PEA and PME accounts

These account types are but 2 of several tax-friendly investing accounts. PEA (Plan d’Epargne en Actions) is only available for Residents of France.

What is it?

A PEA investing account is a long-term investment account that offers tax-deferred growth and tax-free withdrawals for qualified expenses. This account is best for investors who have a long-term investment horizon and are looking to grow their money tax-deferred.

A word of caution

Withdrawals from such an account are only taxed as ordinary income, so this account is not ideal for investors who are in a high tax bracket and are looking to minimize their tax liability.

Difference between PEA and PME

PEA investing accounts are best for investors who are looking to grow their money over the long term and are not as concerned about immediate tax savings. In other words, they are long-term investors who expect to hold their investments for at least 5 years.

PME accounts are ideal for investors who are looking to minimize their current tax liability and are willing to pay taxes on their withdrawals in the future. These individuals typically hold their investment for less than one year.

Where to open one

Brokers such as Saxo Bank offer the account type to their clients.

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