The securities account and the equities saving plan (PEA)

THE EQUITIES SAVING PLAN

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The equities saving plan (PEA) can acquire funds, stocks, or trackers that meet the eligibility conditions while enjoying a very advantegeous tax.As long as any withdrawal before five years, dividends and capital gains escape taxation on income but remain subject to social security contributions at the time of partial withdrawal or final output.

 

 

The PEA : essential to invest in stocks

The equities saving plan allows to build and manage a portfolio of shares. It has tax advantages. However, it has very specific management rules that it is importnat to know before you open, manage or tranfer PEA.

Open or transfer PEA

Tax resident in France may open an equities saving plan (PEA). Each taxpayer or each spouses or each civil partner with joint taxation, can only hold one PEA. The maximum amount of all payments on PEA is 150.000 euros but its value can of course be higher.

It's possible at anytime to transfer the plan to another banking organisation without forfeiting tax benefits.

The transfer, in accordance with the formalities (signing a new contract with the bank and editing a PEA identification certificate by the home bank) thereby helping to keep the opening date and tax exemption for incomes. Very often, banks handle the transfer procedures.

PEA management 

Any withdrawal or partial redemption before 8 years causes the closing of the PEA. In the case of withdrawal or redemption within five years, this leads to the loss of tax benefits related to the PEA.

After 8 years, withdrawals or partial redemptions no longer cause the closing of the PEA. The plan continues to operate. However, when a partial withdrawal was made, it is no longer possible to make new payments  but only manage the amount invested (purchase or resale of securities, for example).

After 8 years without withdrawals, incomes from investment in the PEA are exempt from income taxes but is subject to social security contributions.

Taxation of the PEA

Taxation of the PEA is particularly advantageous. The gains are exempt from income tax after five years in detention but is subject to social security contributions. Any withdrawal before 5 years results in the closing of the PEA.

THE SECURITIES ACCOUNT

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The securities account is an account for investing in financial markets and place orders Stock Exchange. It integrates securities or stock values ​​(stocks or bonds listed in the market). Unlike the Share Savings Plan (PEA), the securities account does not receive any tax benefit but has major advantages: it is possible to hold multiple, invest in all financial markets and on all types of equity securities, bonds, mutual funds,  warrants, ETFs / trackers ...) to diversify their investments without any maximum constraint or withdrawal.

 

 

Opening a securities account

An securities account can be opened by a major or minor, have the form of a joint account or joint ownership. A person can open several securities accounts.

No minimum amount is required upon opening. Similarly, no limit on the number of shares held is imposed.

Operation

A securities account can only hold securities which it allows the management. It is attached to a cash account that manages the liquidity to carry out the purchases and sales of securities. Unlike the PEA, the securities account has no investment ceiling.

Brokerage of securities account

Brokerage fee is collected at each operation, consisting of fixed costs and / or a percentage of the transaction amount.

Tax system

Capital gains from sale of securities and social rights carried out on an ordinary securities account (over stock market gains) are taxed at the progressive rate of income tax after application, where applicable, an allowance for holding period . Added to social security contributions at the rate of 15.5%.

Disposals of securities concerned are:

-sales of shares (listed or unlisted)
-sale of company shares,
-sale of bonds,
-UCI units disposals (FCP, SICAV)
-purchase by a company of its own shares.
 

Capital gains taxable can be reduced with capital losses carried forward the previous ten years have not yet been used, before being submitted to the progressive scale.

In return for the taxation of capital gains tax at progressive rates, 5.1% of the CSG supported by these capital gains is tax deductible in the year of payment.