Should you really choose between a PEA and a securities account?

When you want to invest in stocks, you naturally ask yourself the question of the best investment support: Should you opt for a securities account? Or should you prefer the PEA (editor's note, for Swiss readers: PEA or "Share Savings Plan", is a securities account for French residents that offers tax advantages)? Both have advantages and disadvantages that must be studied closely before determining which of these two media is best suited to your situation...

PEA: more restrictive than a securities account…

Its main drawback its lack of flexibility :

- only one PEA per person and a maximum of 2 per tax household
- a payment ceiling limited to €150,000 (excluding dividends and capital gains from securities held in the portfolio)
- the investment portfolio cannot contain only European titles
- the slightest withdrawal of capital before 8 years of detention immediately close the account. Beyond 8 years, the account is not closed, but if you make a withdrawal, payments are no longer permitted thereafter.

Here, short selling is not allowed, and it is not possible to benefit from leverage on your investments.
On the other hand, the securities account allows very great freedom in portfolio management, in particular:

- no ceiling of payment
- money remains available at any time
- no geographical limitation regarding the securities held in the portfolio

At first glance, it may therefore seem more advantageous to open a securities account, to avoid too many constraints. However, this is not necessarily the best solution…

Securities account: less advantageous from a tax point of view

Although the PEA is subject to strong constraints, it has a significant advantage over the flexibility of the securities account: taxation.

The holder of a securities account is required to pay taxes on all profits obtained (dividends or capital gains) in addition to social security contributions (15.5 %) which are deducted at source.
The PEA, itself, is a very advantageous tax envelope, since the profits obtained are not taxable (excluding social security contributions), provided that they are not withdrawn before at least 5 years of ownership.
This therefore makes the PEA a support particularly well suited to long-term investments.

Do we really have to choose between these two media?

Finally, we quickly understand that the PEA and the securities account are not two opposing investment vehicles, but complementary: when one offers very great freedom in portfolio management, the other provides very competitive taxation. Choosing between the two is therefore not an obligation.

If you do not yet have either one, starting with the PEA may however be a good idea to obtain all the tax advantages as quickly as possible.
Later, you can open a securities account to take advantage of all the opportunities available on the global financial markets.

Finally, for beginner investors, the management constraints linked to the PEA ultimately become advantages: short selling, or leverage can quickly become a nightmare for those who do not yet fully master the dynamics of the stock markets.