French investment tax is genuinely generous if you use the right wrappers. On identical investments over 20 years, the gap between someone using a plain brokerage account and someone combining a PEA with life insurance can run to tens of thousands of euros. Here is what each wrapper does, when to use it, and how to put them together.
The four main wrappers
PEA
€150,000 ceiling. Gains exempt from income tax after five years, social charges still due. Limited to European shares and eligible ETFs.
Life insurance
No ceiling. Lighter taxation after eight years and an inheritance allowance per beneficiary. In exchange, annual management fees.
Plain brokerage account
No ceiling, no constraint, no tax advantage: gains taxed at the flat rate. It is the wrapper for whatever the others will not hold.
PER (pension)
Contributions deducted from taxable income, so the higher your bracket the more they are worth. Capital locked until retirement, barring specific exits.
The constraints are what really separates them: the PEA's ceiling, the PER's horizon, life insurance's fees, the plain account's lack of any advantage. None is better in the abstract, and nothing here says which one suits you.
The PEA (Plan d'Épargne en Actions)
A tax-advantaged account for European equities and eligible ETFs. The headline benefit kicks in after five years: gains, both capital gains and reinvested dividends, become exempt from income tax, leaving only the 17.2% social contributions. You can pay in up to €150,000 (plus €75,000 in a PEA-PME, so €225,000 in total).
It holds EU-listed shares, PEA-eligible ETFs (most synthetic MSCI World ETFs qualify) and eligible funds. It cannot hold US shares directly, bonds, SCPIs or crypto. Withdraw before five years and you pay the full 30% (12.8% plus 17.2%) and the plan closes; after five years it is 17.2% only, and partial withdrawals no longer close it.
For almost anyone with a long horizon, this is the first account to open. The typical use is an accumulating MSCI World ETF bought monthly.
Life insurance (assurance-vie)
A French insurance contract that doubles as an investment wrapper, with tax and estate advantages. After eight years you get an annual allowance on gains of €4,600 (single) or €9,200 (couple); above that it is the 30% flat tax, or a 7.5% reduced rate plus social contributions depending on the situation. On death, up to €152,500 per named beneficiary passes outside the estate for premiums paid before age 70.
It holds euro funds (capital guaranteed, around 2 to 4%) and unit-linked funds such as ETFs, SCPIs and equity funds. There is no contribution ceiling, and partial withdrawals are possible at any time without closing the contract, so your money is not locked. Only the gain inside a withdrawal is taxed: if a €100,000 contract holds €30,000 of gains, a €10,000 withdrawal contains €3,000 of taxable gain.
It shines for estate planning, liquidity and as a PEA complement, and it is the usual home for SCPIs.
The CTO (ordinary securities account)
No tax perk, but no restrictions either. Every sale, dividend and coupon is taxed at 30% (12.8% plus 17.2%), or on the progressive scale if that suits you better (worth choosing when your marginal rate is below 30%). It holds everything: global shares, ETFs, bonds, warrants, certificates. No ceiling, no minimum duration, no geographic limit.
Use it for money beyond your PEA and life insurance, for assets the PEA cannot hold (US shares directly, certain ETFs), for copy trading, or when a low marginal rate makes the progressive scale attractive.
The PER (Plan d'Épargne Retraite)
A retirement wrapper with the tax break at the entrance. Contributions come off your taxable income, up to 10% of taxable income (capped at 8 PASS, around €32,900 in 2024) or 10% of the PASS (around €4,113) if you have little earned income. It holds ETFs, funds and euro funds depending on the contract.
The money is locked until retirement, with a few early exits such as buying a primary home, disability or the death of a spouse. At retirement you take capital or an annuity; capital is taxed as income, often at a lower marginal rate than while you were working. It is essential if your marginal rate is 30% or more, and of little use if you pay little income tax.
Copy trading: investing by following others
Copy trading replicates a chosen trader's positions on your own account automatically. If they put 5% of their portfolio into Apple, your account does the same in proportion. You open an account, pick one or more traders by their track record and drawdown, allocate an amount, and the trades mirror across.
The appeal is exposure without expertise, diversification across several traders, full transparency on positions, and a low entry point. The risks are real too: you depend on someone else's results, past performance guarantees nothing, fees usually beat a passive ETF, and leverage can amplify losses. Gains are taxed as securities capital gains, so 30% in a CTO, or the PEA regime if the platform offers eligible accounts.
To see copy trading in practice, you can look at the account of IgniFI's author on eToro: Join me on eToro (referral link, $50 USD bonus on sign-up)
The strategy there is the Barbell 2.0: a multi-asset portfolio (MSCI World, gold, Bitcoin, US bonds) steered by trend-following rules, targeting around 10% net a year with a maximum drawdown near 25%. There is a dedicated piece on it: Copy Trading on eToro: The Barbell 2.0 Strategy Explained. Treat copy trading as a complement to a long-term ETF plan, not a replacement, and keep it to a minority of your savings.
Side by side
| Wrapper | Ceiling | Tax Advantage | Liquidity | Estate Planning | Restriction |
|---|---|---|---|---|---|
| PEA | €150,000 | Yes (after 5 years) | Good | Moderate | EU equities + eligible ETFs |
| Life Insurance | None | Yes (after 8 years) | Excellent | Excellent | Management fees |
| CTO | None | No | Excellent | Standard | None |
| PER | None | Yes (up-front deduction) | Low (retirement) | Good | Locked until retirement |
What changes with the amount
No wrapper is better in the abstract. What varies is how much each constraint weighs, depending on the sum involved.
Below €5,000, the parameter that matters most is time: the PEA's five-year clock starts at opening, even on a €1 payment. On that count alone, a PEA opened early and barely funded starts ahead of one opened late and well funded.
Between €5,000 and €50,000, a second clock joins in, life insurance's eight years, which follows the same seniority logic. This is also where the PER deduction starts to show, since it is worth your marginal rate.
Between €50,000 and €150,000, the PEA's ceiling becomes a concrete horizon, and a plain brokerage account takes what the PEA cannot hold: non-European shares, ineligible ETFs, copy trading.
Above €150,000, life insurance's inheritance allowance per beneficiary weighs more than day-to-day taxation, and structuring questions (several contracts, a holding company for a business) become a subject of their own, one for a professional.
Common mistakes
The big one is waiting until you have "enough" to open a PEA. The clock starts at opening, not at your first real investment, so open it now with €1.
Next is a life insurance contract with high entry fees. Some bank contracts charge 2 to 4% on every payment, which is ruinous over 20 years. Use an online contract (Linxea, Fortuneo, BoursoBank) with no entry fee.
Leaving everything in euro funds is another. They are safe, but at 2 to 4% they do not reliably beat inflation, so a long horizon needs unit-linked funds to actually grow.
Watch management fees too. An ETF at a direct broker costs 0.20 to 0.30% a year. The same ETF inside a life insurance contract with 0.6% unit-linked fees plus 0.5% wrapper fees is 1.3% a year, which on €150,000 over 20 years is tens of thousands of euros.
And do not withdraw from a PEA before five years. Any withdrawal, even partial, closes it and wipes the advantage. After five years, partial withdrawals are fine.
Where to start
- Open a PEA (even with €1) today
- Open a life insurance contract (even with €500) to start the 8-year clock
- Decide an allocation, for example 80% MSCI World ETF (PEA) and 20% euro funds (life insurance)
- Set up an automatic monthly transfer into them
- If your marginal rate is 30% or more, work out this year's optimal PER contribution
- If you pass the PEA ceiling, open a CTO for the surplus
FAQ
Can you have several PEAs? No, one per person, plus an optional PEA-PME. A couple can hold one each.
Can you have several life insurance contracts? Yes, as many as you like. Having two or three with different insurers is sensible for diversification and flexibility.
Can I put crypto in a PEA or life insurance? No. Crypto is not PEA eligible and generally not in life insurance (rare exceptions via ETPs). You hold it on exchanges or through ETPs in a CTO.
PEA or life insurance first? The PEA first for the cleanest tax on equity ETFs, life insurance alongside for flexibility and estate planning. They complement each other rather than compete.
Does the PER pass on at death? Yes. If death comes before retirement, the PER goes to your heirs, and before age 70 the funds get favourable treatment similar to life insurance.