when the child turns 25 or when he leaves his parents’ tax home.


If your employer has opened one, invest some of your savings in it without hesitation. The company savings plan (PEE) should not be neglected by fans of stock market investments: not only are the annual payments made by the employee often supplemented by a special bonus from the employer, but they provide access to a range of diversified funds composed of 10 to 80% international equities, and shares of the company in which one works if it is listed on the stock exchange.

It should be remembered that, except in the event of exceptional events (marriage, divorce, death of the spouse, disability, over-indebtedness, etc.), the savings invested are blocked for at least 5 years. But the capital gains and dividends collected then escape tax, and are only subject to the payment of the usual 17.2% social security contributions.

Retirement savings plan

Dozens of funds available, and a big tax advantage on entry. Admittedly, the retirement savings plan (PER) has the sole objective of helping you build up savings that will serve as a pension supplement, the capital invested not being available – except for accidents of life (disability, end of rights to unemployment, over-indebtedness, etc.) or acquisition of your main residence – only when you leave working life.

But as with multi-support life insurance, you have the option of investing your savings in a secure euro fund and dozens of other more dynamic supports, including funds made up of shares or real estate.

This with a nice tax advantage, since the payments are deductible from your taxable income. Very significant if you are heavily taxed: by being subject to the 41% bracket, 5,000 euros paid on a PER will save you the following year 2,050 euros in taxes.

PER company

A good deal, even for young employees. If you are lucky enough to work in one of the 265,000 companies offering a company retirement savings plan (Perco’s successor since October 2020), take advantage of it. As for a classic PER, the payments, deductible from your taxable income, can be placed in more or less risky equity funds (including at least one focused on the social and solidarity economy), the employer taking charge of the account management fees, sometimes even those of arbitration between the supports.

The bonuses received (participation, profit-sharing, etc.) can also be placed there. And the savings invested being recoverable at any time in the event of the purchase of his main residence, it remains interesting for a young employee to supply a PER company if he aims to become an owner one day.

Method of taxation of gains in the event of withdrawal of money from one’s life insurance contract


(1) Gains from payments of less than 30,490 euros made between 26.9.1997 and 31.12.1997 are exempt from tax. (2) Payments made since January 2020 on a contract opened before January 1983 are now subject to the current taxation of contracts over 8 years old. (3) This limit of 150,000 euros (double for a couple) applies to all open life insurance and capitalization contracts, and not per contract. (4) The income tax option, if chosen, applies when filing the tax return. If the amount of tax deducted (at 7.50% or 12.80%) proves to be greater than the tax due, the excess is refunded. (5) The tax allowance on earnings from the contract is 4,600 euros per year for a single person (single, divorced, etc.) or 9,200 euros for a married or PACS couple.

The principle of taxing contracts has only been modified marginally by the 2018 reform: in the event of a withdrawal of money, the share of winnings thus remains little taxed after 8 years, or even not at all if these winnings are not do not exceed the annual allowance of 4,600 euros (9,200 euros for a couple). Attention, in addition to the tax rates in our table, you must each time add 17.2% of social security contributions (also due at the end of each year on the fund in euros, even if no withdrawal has been do).

The specific tax regime of the retirement savings plan


(1) Savers can choose to deduct their deposits for tax purposes or not to deduct them, in which case they benefit from reduced taxation upon exit. (2) Death of spouse (or PACS), disability (contract holder, child, spouse or PACS), over-indebtedness, end of unemployment rights, judicial liquidation. (3) Flat-rate levy of 30% (12.8% tax and 17.2% social security contributions) or, optionally, subject to income tax and social security contributions of 17.2%. (4) The annuity is taxed at 40% for leaving the PER between 60 and 69 years old, and at 30% from the age of 70.

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