PEA vs CTO for Beginners in France: Which Account to Choose?
This is the first real decision every French investor faces. The PEA offers major tax advantages but has restrictions. The CTO is fully flexible but taxed more. Here's the complete comparison — with the numbers that actually matter.
The Core Difference in One Sentence
The PEA (Plan d'Épargne en Actions) is a French tax-advantaged account: after 5 years, your gains are taxed at 18.6% instead of 30%. The CTO (Compte-Titres Ordinaire) is a standard brokerage account with no restrictions but no tax break.
Complete Comparison Table
| Feature | PEA | CTO |
|---|---|---|
| Deposit cap | €150,000 | Unlimited |
| Tax on gains (before 5 years) | 30% | 30% |
| Tax on gains (after 5 years) | 18.6% | 30% |
| Early withdrawal | Closes the account (before 5 years) | Anytime, no penalty |
| Asset types | European stocks & ETFs only | Everything worldwide |
| US ETFs (S&P 500, Nasdaq) | Only UCITS European versions | All ETFs worldwide |
| Number per person | 1 PEA + 1 PEA-PME | Unlimited |
The Tax Impact: Real Numbers
Let's say you invest €500/month for 20 years with a 7% annual return. You end up with roughly €260,000 in gains.
| Account | Tax on €260,000 gain | Net amount kept |
|---|---|---|
| CTO (30%) | €78,000 | €182,000 |
| PEA (18.6% after 5y) | €44,720 | €215,280 |
| Difference | — | +€33,280 with PEA |
Over a long investment horizon, the PEA saves you €33,000+ compared to a CTO on the same investment. That's free money from a decision you make once at account opening.
PEA Restrictions: Are They a Problem?
The PEA only allows European stocks and ETFs. But here's what many beginners don't know: you can still get exposure to the entire world through European UCITS ETFs.
- MSCI World (1,500 global companies) → available as PEA-eligible UCITS ETF (CW8, EWLD)
- S&P 500 (500 US companies) → available via PE500, ESE
- Nasdaq 100 → available via PUST, AAPL, NQVT
- Emerging markets → available via PAEEM
The only things you genuinely can't hold in a PEA: crypto, individual US stocks like Apple or Tesla, bonds, gold.
When to Choose the CTO
A CTO makes sense when:
- You've hit the PEA cap (€150,000 deposits)
- You want to hold individual US stocks directly
- You need full liquidity with no risk of closing the account
- You invest via an assurance-vie contract (separate wrapper)
The Answer for 95% of Beginners
Open a PEA today, even with €100. The 5-year clock starts at account opening, not the first deposit. Every day you delay starting that clock costs you tax efficiency later. You can always open a CTO later for the assets the PEA can't hold.
"The best time to open a PEA was 5 years ago. The second best time is today."
Track both accounts in one place
TREESTEP lets you add your PEA, CTO, assurance-vie, and savings to a single dashboard. Earn XP for smart financial decisions, unlock badges, and stay consistent with gamified quests.
Try TREESTEP free →Frequently Asked Questions
Can you have both a PEA and a CTO?
Yes. You can have 1 PEA and as many CTOs as you want. The common strategy is: max out the PEA first (up to €150k deposits), then use a CTO for anything that doesn't fit.
What happens if you withdraw money from your PEA before 5 years?
Any withdrawal before 5 years automatically closes the PEA and triggers 30% tax on gains. After 5 years, partial withdrawals are allowed without closing the account and gains are taxed at only 18.6%.
Can an expat living in France open a PEA?
Yes — any French tax resident can open a PEA, regardless of nationality. You need a French bank account and to be fiscally domiciled in France. Non-residents cannot hold a PEA.