French PEA and Assurance-Vie for International Investors: What Non-Residents Need to Know

France operates two of the most tax-efficient long-term savings vehicles in Europe: the Plan d'Épargne en Actions (PEA) and assurance-vie. Both were enhanced by the Loi Pacte (2019) and subsequent reforms. For internationally mobile individuals with connections to France — whether through property ownership, prior residence, or family — understanding these structures is important both for optimising French tax efficiency and for managing obligations to HMRC or other authorities on overseas income and gains.

The Plan d'Épargne en Actions (PEA)

The PEA is a tax-advantaged equity savings account available to French tax residents and, under certain conditions, to non-residents who previously held a PEA as a French resident. Key features:

How the PEA Works

• Investment limit: EUR 150,000 contribution ceiling per individual (a couple can therefore hold EUR 300,000). A PEA-PME (for SME and small-cap investment) allows an additional EUR 225,000.
• Eligible assets: Shares of companies whose registered office is in the EEA, certain UCITS funds with at least 75% EEA equity exposure, and SICAVs meeting similar criteria.
• Tax treatment inside the envelope: Dividends, interest, and realised gains accumulate free of income tax while they remain within the PEA. The account operates rather like an ISA — income and gains reinvested inside the account are not taxed on an arising basis.
• Withdrawal rules:
  • Withdrawals before year 5 trigger income tax on all accumulated gains at 12.8% plus social charges (17.2%), totalling 30% (the French "Prélèvement Forfaitaire Unique" or PFU, also called the flat tax).
  • Withdrawals after year 5 are exempt from income tax; social charges of 17.2% still apply to gains.
  • After 8 years, withdrawals can be structured as an annuity — at which point even the social charges are reduced.

Non-Residents and the PEA

The PEA was originally restricted to French tax residents; however, the Loi Pacte (2019) clarified that individuals who become non-resident do not have to close their PEA — they can maintain it, but they cannot make further contributions after ceasing French tax residency.

For an individual who has accumulated a large PEA during French residence and then relocates, the account can continue to grow tax-deferred within France. Withdrawals after the 5-year point remain exempt from French income tax; the 17.2% social charge position for non-residents was clarified by EU law — non-EEA residents may owe the full social charges on withdrawal (the position for EEA residents is more favourable following EU case law).

Critically, an existing PEA cannot be opened by a non-resident from scratch — only those who already hold a PEA from a prior period of French residency can benefit in this way.

UK Tax Treatment of the PEA

HMRC does not recognise the PEA as a tax-favoured account in the way France does. For a UK tax resident holding a PEA:

• Dividends and interest arising within the PEA are reportable as they arise in the UK, on the arising basis.
• Capital gains realised within the PEA are reportable to HMRC in the year of realisation.
• UK-France DTA relief: The UK-France Double Tax Agreement provides for relief against double taxation, but the mechanism is credit relief — the French tax paid (or deemed paid if the French exemption applies) is credited against UK liability. Where there is no French tax (e.g., gains in the PEA that are exempt in France), there is no credit available, meaning full UK tax applies.

The result: a UK resident's PEA offers no UK tax advantage. Its value as a vehicle is principally relevant to those who are, or expect to become, French tax residents.

Assurance-Vie: The More Internationally Flexible Structure

Assurance-vie is a French life insurance wrapper — not life insurance in the conventional sense, but an investment envelope that holds a range of assets (funds, bonds, structured products, and within certain limits, shares). It is the dominant savings vehicle in France, holding an estimated EUR 1.9 trillion in assets.

Tax Treatment for French Residents

For French tax residents:

• Tax deferral: Income and gains within the assurance-vie accumulate without French income tax until withdrawal.
• Withdrawal taxation: After 8 years, withdrawals benefit from a EUR 4,600 annual allowance (EUR 9,200 for couples) before the PFU rate applies. Gains above the allowance are taxed at 7.5% (for policies opened before 27 September 2017 or contributions up to EUR 150,000) or 12.8% (the standard PFU).
• Death benefit: On death, assets within an assurance-vie are distributed outside the estate succession rules. Beneficiaries receive up to EUR 152,500 free of French inheritance tax (per named beneficiary for policies where premiums were paid before age 70); beyond this, a flat 20% tax applies up to EUR 700,000 and 31.25% above that.
• The death benefit treatment makes assurance-vie the cornerstone of French estate planning.

Non-Residents and Assurance-Vie

Unlike the PEA, assurance-vie can generally be opened by non-French residents, subject to the insurer's appetite and the investor's country of residence. French insurers — AXA, Generali (France), Suravenir, and others — market assurance-vie products to non-residents, particularly to the French diaspora and to international clients with French asset holdings.

For a UK tax resident holding a French assurance-vie:

• The UK-France DTA provides for relief on income and gains to the extent French tax is paid.
• Where the French system defers tax until withdrawal, HMRC's position is that the underlying fund income and gains are reportable in the UK on an arising basis (i.e., the UK does not accept the French deferral).
• The death benefit provisions under French assurance-vie do not affect the position for UK IHT, which is assessed on the value of the policy asset in the estate under UK law.

Practical Use for Non-Residents

For individuals who are non-French residents with French estate planning concerns — e.g., non-residents who own French property and wish to manage the French succession of other assets — assurance-vie has a specific role. The ability to designate beneficiaries and distribute assets outside French forced heirship rules (réserve héréditaire) is a genuine tool. French forced heirship rules restrict the testamentary freedom of French-domiciled individuals; non-residents owning French property may be subject to French succession law on those assets.

Since the EU Succession Regulation (Brussels IV, still applied by France), individuals may elect for the law of their nationality (if non-French) to govern succession to their French movable and immovable assets. This election is made in the will. The result is that many non-French nationals with French assets elect for their home law to govern succession, reducing the importance of assurance-vie as an estate-planning workaround.

The Loi Pacte Changes

The Loi Pacte (2019) made several changes of relevance:

• PEA transferability: Individuals changing bank or insurer can now transfer their PEA without triggering a taxable withdrawal — increasing portability and reducing lock-in.
• PEA-PME expansion: The contribution limit for PEA-PME was raised, and eligible instruments expanded to include certain crowdfunding securities and mini-bonds.
• Assurance-vie reforms: Simplified portability rules allow transfers between assurance-vie contracts of different insurers while preserving the tax clock on the original policy.

Key Compliance Points for UK Investors

• HMRC reporting: UK residents must report all foreign income and gains via self-assessment, including income and gains arising within foreign financial accounts such as a PEA or assurance-vie. There is no minimum account value below which disclosure is excused. Failure to disclose can attract substantial penalties.
• CRS: France participates in CRS (Common Reporting Standard). Account information is automatically shared with HMRC.
• IHT: Since 6 April 2025 UK inheritance tax is assessed on a residence basis rather than domicile. A long-term UK resident (broadly, UK-resident for at least 10 of the previous 20 tax years) is within the scope of UK IHT on worldwide assets, so the value of French investment accounts is included regardless of the French death benefit rules.

How Global Investments Can Help

For clients with French connections — whether a holiday home, prior residence, or family ties — navigating the interaction of French and UK (or other) tax rules requires specialist knowledge of both systems. We work with French-qualified tax advisers to review existing PEA or assurance-vie holdings, model the UK tax cost, and advise on whether restructuring is warranted. Where estate planning across a French-UK axis is required, we co-ordinate the legal and financial elements alongside notaires and UK solicitors. Contact us to discuss.