French PEA: Which ETFs Qualify and How to Build a Global Portfolio

What is the PEA?

The Plan d'Épargne en Actions (PEA) is a French tax-advantaged account designed to encourage investment in European equities. You contribute cash, buy qualifying ETFs or shares inside the wrapper, and — provided you wait at least five years before withdrawing — your capital gains and dividends are entirely exempt from French income tax.

Social charges (CSG/CRDS) at 17.2% still apply to gains, but you avoid the flat tax rate of 12.8% income tax (part of the 30% PFU prélèvement forfaitaire unique that applies outside the PEA). For a French taxpayer in a high marginal bracket, the PEA saves substantially more.

The 75% EU/EEA rule — why most world ETFs are blocked

To qualify for PEA investment, an ETF must hold at least 75% of its assets in companies established in the EU or EEA (European Economic Area — includes EU + Norway, Iceland, Liechtenstein). Each company must be subject to corporate tax in its home country.

This rule immediately excludes global index ETFs. VWCE and IWDA track global indices where ~65–70% of the weight is in US and other non-EU companies. CSPX tracks the S&P 500 entirely. None of these pass the 75% threshold, so none can be held inside a PEA.

Which ETFs are PEA-eligible?

Physical ETFs tracking a European-only or EEA-heavy index are typically eligible. Synthetic UCITS ETFs using swaps can also be eligible — the eligibility test looks at the ETF's legal structure and underlying exposure declaration, not just the physical holdings.

Building a global portfolio within PEA constraints

The PEA's EU focus does not mean you must limit yourself to European stocks. The standard approach is to split between PEA and CTO (Compte-Titres Ordinaire):

The logic is straightforward: put your European allocation inside the PEA where it grows tax-free, and hold global (US/EM) exposure in the CTO where the PFU applies. Over time, as your PEA grows and you exhaust the €150k limit, you deploy more into the CTO.

Can synthetic ETFs be used in a PEA?

Yes — this is a widely misunderstood point. Synthetic ETFs that use swaps can be PEA-eligible, provided the ETF provider structures them correctly. Some Amundi and Lyxor synthetic ETFs tracking the S&P 500 or MSCI World are indeed PEA-eligible, because the legal vehicle holds qualifying EU securities as collateral while the swap provides index returns.

Confirming PEA eligibility for synthetic ETFs requires checking the provider's documentation (DICI / KID). Your PEA provider's eligible securities list is the authoritative source — if it is not on the list, assume it is ineligible. Physical ETFs tracking European-only indices are simpler and unambiguously eligible.

Withdrawals and the 5-year clock

The 5-year holding period starts from the date of your first contribution to the PEA, not from when you buy each ETF. Once five years have elapsed, you can make partial withdrawals without closing the PEA — and future contributions remain possible (up to the €150k cap net of withdrawals under current rules).

Before five years, any withdrawal closes the PEA and triggers the 30% PFU on the entire gain, subject to certain exceptions (death, disability, company liquidation). In practice, if you open a PEA and might need the money within five years, keep that money in a livret or cash account instead.