Tax options for individuals in France 2026: PEA, PER, IR-PME

For individuals living in France or subject to French income tax, 2026 opens with a material change in the taxation of investment returns. The Social Security Financing Act for 2026 (loi n° 2025-1403 of 30 December 2025) raised social levies on capital income from 17.2% to 18.6%, lifting the overall flat tax (prélèvement forfaitaire unique, or PFU) from 30% to 31.4% on income earned from 1 January 2026. Every projection made under the previous rate is now overstated.

At the same time, the Finance Act for 2026 introduced several changes that create genuine planning opportunities: an extended carry-forward on PER pension contributions (now five years), a revised income tax schedule, and a temporary family gift exemption running until 31 December 2026. Taken together, these changes make 2026 a year where the order and mix of tax wrappers genuinely matter.

The five wrappers to know are: the PEA and PEA-PME (equity plans, income tax exemption after five years, social levies at 18.6%), assurance-vie (life insurance, annual withdrawal allowance after eight years, transmission mechanics), the PER (pension plan, upfront deduction, best suited to high marginal rates), IR-PME (SME investment tax reduction at 18% or 25% for ESUS entities), and transmission tools including dons familiaux and dismemberment. All figures in this article are specific to French tax law and should be applied only in the context of French tax residency.

The increase in social levies is the most immediate development. The total prélèvements sociaux rate moves to 18.6% (up from 17.2%), driven by a 1.4 percentage point increase in the CSG. Combined with the 12.8% income tax component, the PFU reaches 31.4% on dividends, interest, securities gains and life insurance withdrawals (on the gain portion). The change applies to all qualifying income received from 1 January 2026.

On the pension savings side, the annual PASS (plafond annuel de la sécurité sociale) is set at 48,060 € for 2026, up from 47,100 € in 2025. This reference figure determines contribution ceilings for the PER.

The Finance Act for 2026 extended the carry-forward period for unused PER contribution headroom from three to five years. This is a meaningful change for anyone with variable income: headroom accumulated in lower-earning years can be deployed in a higher-income year when the deduction is worth more.

The plan d'épargne en actions (PEA) is the reference wrapper for long-term equity investment in European companies. The contribution ceiling is 150,000 € for the standard PEA and an additional 75,000 € for the PEA-PME, giving a combined maximum of 225,000 € per taxpayer. A PEA Jeune is available to 18-to-25-year-olds still attached to their parents' household, capped at 20,000 €.

The key feature is exemption from income tax on gains after five years of ownership. In 2026, social levies at 18.6% remain due on those gains at exit. A withdrawal before the five-year mark generally triggers closure of the account and taxation of the full gain at 31.4% (12.8% income tax + 18.6% social levies). The five-year hold is therefore the defining constraint.

Despite the higher social levy, the PEA retains a structural advantage over a standard securities account (compte-titres): gains compound inside the wrapper without annual friction, and the income tax component is eliminated entirely after five years. Over a ten-year horizon or beyond, this compounding effect significantly outweighs the social levy cost.

For a detailed review of PEA-PME eligibility criteria and sector-specific rules, see our dedicated article (in French): PEA-PME : quelle fiscalité pour vos investissements ?.

French life insurance (assurance-vie) serves two distinct purposes that few other wrappers combine: tax-efficient access to investment returns after eight years and a transmission mechanism that operates outside the estate.

On withdrawals after eight years, an annual allowance of 4,600 € of gains applies for a single person and 9,200 € for a married or pacsé couple. Beyond this allowance, the applicable rate depends on the net premiums paid after 27 September 2017: below 150,000 € of net premiums, a preferential rate of 7.5% applies (plus 18.6% social levies); above that threshold, the full 12.8% income tax rate applies (plus 18.6% social levies). In all cases, social levies at 18.6% are due on the entirety of the gain, with no allowance on this portion.

The transmission mechanic is often the most valuable feature for older policyholders. Premiums paid before age 70 benefit from a per-beneficiary allowance of 152,500 € on death, entirely outside the standard inheritance rules. Above that threshold, a specific levy of 20% applies up to 700,000 € and 31.25% beyond. For premiums paid after age 70, the exemption is limited to a global allowance of 30,500 € on capital (shared across all beneficiaries), though gains remain exempt.

Beneficiary designation clauses are among the most frequently overlooked administrative tasks. An outdated or generic clause can negate the transmission advantage entirely. For the perspective of a business owner using life insurance as part of a broader wealth structure, see our article investing in life insurance as a company director. For the question of beneficiary disclosure rights, see can heirs identify the beneficiary of a life insurance policy?.

The plan d'épargne retraite (PER) is structured around a simple principle: contributions are deducted from taxable income in the year of payment, and the corresponding tax deferral is recovered by the state at exit (capital is taxed under the income tax schedule at the pension rate; gains are taxed at the PFU of 31.4%). The higher the marginal rate at the time of contribution, and the lower the effective rate at exit, the better the outcome.

The 2026 contribution ceilings are as follows:

• Employees: the deductible maximum is the greater of 10% of net professional income for the prior year (capped at eight times the prior-year PASS, giving a ceiling of 37,680 €) or 10% of the 2026 PASS (a floor of 4,806 €).
• Self-employed (TNS): the ceiling ranges from 4,806 € to 88,911 € depending on taxable profit, using a specific formula that references both the PASS and the level of business income.

Worked example. An employee with 90,000 € in net professional income in 2025 has a deduction ceiling of roughly 9,000 € in 2026. At a 41% marginal rate, a voluntary contribution of 10,000 € to their PER delivers an immediate income tax saving of 4,100 €. The trade-off is that the capital is locked until retirement (with limited early-release exceptions for purchase of a primary residence, death of a spouse, disability, end of unemployment entitlement, or judicial liquidation for a self-employed person) and the exit is taxable.

The five-year carry-forward (new for 2026) adds flexibility for those with variable income. Unused headroom from years of lower earnings can be applied in a high-income year. For companies setting up collective PER schemes, see our practical guide on implementing a workplace PER in 2026.

The IR-PME (also known as the Madelin reduction) allows French income taxpayers to reduce their tax liability by investing directly in the share capital of eligible SMEs. The base rate is 18% of the amount invested. An enhanced rate of 25% applies to investments in entreprises solidaires d'utilité sociale (ESUS) and qualifying social housing companies, and this enhanced rate is confirmed until 30 September 2026.

Annual investment ceilings are 50,000 € for a single person and 100,000 € for a couple. The maximum reduction is therefore 9,000 € (single, 18%) or 25,000 € (couple, 25% ESUS). However, the IR-PME reduction falls within the 10,000 € global cap on tax niches that applies per household. If you already use other reductions (domestic employment, charitable gifts, etc.), the effective benefit may be partially capped. Any excess is carried forward to the following four years.

Shares must be held for at least five years (to the 31 December of the fifth year following subscription); early disposal triggers repayment of the reduction obtained.

The IR-PME suits investors with a meaningful income tax liability, a solid underlying asset base to absorb the illiquidity, and confidence in the specific SME investment. The tax reduction does not replace investment due diligence. For a broader overview of tax reduction options, see our article on tax planning for individuals.

Real estate transmission and structuring represent a separate pillar of French tax planning. The société civile immobilière (SCI) remains widely used to organise property ownership and facilitate transfer across generations. Dismemberment of SCPI units (bare ownership / usufruct split) allows acquisition at a discount, deferral of taxable rental income during the dismemberment period, and consolidation of full ownership at maturity — detailed in our article on SCPI dismemberment. For directors integrating real estate into a holding structure, see our article on holding company taxation.

On the transmission side, 2026 offers a window that is worth acting on. Under Article 790 A bis of the Code général des impôts, a donor can transfer up to 100,000 € per donee (and up to 300,000 € in total) to a child, grandchild or great-grandchild entirely free of gift tax — but only for transfers completed by 31 December 2026. The funds must be deployed within six months of receipt either to purchase a new-build primary residence or to finance qualifying energy renovation works, failing which the exemption is reassessed. This allowance stacks with the standard lifetime gift allowance. Full details and conditions are covered in our article on the new provisions of the 2026 Finance Act.

Profile 1 — Employee, age 32, 30% marginal rate, 30,000 € to invest. The priority is building a long-term capitalisation envelope. The PEA should be funded first: the income tax exemption after five years is a structural advantage, and at 30% marginal rate, the PER deduction is less compelling than it would be at 41%. Assurance-vie complements the PEA for savings that need to remain accessible. The IR-PME is not a priority at this stage — illiquidity is a constraint when the asset base is still being built.

Profile 2 — Business owner, age 48, 41% marginal rate, 150,000 € free capital. In our experience with high-tax directors, the combination of PER + assurance-vie + IR-PME ESUS consistently produces strong results. The PER captures the immediate tax saving (41% of the contribution, so 4,100 € for every 10,000 € paid in). Assurance-vie absorbs medium-term savings with compound growth free of annual tax friction. The IR-PME ESUS (25%) is added where the income tax liability comfortably exceeds 10,000 € and the investment risk profile is appropriate. A parallel reflection on wealth structuring via a holding company is often warranted at this stage.

Profile 3 — Couple, age 60, 500,000 € estate, transmission objective. The priority shifts from accumulation to transfer. Assurance-vie is central: premiums paid before age 70 attract the 152,500 € per-beneficiary allowance on death, so two children represent 305,000 € passing outside the estate. The dons familiaux window (100,000 € per donor before 31 December 2026) is a parallel lever that should not be missed. Beneficiary clause review is non-negotiable before making any new premium payments.

Four patterns recur in the files we handle:

Choosing a wrapper for its headline tax benefit without a defined investment horizon. The IR-PME reduction is attractive, but capital is locked for five years. The PER deduction is real, but exit is taxable. Without a clear horizon, the tax saving can be offset by liquidity constraints.

Concentrating all savings in a single wrapper. A diversified mix of PEA + assurance-vie + PER allows withdrawals to be timed and structured according to each year's tax position. A taxpayer with only a PER has no short-term flexibility.

Leaving beneficiary clauses outdated on life insurance contracts. A generic or unchanged clause can neutralise the 152,500 € per-beneficiary transmission advantage — one of the most costly errors we encounter, and one of the least visible.

Treating a tax reduction as equivalent to a return. A 25% IR-PME ESUS reduction is worthless if the underlying investment fails. Tax efficiency and investment quality are separate questions.

Updated 26 May 2026. This article is for information purposes only and does not substitute for personalised advice. For your specific situation, consult a qualified French accountant (expert-comptable) or licensed wealth adviser (conseiller en gestion de patrimoine agréé).