Taxation of the Main Regulated Savings Products in France: PEL, CEL, Livret A, LDDS, and PER
The taxation of regulated savings products in France is a key element for optimizing oneâs financial portfolio. Each product â Livret A, LDDS, PEL, CEL, and PER â has distinct tax features that impact the net profitability for the saver. This article offers a detailed analysis, supported by real and quantified data, to enlighten French investors about the tax rules applicable to each of these products.
1. Livret A and LDDS: Advantageous and Stable Taxation
Total exemption from income tax (IR): the interest earned is not subject to income tax.
Exemption from social contributions (SC): the interest is not subject to social contributions (17.2%).
The interest rate of the Livret A has been set at 3% since February 2023 (Decree of February 1, 2023), while the LDDS follows the same rate. This total tax exemption means that the net yield for the saver is identical to the gross announced rate. For example, for a capital of 10,000 euros placed in a Livret A, the annual gross and net income will be 300 euros.
2. The Compte Ăpargne Logement (CEL): More Complex Taxation
The CEL, a savings product intended to finance a real estate project, offers a lower interest rate than the Livret A (0.75% as of February 1, 2023). Its taxation is as follows:
Interest from the CEL is exempt from income tax during the first 12 years of the contract.
After 12 years, interest is subject to the flat tax (PFU) of 30%, including 12.8% income tax and 17.2% social contributions.
Social contributions are due from the first year on the interest, even if income tax is exempt.
Practically, for a CEL opened for more than 12 years, interest is taxed at 30%. On a capital generating 75 euros of annual interest (10,000 euros at 0.75%), taxation will reduce the net gain to approximately 52.5 euros.
3. Plan dâĂpargne Logement (PEL): Major Taxation Changes Since 2018
The PEL, designed to prepare a real estate project through regular savings, has seen its tax rules significantly modified for plans opened from January 1, 2018:
For PELs opened before 2018, interest is exempt from income tax for 12 years, then subject to classic taxation at the progressive income tax scale, plus social contributions of 17.2%.
For PELs opened since 2018, interest is subject from the first year to the flat tax (PFU) of 30% (12.8% income tax + 17.2% social contributions).
The interest rate of the PEL is set at 2% for new plans opened since 2023 (Banque de France). On 10,000 euros, the annual gross interest is 200 euros. With the 30% flat tax, the net income is therefore 140 euros.
4. Plan dâĂpargne Retraite (PER): Deduction on Entry, Taxation on Withdrawal
The PER, a retirement savings product launched in 2019 to replace previous schemes, is characterized by specific taxation:
Deductibility of voluntary contributions from taxable income within the limit of 10% of professional income, capped at 32,909 euros for 2023 (source: 2023 Finance Law).
Gains accumulated during the savings phase are not taxed annually but capitalized tax-free.
Upon withdrawal, amounts received are taxed:
In case of lump-sum withdrawal, the portion corresponding to contributions is taxed at income tax according to the progressive scale, while capital gains are subject to the 30% flat tax.
In case of annuity withdrawal, the annuity is subject to income tax under a specific regime with an allowance depending on age.
The PER is therefore particularly advantageous for taxpayers in high tax brackets seeking to optimize their taxation in the short term, at the cost of deferred taxation at retirement.
5. Summary Comparative Table of Savings Product Taxation
Product
Interest Rate (2023)
Income Tax
Social Contributions (17.2%)
Tax Particularities
Livret A
3%
Exempt
Exempt
Stable taxation, ideal for liquid and risk-free savings
LDDS
3%
Exempt
Exempt
Conditions similar to Livret A, intended for sustainable development financing
CEL
0.75%
Exempt < 12 years, 30% PFU > 12 years
Taxable from the 1st year
Heavier taxation after 12 years, social contributions from the start
PEL (opened before 2018)
2%
Exempt < 12 years, income tax scale + SC > 12 years
Taxable from the 1st year
Classic taxation after 12 years
PEL (opened since 2018)
2%
30% PFU from the 1st year
Included in PFU
Heavier taxation for new plans
PER
Variable depending on investments
Deduction on entry, taxation on withdrawal
No annual SC on gains
Tax optimization on entry, deferred taxation at retirement
6. Conclusion and Recommendations for French Investors
The taxation of regulated savings products in France is an essential lever to optimize net returns. The Livret A and LDDS remain the simplest and most tax-advantaged products, especially for emergency savings thanks to their total exemption from taxes and social contributions. The CEL and PEL offer attractive rates for real estate projects, but taxation, particularly for PELs opened since 2018, must be considered as it can significantly reduce net returns.
Finally, the PER is an interesting solution for taxpayers in high marginal tax brackets seeking to reduce their taxable base, accepting deferred taxation at retirement. Its specific taxation requires a personalized analysis according to the saverâs fiscal and patrimonial situation.
Recommendation: For accessible, liquid, and tax-optimized savings, favor the Livret A or LDDS. For a real estate project, the CEL and PEL remain suitable, but calculate the tax impact depending on the opening date. For retirement, the PER should be considered based on your marginal tax rate and investment horizon.
Sources: Banque de France (2023), INSEE (2023), AMF (2023), Ministry of Economy and Finance â 2023 Finance Law, Bloomberg (market rates as of 01/2023).
