The PER: A Unique Deduction Mechanism
The Plan d'Epargne Retraite (PER), established by the PACTE law in 2019, has become one of the most popular tax reduction tools in France in just a few years. Its mechanism is fundamentally different from standard tax reductions: voluntary contributions are deducted from taxable income, rather than from the tax amount itself.
This distinction is crucial. A deduction reduces the tax base, meaning the tax saving is directly proportional to the taxpayer's marginal tax rate (TMI). The higher your TMI, the more advantageous the PER.
Deduction vs Reduction Comparison
For a 10 000 euros investment:
| Mechanism | TMI 30 % | TMI 41 % | TMI 45 % |
|---|---|---|---|
| Reduction (18 % FCPI type) | 1 800 euros | 1 800 euros | 1 800 euros |
| PER deduction | 3 000 euros | 4 100 euros | 4 500 euros |
At the same TMI, the PER generates a saving 2 to 2.5 times greater than an 18 % reduction.
Deduction Ceilings in 2026
Deductible contributions are capped at the higher of:
- 10 % of the previous year's professional income, up to 35 194 euros (8 times the annual Social Security ceiling)
- 4 399 euros (10 % of the PASS)
Unused ceilings from the previous 3 years can be carried forward. A couple can pool their respective ceilings.
Practical Example
Paul and Marie, a married couple, declare 120 000 euros of net income:
- Individual ceiling: 120 000 / 2 x 10 % = 6 000 euros each
- Couple's ceiling: 12 000 euros
- With unused ceilings from the last 3 years: potentially 48 000 euros
A contribution of 12 000 euros at TMI 41 % generates 4 920 euros of tax savings.
The Major Advantage: Outside the Tax Niche Cap
The PER is exempt from the global tax niche cap of 10 000 euros. This means a taxpayer can combine:
- 10 000 euros of standard tax reductions (Pinel, FCPI, home help...)
- AND the PER deduction without limitation by this cap
This is a considerable advantage for taxpayers who have already maxed out their tax niche cap.
The Trade-Off: Exit Taxation
The PER is not a free tax gift. Amounts deducted at entry are taxed on exit, at retirement:
Capital Withdrawal
- The capital (contributions) is subject to the progressive income tax scale
- Capital gains are subject to the PFU of 30 % (12.8 % income tax + 17.2 % social contributions)
Annuity Withdrawal
- The annuity is taxed under the income tax scale after a 10 % allowance (like retirement pensions)
- Social contributions of 17.2 % on a fraction of the annuity
Is the PER Worthwhile Despite Exit Tax?
The PER's value rests on a TMI differential between entry and exit:
| TMI at Entry | TMI at Retirement | Net Tax Gain |
|---|---|---|
| 41 % | 30 % | 11 TMI points gained |
| 45 % | 30 % | 15 TMI points gained |
| 30 % | 30 % | Zero gain (simple tax deferral) |
| 30 % | 11 % | 19 TMI points gained |
Golden rule: the PER is advantageous if your TMI drops at retirement. If your TMI stays the same, the benefit is limited to the return on invested savings during the holding period.
20-Year Simulation
A taxpayer at TMI 41 % contributes 10 000 euros/year to their PER for 20 years, with a 5 %/year return:
- Capital contributed: 200 000 euros
- Annual tax saving: 4 100 euros (reinvested at 5 %)
- PER value at retirement: approximately 347 000 euros
- Exit tax on capital (TMI 30 %): approximately 60 000 euros on the capital + PFU on gains
- Net gain vs investing without PER: approximately 85 000 euros
PER vs Other Tax Reduction Schemes
| Criterion | PER | Pinel | FCPI | Girardin |
|---|---|---|---|---|
| Type of advantage | Deduction | Reduction | Reduction | Reduction |
| Tax niche cap | Outside cap | Within cap | Within cap | 18 000 euros |
| Saving at TMI 41 % | 41 % | 12-21 % | 18 % | 110-120 % |
| Lock-up period | Until retirement | 6-12 years | 5-8 years | 5 years |
| Capital risk | Financial market | Property | High (SMEs) | Reassessment |
| Exit tax | Yes (IR) | No | PFU on gains | No |
Who Is the PER Best For?
The PER is particularly suited if you are:
- At TMI 41 % or 45 % with a prospect of a lower rate at retirement
- Nearing the end of your career (10 to 15 years before retirement): the lock-up period is short
- Already at the tax niche cap: the PER offers additional leverage
- Seeking simplicity: no property management or operating risk
The PER is less suitable if:
- Your TMI is 30 % or below: the saving is modest and exit tax may cancel it out
- You need liquidity: the PER is locked until retirement (with some early release exceptions)
- Your TMI will not drop at retirement (significant investment income)
Conclusion
The PER is an extremely powerful tax reduction tool for taxpayers at a high TMI, thanks to its deduction mechanism and exemption from the tax niche cap. However, it is not a tax cancellation but a tax deferral, whose benefit depends on the TMI differential between today and retirement. Integrated into a comprehensive wealth strategy, the PER often constitutes the first building block of tax optimisation to put in place before exploring other schemes.