As a foreigner just starting your life in France, you might notice that most locals focus on lassurance-vie and savings (livret a et ldds). 🤔 But actually, there are plenty of ways to invest in stocks here too!
So, what’s the best solution?
If you’re living in France, opening a French investment account like PEA or CTO is the safest and most tax-efficient choice!
What’s the difference between PEA and CTO?
To invest in stocks or ETFs in France, you generally choose between:
| Feature | PEA (Plan d'Épargne en Actions) | CTO (Compte-Titres Ordinaire) |
|---|---|---|
| Investment scope | European stocks/ETFs + US index ETFs (S&P 500, Nasdaq) | Global stocks, ETFs, bonds |
| Tax benefits | Tax-free on gains after 5 years (only social charges 17.2%) | No tax benefits, flat 30% tax on gains |
| Contribution limit | Up to €150,000 | No limit |
| Liquidity | Low (penalties if withdrawn before 5 years) | High (free deposits/withdrawals) |
| Tax reporting | Automatic via bank, no extra declaration | Self-reporting required, especially for foreign assets/dividends |
| Best for | Long-term, tax-efficient investing | Flexible, global diversified and short/medium-term investing |
More about PEA
PEA is a tax-advantaged savings plan designed for long-term investment in European shares and select US ETFs. If you keep your investment for at least 5 years, capital gains are exempt from income tax (social charges still apply). The bank handles most tax paperwork, making it hassle-free.
Limitations: You can’t directly buy individual US or non-European stocks, and withdrawing funds before 5 years means losing the tax benefits.
Ideal for: Investors who want to build wealth steadily over the long term through ETFs or European stocks.
More about CTO
The CTO is a general brokerage account allowing investment in a wide range of assets worldwide—including US, Asian, and other global markets.
Taxes: Gains are taxed at a flat 30% rate (12.8% income tax + 17.2% social charges), and managing foreign dividends or currency exchange can add some complexity.
Ideal for: Investors seeking diversified portfolios including individual stocks like Apple, Tesla, or companies from your home country, or those who want more flexibility and shorter investment horizons.
Which account should you start with? 🤔
- If you want tax benefits and a simple long-term investment → start with PEA.
- If you want to invest globally, including stocks outside Europe, or may need to withdraw funds within 5 years → choose CTO.
- If you have enough capital and want the best of both worlds → use both accounts.
Final thoughts: Begin your investing journey in France 🚀
PEA is a great entry point: simple, tax-efficient, and it removes the stress of complex tax declarations. For newcomers, it’s often the best first step.
Personally, I wasn’t sure how long I’d stay in France, so I started with a small PEA investment (around €100) to get familiar with the market. Once you’re comfortable and want more options, opening a CTO to access individual global stocks is a smart move — especially when market dips make buying attractive! 😆
If the 5-year commitment feels restrictive, nothing stops you from opening a CTO right away. Choose the option that suits your goals and situation! 😁
No worries if you’re a beginner!
The terms and options may look confusing at first, but once you open an account and learn how investing flows, it’s quite simple and even fun! 😉
Next time, I’ll cover comparisons between different PEA accounts and tips for opening one.
À bientôt!