1"use strict";(self.webpackChunkdocusaurus_test=self.webpackChunkdocusaurus_test||[]).push([[3422],{4128:(e,n,t)=>{t.r(n),t.d(n,{assets:()=>c,contentTitle:()=>a,default:()=>u,frontMatter:()=>o,metadata:()=>l,toc:()=>d});var i=t(5893),r=t(1151),s=t(9394);const o={sidebar_position:2,sidebar_label:"Types of accounts",description:"Livrets / CTO / PEA / PEA-PME / Life Insurance / PER"},a="Types of accounts",l={id:"finance/getting-started/account-types",title:"Types of accounts",description:"Livrets / CTO / PEA / PEA-PME / Life Insurance / PER",source:"@site/digital-garden/finance/getting-started/account-types.mdx",sourceDirName:"finance/getting-started",slug:"/finance/getting-started/account-types",permalink:"/digital-garden/finance/getting-started/account-types",draft:!1,unlisted:!1,editUrl:"https://github.com/hugolmn/hugolmn.github.io/tree/main/digital-garden/finance/getting-started/account-types.mdx",tags:[],version:"current",sidebarPosition:2,frontMatter:{sidebar_position:2,sidebar_label:"Types of accounts",description:"Livrets / CTO / PEA / PEA-PME / Life Insurance / PER"},sidebar:"gardenSidebar",previous:{title:"Prerequisites",permalink:"/digital-garden/finance/getting-started/prerequisites"},next:{title:"Platforms and brokers",permalink:"/digital-garden/finance/getting-started/platforms-and-brokers"}},c={},d=[{value:"Livret A",id:"livret-a",level:2},{value:"LDDS",id:"ldds",level:2},{value:"LEP",id:"lep",level:2},{value:"CTO",id:"cto",level:2},{value:"PEA",id:"pea",level:2},{value:"PEA-PME",id:"pea-pme",level:2},{value:"Assurance vie",id:"assurance-vie",level:2},{value:"PER",id:"per",level:2}];function h(e){const n={a:"a",admonition:"admonition",em:"em",h1:"h1",h2:"h2",li:"li",p:"p",strong:"strong",table:"table",tbody:"tbody",td:"td",th:"th",thead:"thead",tr:"tr",ul:"ul",...(0,r.a)(),...e.components};return(0,i.jsxs)(i.Fragment,{children:[(0,i.jsx)(n.h1,{id:"types-of-accounts",children:"Types of accounts"}),"\n",(0,i.jsxs)(n.table,{children:[(0,i.jsx)(n.thead,{children:(0,i.jsxs)(n.tr,{children:[(0,i.jsx)(n.th,{style:{textAlign:"right"},children:"Account"}),(0,i.jsx)(n.th,{style:{textAlign:"center"},children:"Recommended duration"}),(0,i.jsx)(n.th,{style:{textAlign:"center"},children:"Recommended for"}),(0,i.jsx)(n.th,{style:{textAlign:"center"},children:"Typical taxes on profits"})]})}),(0,i.jsxs)(n.tbody,{children:[(0,i.jsxs)(n.tr,{children:[(0,i.jsx)(n.td,{style:{textAlign:"right"},children:"Livret A, LDDS, LEP"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Any"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Keeping your cash"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"0%"})]}),(0,i.jsxs)(n.tr,{children:[(0,i.jsx)(n.td,{style:{textAlign:"right"},children:"CTO"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Any"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Flexibility"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"30%"})]}),(0,i.jsxs)(n.tr,{children:[(0,i.jsx)(n.td,{style:{textAlign:"right"},children:"PEA"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"> 5 years"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Tax benefits"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"17.2%"})]}),(0,i.jsxs)(n.tr,{children:[(0,i.jsx)(n.td,{style:{textAlign:"right"},children:"Life Insurance"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"> 8 years"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Optimizing inheritance"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"17.2% + 7.5%"})]}),(0,i.jsxs)(n.tr,{children:[(0,i.jsx)(n.td,{style:{textAlign:"right"},children:"PER"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Until retirement or purchase of your primary residence"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"Deferring income tax"}),(0,i.jsx)(n.td,{style:{textAlign:"center"},children:"30%"})]})]})]}),"\n",(0,i.jsx)(n.h2,{id:"livret-a",children:"Livret A"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Meaning"}),": Booklet A"]}),"\n",(0,i.jsx)(n.p,{children:"Livret A is a tax-free investment, with no lock-in duration and an interest rate set by the french government (3%/year as of March 1st 2024), paid annually.\nSavings amount is capped at 22 950\u20ac."}),"\n",(0,i.jsx)(n.p,{children:"The Pros:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Maximum flexibility: no fees, no minimum duration, transfer in and out anytime you want."}),"\n",(0,i.jsx)(n.li,{children:"No risk, interest rate is guaranteed"}),"\n",(0,i.jsx)(n.li,{children:"No taxes on generated interests"}),"\n",(0,i.jsx)(n.li,{children:"Cap can be exceeded by generated interests"}),"\n"]}),"\n",(0,i.jsx)(n.p,{children:"The Cons:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Interest rate usually similar to inflation"}),"\n"]}),"\n",(0,i.jsx)(n.admonition,{type:"warning",children:(0,i.jsxs)(n.p,{children:["You can only hold ",(0,i.jsx)(n.strong,{children:"one"})," Livret A."]})}),"\n",(0,i.jsx)(n.h2,{id:"ldds",children:"LDDS"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Acronym"}),": Livret de D\xe9veloppement Durable et Solidaire ",(0,i.jsx)(n.em,{children:"(Sustainable and inclusive development booklet)"}),"."]}),"\n",(0,i.jsx)(n.p,{children:"Same characteristics and interest rate as Livret A. The only difference is the savings amount that is capped at 22 950\u20ac."}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsxs)(n.p,{children:["You can open a Livret A ",(0,i.jsx)(n.strong,{children:"and"})," a LDDS."]})}),"\n",(0,i.jsx)(n.admonition,{type:"warning",children:(0,i.jsxs)(n.p,{children:["You can only hold ",(0,i.jsx)(n.strong,{children:"one"})," LDDS."]})}),"\n",(0,i.jsx)(n.h2,{id:"lep",children:"LEP"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Acronym"}),": Livret d'Epargne Populaire ",(0,i.jsx)(n.em,{children:"(Popular Savings Book)"}),"."]}),"\n",(0,i.jsx)(n.p,{children:"Same characteristics as Livret A except:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Interest rate is always higher: at least the rate Livret A + 0.5%, or current inflation if higher."}),"\n",(0,i.jsx)(n.li,{children:"Savings amount is capped at 10k\u20ac (but can be exceeded by interest payments)."}),"\n",(0,i.jsxs)(n.li,{children:["Your ",(0,i.jsx)(n.a,{href:"./prerequisites#taxable-income-and-tmi",children:"taxable income"})," has to be under 22 419\u20ac for a single person (as of March 1st 2024)."]}),"\n"]}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsx)(n.p,{children:"Your account will have to be closed only if your taxable income exceed the maximum for two consecutive years."})}),"\n",(0,i.jsx)(n.admonition,{type:"warning",children:(0,i.jsxs)(n.p,{children:["You can only hold ",(0,i.jsx)(n.strong,{children:"one"})," LEP."]})}),"\n",(0,i.jsx)(n.h2,{id:"cto",children:"CTO"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Acronym"}),": Compte Titre Ordinaire ",(0,i.jsx)(n.em,{children:"(Sustainable and inclusive development booklet)"}),"."]}),"\n",(0,i.jsx)(n.p,{children:"The Pros:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Maximum flexibility: you can buy or sell any open-market day, and transfer money anytime you need."}),"\n",(0,i.jsx)(n.li,{children:"Maximum choice of ETFs and stocks: the only limit being the ones listed by your broker."}),"\n",(0,i.jsx)(n.li,{children:"No account limit: you can open accounts with multiple brokers."}),"\n"]}),"\n",(0,i.jsx)(n.p,{children:"The Cons:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsxs)(n.li,{children:["No tax benefit: profits and divi
1dends are taxed a flat 30% (or 17.2% + your ",(0,i.jsx)(n.a,{href:"./prerequisites#taxable-income-and-tmi",children:"TMI"})," if more favorable)."]}),"\n",(0,i.jsx)(n.li,{children:"Dividends from foreign sources have to be declared annually on your tax form to avoid double taxation (by France + other country)."}),"\n",(0,i.jsx)(n.li,{children:"Accounts opened in foreign countries also have to be declared when filing your taxes."}),"\n"]}),"\n",(0,i.jsx)(n.h2,{id:"pea",children:"PEA"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Acronym"}),": Plan d'Epargne en Actions ",(0,i.jsx)(n.em,{children:"(Share Savings Plan)"}),"."]}),"\n",(0,i.jsx)(n.p,{children:"The Pros:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Tax benefit: only 17.2% social taxes on realized profits"}),"\n",(0,i.jsx)(n.li,{children:"No taxation as long as the money stays in the account (except for foreign dividends taxed at source)."}),"\n",(0,i.jsx)(n.li,{children:"Taxation only on amounts withdrawn. Example: if your account had 15k\u20ac of cumulative deposits, and is now worth 20k\u20ac, your account has 75% of initial capital and 25% of capital gains. If you withdraw 2k\u20ac from this account, it corresponds to 1.5k\u20ac of initial capital and 0.5k\u20ac of profits. You would pay taxes only on these 0.5k\u20ac of profits."}),"\n",(0,i.jsx)(n.li,{children:"Some ETFs that use synthetic replication are eligible for this account even if the tracked index is not based in the EU."}),"\n",(0,i.jsx)(n.li,{children:"Transaction fees are capped by french-law at 0.5% of the transaction amount."}),"\n"]}),"\n",(0,i.jsx)(n.p,{children:"The Cons:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Restricted to European Union stocks, and ETFs with at least 75% invested in EU stocks."}),"\n",(0,i.jsx)(n.li,{children:"Withdrawal within the first 5 years after opening the account: loss of tax benefit (a 30% flat tax is applied) and the account is automatically liquidated and closed."}),"\n",(0,i.jsx)(n.li,{children:"If you have deep pockets: cumulative deposits are limited to 150k\u20ac."}),"\n",(0,i.jsx)(n.li,{children:"Limited to one account."}),"\n"]}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsx)(n.p,{children:"Open a PEA as soon as you can even if you don't invest right away: tax-benefits are based on the account seniority."})}),"\n",(0,i.jsx)(n.admonition,{type:"warning",children:(0,i.jsxs)(n.p,{children:["You can only hold ",(0,i.jsx)(n.strong,{children:"one"})," PEA."]})}),"\n",(0,i.jsx)(n.h2,{id:"pea-pme",children:"PEA-PME"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Acronym"}),": Plan d'Epargne en Actions - Petites et Moyennes Entreprises."]}),"\n",(0,i.jsx)(n.p,{children:"Pros & Cons: Same as the PEA, but restricted to small and medium size businesses (SMB)."}),"\n",(0,i.jsx)(n.p,{children:"SMB that qualify for the PEA-PME have to be based in the EU, and match one of these criteria."}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Less than 5k employees and revenue under 1.5B\u20ac or balance sheet under 2B\u20ac."}),"\n",(0,i.jsx)(n.li,{children:"Market capitalization under 1B\u20ac."}),"\n"]}),"\n",(0,i.jsx)(n.p,{children:"Cumulative deposits on a PEA-PME are limited to 225k\u20ac, and the cumulative deposits on a PEA and a PEA-PME are also capped at 225k\u20ac."}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsxs)(n.p,{children:["Only open a PEA-PME if you intend to buy eligible ",(0,i.jsx)(n.strong,{children:"small cap"})," stocks, and if you plan to exceed the limit of 150k\u20ac of deposits of the regular PEA."]})}),"\n",(0,i.jsx)(n.admonition,{type:"warning",children:(0,i.jsxs)(n.p,{children:["You can only hold ",(0,i.jsx)(n.strong,{children:"one"})," PEA-PME."]})}),"\n",(0,i.jsx)(n.h2,{id:"assurance-vie",children:"Assurance vie"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Meaning"}),": Life Insurance."]}),"\n",(0,i.jsx)(n.p,{children:"The Pros:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Tax benefit: 17.2% social taxes + 7.5% flat tax on realized profits"}),"\n",(0,i.jsx)(n.li,{children:"Taxation only on amounts withdrawn. Example: if your account had 15k\u20ac of cumulative deposits, and is now worth 20k\u20ac, your account has 75% of initial capital and 25% of capital gains. If you withdraw 2k\u20ac from this account, it corresponds to 1.5k\u20ac of initial capital and 0.5k\u20ac of profits. You would pay taxes only on these 0.5k\u20ac of profits."}),"\n",(0,i.jsx)(n.li,{children:"If you withdraw from contracts older than 8 years: you only pay taxes on profits above 4 600\u20ac (or 9200\u20ac if you file taxes with your partner). This can be applied every year, but the amount is global: withdrawing from one or more contracts does not matter."}),"\n",(0,i.jsx)(n.li,{children:"Optimized for inheritance (reduced taxes)."}),"\n",(0,i.jsx)(n.li,{children:"No account limit: you can open accounts with multiple brokers."}),"\n"]}),"\n",(0,i.jsx)(n.p,{children:"The Cons:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Withdrawal within the first 8 years after opening the account: loss of tax benefit (a 30% flat tax is applied)"}),"\n",(0,i.jsx)(n.li,{children:"If you have deep pockets: deposits beyond 150k\u20ac (over all your life insurance contracts) are also subject to the 30% flat tax."}),"\n"]}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsxs)(n.p,{children:["You can hold ",(0,i.jsx)(n.strong,{children:"multiple"})," Life Insurances."]})}),"\n",(0,i.jsx)(n.h2,{id:"per",children:"PER"}),"\n",(0,i.jsxs)(n.p,{children:[(0,i.jsx)(n.strong,{children:"Acronym"}),": Plan d'Epargne Retraite ",(0,i.jsx)(n.em,{children:"(Retirement Savings Plan)"}),"."]}),"\n",(0,i.jsx)(n.p,{children:"If you work for a French company, you may already have one (also called PERCO ou PERCOL, but different from PEE)."}),"\n",(0,i.jsx)(n.p,{children:"The Pros:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:'Tax benefit: deposits can reduce your taxable income (up to 10%, with a minimum of 4 399\u20ac as of 2024). If your taxable income for the current year was 40k\u20ac but you transfered 4k\u20ac into your PER (and selected "versement d\xe9ductible"), your income tax will only be calculated on 36k\u20ac.'}),"\n",(0,i.jsx)(n.li,{children:"You can transfer funds from one account to another: useful when your employer'
1s PER has very high fees or poor choices of investments."}),"\n",(0,i.jsx)(n.li,{children:"Optimized for inheritance (reduced taxes)."}),"\n",(0,i.jsx)(n.li,{children:"No account limit: you can open accounts with multiple brokers."}),"\n"]}),"\n",(0,i.jsx)(n.p,{children:"The Cons:"}),"\n",(0,i.jsxs)(n.ul,{children:["\n",(0,i.jsx)(n.li,{children:"Funds are locked until retirement, purchase of your primary residence, disability (you, your partner or your children), death (you or your partner), expiration of unemployment benefits, over-indebtedness or liquidation of your own company."}),"\n",(0,i.jsx)(n.li,{children:"If you chose to reduce your taxable income, defered income tax are still due when withdrawing money (only in the case of retirement or purchase of your primary residence)."}),"\n",(0,i.jsx)(n.li,{children:"PER contract usually charge annual fees of around 0.5% of the contract value, on top of transaction fees, management fees or ETF fees."}),"\n",(0,i.jsx)(n.li,{children:"When you decide to do something on your PER, there is a one-to-two day lag between you decision and the purshase/sale actually being done."}),"\n"]}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsxs)(n.p,{children:["Deferring part of your income tax allows you to ",(0,i.jsx)(n.strong,{children:"invest more"})," now, and pay back the taxes you owe later."]})}),"\n",(0,i.jsx)(n.admonition,{type:"tip",children:(0,i.jsxs)(n.p,{children:["You can hold ",(0,i.jsx)(n.strong,{children:"multiple"})," PER."]})}),"\n",(0,i.jsx)(s.Z,{})]})}function u(e={}){const{wrapper:n}={...(0,r.a)(),...e.components};return n?(0,i.jsx)(n,{...e,children:(0,i.jsx)(h,{...e})}):h(e)}},9394:(e,n,t)=>{t.d(n,{Z:()=>r});var i=t(5893);function r(){return(0,i.jsx)("a",{href:"https://www.buymeacoffee.com/hugolmn",target:"_blank",children:(0,i.jsx)("img",{src:"https://img.buymeacoffee.com/button-api/?text=Buy me a coffee&emoji=\u2615&slug=hugolmn&button_colour=3578e5&font_colour=ffffff&font_family=Cookie&outline_colour=ffffff&coffee_colour=FFDD00"})})}},1151:(e,n,t)=>{t.d(n,{Z:()=>a,a:()=>o});var i=t(7294);const r={},s=i.createContext(r);function o(e){const n=i.useContext(s);return i.useMemo((function(){return"function"==typeof e?e(n):{...n,...e}}),[n,e])}function a(e){let n;return n=e.disableParentContext?"function"==typeof e.components?e.components(r):e.components||r:o(e.components),i.createElement(s.Provider,{value:n},e.children)}}}]);
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