In recent years, the PEA-PME has been on the rise and more and more resources have been put in place to facilitate its opening. Thus, laws and banks are updating to allow individuals to invest in SMEs and mid-caps.
What is a PEA-PME?
A PEA-PME is an equity savings plan (PEA) intended for the financing of small and medium-sized enterprises (SMEs) and medium-sized enterprises (ETI). It is a financial investment that allows exemption from income tax. The PEA-PME works like a PEA, but it is intended for SMEs and ETIs, its ceiling and the type of securities that appear there are different. The only condition for opening a PEA-PME is to be of legal age. The specificity of PEA-PME is that it allows to benefit from an advantageous tax regime. After 5 years, earnings are exempt from income tax and only social security contributions will apply to earnings. For the moment, the PEA-PME remains an investment little used by the French, but the widening of its eligibility for debt instruments such as crowdfunding makes it attractive to the French.
What is crowdfunding?
Crowdfunding is crowdfunding. It allows the public to finance projects without the help of traditional banking players, through specialized platforms. This to help the creation of young companies, for real estate financing or for associative projects. Real estate crowdfunding investments can be accommodated in PEA-PME since 2019. When the financial project is completed, lenders can not only recover their principal, but also interest ranging from 7 to 12%.
The PACTE law
Definitively adopted on April 11, 2019, the PACTE law (Action Plan for the Growth and Transformation of Businesses) paves the way for more crowdfunding. The vote of this law made it possible to the securities resulting from the crowdfunding to be eligible for PEA-PME and to increase the ceilings in force. Previously fixed at € 75,000, now the PEA-PME shares the same ceiling as the PEA, which amounts to € 225,000. From their PEA-PME, individuals can now invest in crowdfunding platform projects.
How PEA-PME works in crowdfunding
To be able to invest in crowdfunding from your PEA-PME, you must first contact a banking institution. The bank advisor can then guide you on the procedure to follow, giving you the documents necessary for the release of funds and the reimbursement of the project when it comes to an end. Banks apply fees (variable depending on the bank) for holding a PEA-PME, which includes opening fees, online transactions and annual custody fees. Note, however, that the PEA-PME can be transferred from one bank to another, thus giving the possibility of changing banks, if the rates offered by the banking establishment are not attractive enough. In addition, since July 1, 2020, limits have been set for the bank charges of a PEA-PME. Since then, the costs per unlisted line cannot exceed 0.4% of the line added to 25 euros, to simplify: for an investment of 5,000 €, your bank charges cannot exceed 45 €. To facilitate crowdfunding investments, ceilings have also been set for account transfer fees and custody fees. Real estate crowdfunding takes the lead, however, it is possible to invest in different types of financial tools. Investing in crowdfunding from a PEA-PME allows individuals to access forms of financing hitherto reserved for professional investors and institutions. This investment, which is not subject to real estate wealth tax, may potentially generate capital gains subject to the flat tax of 30%.