A simple guide to understanding the difference between a PEA (Plan d'Épargne en Actions) and a standard brokerage account. Learn which one is best for your investment strategy.
A PEA (Plan d'Épargne en Actions) is a tax-advantaged investment account available only in France. It's designed to encourage French residents to invest in European stocks by offering significant tax benefits after a certain holding period.
💡 Simple Explanation: Think of the PEA as a special savings envelope with tax benefits. You put money in, invest in European stocks, and if you keep it for 5+ years, your profits are tax-free (only social contributions apply)!
The traditional PEA with a €150,000 deposit limit. You can invest in European stocks and equity ETFs.
Similar to standard PEA but focused on small and medium-sized European companies (SMEs). Deposit limit: €225,000. Can be combined with a standard PEA.
Opened at a bank, allows you to buy stocks, bonds, and ETFs directly.
Opened with an insurance company, you invest in mutual funds rather than individual stocks.
📊 Important: The PEA is specifically designed for long-term European stock investing. If you want to invest in US stocks, cryptocurrencies, or bonds, you'll need a standard brokerage account.
A Brokerage Account (Compte-Titres Ordinaire or CTO in French) is a standard investment account that allows you to buy and sell any type of financial asset from anywhere in the world, without restrictions.
💡 Simple Explanation: The brokerage account is like a universal investment wallet. You can invest in anything: US stocks, Asian stocks, cryptocurrencies, bonds, commodities, and more. No deposit limit, no geographic restrictions, but also no special tax advantages.
Want to invest in Apple, Tesla, or Nvidia? No problem. Want to buy Chinese or Japanese stocks? You can do that too. The brokerage account gives you access to global markets.
You can deposit €1 million, €10 million, or more. There are no limits. Perfect for large investors or people building significant portfolios.
Need your money back? Sell your positions and withdraw anytime. No 5-year lock-in period, no account closure penalty.
Here's a direct comparison to help you understand the main differences:
| Feature | PEA | Brokerage Account |
|---|---|---|
| Availability | France only (tax residents) | Worldwide |
| Deposit Limit | €150,000 | Unlimited |
| Eligible Assets | European stocks & ETFs only | All assets (stocks, bonds, crypto, etc.) |
| Geographic Markets | Europe (EU/EEA) | Global (US, Asia, Europe, etc.) |
| Tax Benefits | Yes (after 5 years) | No special benefits |
| Withdrawal Flexibility | Limited (closes account before 5 years) | Complete freedom |
| Number of Accounts | 1 per person | Unlimited |
| Dividends | Automatically reinvested (tax-free) | Paid out (taxed immediately) |
| Best For | Long-term European stock investing | Diversified global investing |
Taxation is the biggest difference between a PEA and a brokerage account. Let's break it down:
Withdrawal = Account closure
⚠️ Early withdrawal closes your PEA permanently
Tax-free withdrawals!
✅ You save 12.8% in taxes compared to a brokerage account
💡 Key Benefit: After 5 years, you can withdraw money while keeping the PEA open. You just can't add more money after the first withdrawal.
Flat Tax (PFU) - "Prélèvement Forfaitaire Unique"
When is it applied?
📊 Alternative Option: You can choose to be taxed at your progressive income tax rate instead of 30% flat tax, but only if your marginal tax rate is lower (rare).
Scenario: You invest €10,000 and it grows to €20,000 (+€10,000 profit) after 6 years.
Profit: €10,000
Tax: €10,000 × 17.2% = €1,720
You keep: €18,280
Profit: €10,000
Tax: €10,000 × 30% = €3,000
You keep: €17,000
💰 Savings with PEA: €1,280 (12.8% saved on €10,000 profit)
The more you earn, the more you save with the PEA!
The answer depends on your investment goals, timeline, and the markets you want to access.
💡 Best for: Long-term European stock investors who want tax efficiency
💡 Best for: Global investors who prioritize flexibility and diversification
Max out your PEA (€150,000) first to get tax benefits, then use a brokerage account for additional investments in US/global stocks.
Use PEA for European stocks (Airbus, LVMH, SAP, etc.) and a brokerage account for US tech stocks (Apple, Microsoft, Nvidia, etc.).
PEA for buy-and-hold European dividend stocks. Brokerage account for active trading or short-term opportunities in global markets.
Yes, absolutely! In fact, many experienced investors in France use both accounts to maximize their investment opportunities.
Use your PEA for European stocks to benefit from the 17.2% tax rate after 5 years, and use your brokerage account for everything else (US stocks, bonds, crypto ETPs, etc.).
PEA gives you European exposure. Brokerage account gives you US, Asian, and emerging market exposure. Together, you have a truly global portfolio.
Keep long-term European investments in your PEA for tax benefits. Use your brokerage account for short-term trades or investments that need quick access to cash.
Example: 60% of portfolio in PEA (European stocks), 30% in brokerage account (US stocks), 10% in brokerage (bonds/crypto). Balanced and tax-efficient!
This article is for educational purposes only. It is not financial, tax, or legal advice. Tax laws change frequently and vary by individual circumstances.
Before opening any investment account, consult with a qualified financial advisor or tax professional to understand your specific situation.