This lesson describes French law
The wrappers below (PEA, CTO, assurance-vie) exist under French law and their tax treatment applies to French residents. Other countries have their own equivalents, with different rules. Check the framework that applies to you, and consult a qualified professional where needed.
In France you do not buy shares “in a vacuum”: you hold them inside a wrapper that determines the tax treatment and the constraints. Choosing the right wrapper is a decision as important as choosing the securities.
The PEA: Plan d'Épargne en Actions
Restricted to European shares (and eligible ETFs). Its main strength: after five years of holding, gains are exempt from income tax (only social levies, around 17.2%, apply). Contribution cap: €150,000. It is the reference wrapper for long-term equity investing in France.
The CTO: Compte-Titres Ordinaire
No restrictions: every market in the world, every product. In exchange, gains are taxed (a 30% flat tax by default). It is the natural complement to the PEA for investing outside Europe or beyond the cap.
Assurance-vie
A flexible wrapper combining euro funds (secured) and unit-linked holdings (shares, ETFs). Favourable tax treatment after eight years, and a major advantage for estate planning. Often carries higher fees, which deserve close attention.
A simple rule
For many long-term investors in France: the PEA first (European shares and eligible World ETFs), then the CTO for the rest of the world, and assurance-vie for flexibility and estate planning.
In Earnnest
You can tag each broker connection as PEA or non-PEA (CTO), and separate your positions by wrapper in the portfolio. See the Help centre → Connecting a broker.
À retenir
- ✓The wrapper determines the tax treatment: it can be worth several points of net return.
- ✓PEA = European shares and ETFs, income-tax exemption after five years (social levies still apply).
- ✓CTO = total freedom but taxable; assurance-vie = flexibility and estate planning.