The PEA-PME is a share savings plan dedicated to small and medium-sized enterprises and mid-caps. A complement to the standard PEA, it increases overall equity investment capacity while directing part of a saver’s money toward smaller companies, listed or unlisted.
What is the PEA-PME
The PEA-PME works on the same principle as the standard share savings plan: it is a wrapper that holds shares and certain related securities, with favorable taxation on capital gains beyond a given holding period. The only difference lies in the nature of eligible securities, limited to small and medium-sized enterprises (SMEs) and mid-caps (ETI).
The same holder can hold a standard PEA and a PEA-PME at the same time. The two wrappers share a single overall payment ceiling, which allows the PEA-PME to act as a relay once the standard PEA is full.
Which companies are eligible for the PEA-PME
Eligibility of a security for the PEA-PME depends on the size of the issuing company, not its sector of activity. Shares of companies, listed or unlisted, headquartered in the European Union or the European Economic Area are admitted, provided they meet size thresholds set by law.
The size criteria to meet
A company is considered an eligible SME or mid-cap for the PEA-PME when it employs fewer than 5,000 people, and its annual revenue does not exceed 1.5 billion euros or its total assets remain below 2 billion euros. These thresholds effectively exclude large caps, even when listed on the same markets as eligible securities.
For listed securities, Euronext publishes and regularly updates a list of companies that have declared their eligibility for the scheme, which makes it easier to check before a purchase. The account custodian generally applies this check, but it remains useful to verify eligibility at the time of each order, since a company’s thresholds can change from one year to the next.
Beyond direct shares, the PEA-PME also accepts units of funds invested at least 75% in eligible SME and mid-cap securities, as well as certain participating securities and convertible bonds issued by these same companies.
What is the PEA-PME payment ceiling
The PEA-PME payment ceiling stands at 225,000 euros, but this amount is not cumulative with the standard PEA ceiling: the two wrappers share a single overall ceiling. The standard PEA alone is capped at 150,000 euros, leaving a maximum payment capacity of 75,000 euros into the PEA-PME for a holder who has already reached their standard PEA ceiling.
Only cash payments count toward this ceiling: the portfolio’s valuation can subsequently exceed this amount due to capital gains, without this constituting a breach of the regulatory ceiling. Transferring securities held elsewhere into a PEA-PME is not possible: funding happens exclusively through cash transfers.
Standard PEA or PEA-PME: what are the differences
The two wrappers share the same tax mechanics, but differ in the nature of eligible securities and their role in an investment strategy.
| Criterion | Standard PEA | PEA-PME |
|---|---|---|
| Eligible securities | European shares, any size | European SME and mid-cap shares only |
| Payment ceiling | €150,000 | €225,000 total combined with the standard PEA |
| Number per person | One | One, in addition to the standard PEA |
| Taxation | Same after 5 years of holding | Same after 5 years of holding |
| Risk level | Varies by securities chosen | Generally higher, liquidity sometimes reduced |
The choice between the two wrappers is not really a matter of exclusivity: an investor can hold large caps in their standard PEA and reserve the PEA-PME for a more targeted pocket of mid-cap stocks, as a diversification approach rather than a substitution.
How to open a PEA-PME and its taxation on exit
Opening a PEA-PME is available to any adult who is a French tax resident, one PEA-PME per person, in addition to an existing or non-existing standard PEA. The plan can be opened with a bank, as a securities account paired with a cash account, or with an insurance company, as a capitalization contract.
On the tax side, the PEA-PME follows the same rules as the standard PEA: capital gains remain exempt from income tax once the plan has existed for more than five years, with social security contributions still due at the rate applicable at the time of withdrawal. A withdrawal before this five-year period generally results in the plan’s closure and the loss of its tax seniority, except in specific cases provided for by law.
Risks to know before investing in a PEA-PME
Investing through a PEA-PME means being exposed to SME and mid-cap shares, securities that are generally more volatile than the large caps that make up a broad ETF or a diversified index. The higher growth potential of these companies comes with an increased risk of capital loss, and more pronounced performance gaps from one stock to another.
Liquidity is a second point of attention, particularly for unlisted or thinly traded securities: selling a position in an SME or mid-cap can prove more difficult and costly than for a highly liquid large-cap stock. Diversifying holdings within the PEA-PME, rather than concentrating payments on a small number of companies, mitigates this risk without eliminating it.
Choosing the most suitable wrapper also depends on the wealth-building objective pursued: for an investor weighing several options, the trade-off between a PEA, life insurance and a brokerage account helps place the PEA-PME within a broader allocation, alongside wrappers with different liquidity and tax rules.
Frequently asked questions
What is the difference between a standard PEA and a PEA-PME?
A standard PEA accepts shares from most European companies, including large caps, up to a ceiling of 150,000 euros. The PEA-PME is limited to shares of small and medium-sized enterprises and mid-caps, with a payment ceiling shared with the standard PEA.
Which shares are eligible for the PEA-PME?
Eligible shares are those of companies, listed or unlisted, headquartered in the European Union or the European Economic Area, employing fewer than 5,000 people and with annual revenue not exceeding 1.5 billion euros or total assets not exceeding 2 billion euros.
What is the PEA-PME payment ceiling?
The PEA-PME payment ceiling is 225,000 euros, shared with the standard PEA. A holder whose standard PEA has already reached 150,000 euros can therefore only pay an additional 75,000 euros into their PEA-PME.
Who can open a PEA-PME?
Any adult who is a French tax resident can open a PEA-PME, one per person, in addition to their standard PEA. The plan can be opened with a bank or an insurance company.
What is the benefit of a PEA-PME compared to a standard PEA?
The PEA-PME increases overall payment capacity beyond the standard PEA ceiling, while directing savings toward financing small and medium-sized enterprises, which often show greater growth potential than large caps, in exchange for higher risk.