3 legal tools to pay less tax — that most French households ignore.

The French tax paradox

France posts one of the highest mandatory tax burdens among developed economies: nearly 45% of GDP. Income tax, social levies, VAT, property tax, wealth tax for the highest earners… the fiscal pressure on households is real and concrete.

Yet France has simultaneously built one of the most generous legal tax-optimisation systems in Europe. Mechanisms designed to channel household savings into the productive economy while cutting their tax bill. Mechanisms that — paradoxically — fewer than one taxpaying French household in five uses fully.

1. The PER: turn your taxes into retirement savings

The Plan d'Épargne Retraite (PER), created by the 2019 PACTE law, is probably the most powerful and most under-known instrument in French savings. The principle is simple: amounts you contribute are deducted from your taxable income, within an annual cap.

For an employee, this cap is 10% of the previous year's professional income, within the limit of 10% of 8 times the Annual Social Security Cap (PASS) — about €32,909 in 2024. Unused caps from the past 3 years carry forward, which often makes it possible to catch up.

The money is then invested (in unit-linked funds, ETFs, diversified funds) and grows tax-free until retirement. Exit taxation is the pension tax regime — often lower than today's marginal bracket, which amplifies the advantage further.

• Ideal for taxpayers in the 30%, 41% or 45% brackets
• Exit as lump sum or annuity at retirement
• Early release possible in some cases: spouse's death, disability, purchase of main residence
• Transferable between providers tax-free

2. The PEA: tax exemption within everyone's reach

The Plan d'Épargne en Actions (PEA) is the ideal vehicle to invest in equities in France. The advantage is huge: after 5 years held, all capital gains and dividends are exempt from income tax. Only social levies (17.2%) remain due.

The contribution cap is €150,000 per person (€300,000 for a couple). And the essential trick: the 5-year clock starts at the plan's opening date — not the contribution date. Every day your PEA isn't open is a day lost.

Holding period	Tax on gains	Social levies	Total
PEA – under 5 years	12.8%	17.2%	30%
PEA – after 5 years	0%	17.2%	17.2%
Standard brokerage account	12.8%	17.2%	30%

On a portfolio generating €50,000 of gains after 10 years, the difference between a PEA and a standard brokerage account represents €6,400 of tax savings. A certain saving, guaranteed by law, accessible to every French taxpayer.

3. Life insurance: queen of transmission and gentle taxation

Life insurance is often presented as a simple savings product. It is in fact an extremely powerful tax wrapper, when used well.

After 8 years held, withdrawals benefit from an annual allowance of €4,600 (€9,200 for a couple) on the gains. Beyond that, gains are taxed at a reduced 7.5% rate (+ 17.2% social levies) for contributions below €150,000.

But the most overlooked advantage is for estate planning: capital transferred via life insurance is outside the estate up to €152,500 per beneficiary (for contributions made before age 70). For a family with 3 children, that's up to €457,500 transferred free of inheritance tax.

• Open from the first euro, across a wide range of underlyings
• No contribution cap
• Investment in euro funds (secured) or unit-linked (dynamic)
• Beneficiary clause freely set — spouse, children, third parties

The real cost of doing nothing

Not using these tools means voluntarily paying more tax than necessary. For a household in the 30% bracket who could contribute €3,000/year to a PER, the annual saving is €900 — or €9,000 over 10 years, before compound interest.

These tools don't require a big starting capital or deep financial expertise. They just require good guidance — and action.