The PEA-PME is a savings product intended to finance small, medium-sized and intermediate-sized companies. Its operation is very similar to that of a share savings plan (PEA). What are the conditions for opening a PEA-PME? What is the maximum payment that can be made? What is the tax regime surrounding this investment mechanism? Answer.
Capital Video: What is PEA-PME?
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– Open a PEA-PME
What is PEA-PME?
Accessible to any person domiciled in France, the PEA-PME is a securities account designed to direct savings towards financing small and medium-sized enterprises (SMEs) and intermediate-sized enterprises (ETIs). This savings product, created with the 2014 Finance Act, allows you to manage a portfolio of European shares and mutual funds while benefiting from tax advantages.
What are the conditions for opening a PEA-PME?
Be domiciled for tax purposes in France
All French taxpayers domiciled for tax purposes in France can open a PEA-PME with a financial intermediary: credit institution, Caisse des dépôts et consignations, Banque de France, Banque postale, insurance company covered by the Insurance Code, etc. The number of PEA-PMEs is limited to one per person, and two per tax household. When requesting to open one, the banking institution must verify that the saver does not already have one.
Sign a contract when opening
The PEA-PME can be subscribed in the form of a PEA insurance (capitalization contract), managed by an insurer or a bank PEA. It then takes the form of a securities account coupled with a cash account. In all cases, the opening of the PEA-PME is the subject of a written contract mentioning the legislation on the PEA as well as certain rules of the General Tax Code.
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What is the maximum payment that can be made into a PEA-PME?
Only cash payments are permitted.
Cash payments are payments in money that can take the form of cash, checks or transfers. The securities acquired using this cash are then registered in a securities account. The opening date of the PEA-PME corresponds to the date of the first payment (no legal minimum amount). It is from this moment that the tax meter starts to turn. The amounts paid into the PEA-PME can be scheduled or one-off. They must be used to invest in:
- Actions by SMEs and ETIs.
- Bonds convertible into shares of these same companies.
- Shares in mutual funds (FCP) which meet the investment criteria for SMEs and mid-cap companies.
Payment ceiling
The PEA-PME ceiling is 225,000 euros in 2024. If the investor holds both a classic PEA and a PEA-PME, the cumulative payments into the two accounts must not exceed 225,000 euros.
Local investment funds: characteristics and tax exemption
What taxation surrounds a PEA-PME?
Withdrawal before five years
The PEA-PME takes on the tax characteristics of the PEA. Except for exceptions, before five years, any withdrawal results in the closure of the plan. Dividends and capital gains are taxed at the PFU (or Flat Tax) of 30% (12.8% income tax + 17.2% social security contributions).
Withdrawal after five years
After five years (effective date of the first payment), withdrawals are authorized. Payments remain possible even after a partial withdrawal. Upon withdrawal, earnings (dividends and capital gains) are tax-exempt, but remain subject to social security contributions (17.2%).
Withdrawal in the form of a life annuity
The withdrawal can take the form of a tax-free life annuity (article 157 of the CGI). To convert the capital of the PEA-PME into an annuity, it must be transformed into a PEA-insurance (if it was initially a banking PEA-PME). This conversion is only possible if the PEA-PME has a maturity of at least eight years.
Good to know: Transferring your PEA to another bank offering more attractive pricing is possible. The flat rate for the transfer is set at 15 euros (maximum) per line of securities with a ceiling of 150 euros for all fees related to this transfer.
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What is the difference between the PEA and the PEA-PME?
Ceiling amount
The difference between a PEA-PME and a classic PEA concerns the payment limits as well as the eligible securities. The ceiling for the PEA-PME is 225,000 euros compared to 150,000 euros for the Classic PEA. It is possible to hold both an ordinary PEA and a PEA-PME, but the capped total of the two plans must not exceed 225,000 euros. Exceeding this payment ceiling is subject to a tax fine equal to 2% of the amount of the excess payments. The two versions of the PEA can be domiciled in different establishments.
Authorized investments
The PEA allows you to invest in all European stocks. Investments authorized with a PEA-PME are limited to small and medium-sized enterprises (SMEs) and European mid-cap companies (ETIs) with fewer than 5,000 employees and an annual turnover of less than €1.5 billion (or a balance sheet total of less than €2 billion). The following are eligible:
- the actions,
- units of mutual funds or shares of Sicav, UCITS and ETFs invested at least 75% in securities of SMEs or ETIs,
- shares of limited liability companies (SARL),
- trackers (ETF) and investment funds (FCPR, FCPI),
- fixed rate bonds,
- bonds (debt securities) convertible or repayable into shares,
- certain crowdfunding titles.
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What are the advantages of a PEA-PME?
A wealth diversification tool
Like any financial mechanism, the PEA-PME involves risks and advantages for investors seeking to grow their capital through the real economy. It is a wealth diversification tool that allows you to bet on and contribute to the development of French SMEs and ETIs by benefiting from a broader market than that of the major stocks listed on the Paris Stock Exchange.
Favorable taxation
The PEA–PME provides access to advantageous taxation and competitive management fees. Since July 1, 2020, these fees have been capped as follows:
- Account maintenance and custody fees: 0.4% maximum of the value of the securities in the portfolio. These fees may be increased by fixed fees per line of securities held or per unit of account (UC) without being able to exceed 5 euros, or 25 euros for unlisted securities (or unit of account);
- Transaction fees : 0.5% maximum of the transaction amount per electronic order and 1.2% in other cases.
- Transfer-related fees: 15 euros per line of securities held transferred and 50 euros for a line corresponding to unlisted securities. The total fees are capped at 150 euros.
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