If you’ve built your PEA (stock savings plan) around synthetic ETFs tracking global indices, you might want to sit down. Bercy (the French Ministry of Finance) has quietly announced it’s taking a hard look at these products, and the implications could be expensive.
The ministry recently told Le Figaro that “the issue of investments in ETFs marketed by European actors and invested in values outside the European Economic Area is a subject well identified by Bercy services, and is the subject of analysis.” Translation: your MSCI World or S&P 500 exposure via synthetic ETFs might be living on borrowed time.
What Makes Synthetic ETFs So Appealing (And Problematic)
Synthetic ETFs don’t actually buy the underlying stocks. Instead, they use swap agreements with investment banks to replicate index performance. For French investors, this is the magic that lets you hold global market exposure inside your PEA while technically complying with the rule that PEA investments must be at least 75% European.
The iShares MSCI World Swap PEA UCITS ETF is a perfect example. It delivers global developed market exposure without holding a single non-European stock directly. The ETF invests in a basket of European assets and swaps their performance for the MSCI World return. Clever, right?
This structure has fueled explosive growth. By the third quarter of 2025, 359,000 French investors were buying ETFs, up 45% from the previous year. At the end of 2024, 22.5% of the €128 billion sitting in PEA accounts was invested in OPCVM (collective investment schemes), which includes ETFs. That’s roughly €26 billion potentially affected by any rule change.
The Philosophical Objection
The PEA was created in 1992 with a clear mission: direct French savings toward financing French and European companies. The tax advantages, complete exemption from income tax and social charges after five years, were meant to encourage investment in the “real economy” of the EU.
But synthetic ETFs, while technically compliant, arguably undermine this spirit. Your money might be wrapped in European assets for regulatory purposes, but economically, you’re betting on Apple, Microsoft, and Nvidia. Bercy’s analysis suggests this “diverts” the PEA from its original purpose.
This isn’t the first time French regulators have closed a “loophole.” In 2011, the government banned SIIC (listed real estate investment companies) from PEA accounts. The logic was identical: SIIC combined two tax advantages, PEA exemption and SIIC tax transparency, creating what officials considered an unjustified double benefit. Existing holdings were grandfathered, but new purchases were prohibited.
The Nightmare Scenario for Investors
Here’s where it gets painful. If Bercy follows the SIIC playbook, synthetic ETFs could become “non-eligible” for PEA. But what happens to the €26 billion already invested?
Historical precedent offers clues. When Brexit uncertainty clouded UK stock eligibility, the AMF (Financial Markets Authority) clarified that ineligible holdings would need to be transferred to a standard securities account (CTO) or sold. Fortuneo organized forced transfers of British securities from PEA to CTO accounts.
The tax consequences would be brutal. Selling means triggering capital gains taxes at your marginal rate (up to 30% plus social charges) instead of the PEA’s zero rate. Transferring to a CTO might avoid immediate taxation, but you’d lose the PEA’s future tax exemption on gains.
Many investors report having 80% of their financial wealth in diversified ETFs within their PEA, opened less than five years ago. The prevailing sentiment is frustration at potential rule changes that would force them to empty their PEA, pay full taxes and fees, and adopt a different strategy. One investor summed it up: “I have a bit of a feeling of being scammed if the regulation changes and I have to empty my PEA.”
The Scale of the Problem
Let’s put this in perspective. The Banque de France counted nearly 5.4 million active PEA accounts at the end of 2024. That’s 5.4 million potential voters who could see their investment strategy upended.
The synthetic ETF structure has become so common that many investors don’t even realize they’re using it. The iShares Core DAX and Core EuroStoxx 50 ETFs, two of the largest European equity ETFs available to French investors, are administered by BlackRock, an American giant. This raises sovereignty questions that play well in French political circles.
Yet the irony is thick. French investors turn to synthetic ETFs partly because domestic alternatives are underwhelming. As one investor bluntly put it: “But we don’t want to invest in Stellantis.” The French automaker’s shares have been volatile, and many retail investors prefer broad market exposure to betting on individual French companies.
Is This Justified Policy or Fiscal Whiplash?
The debate splits along predictable lines. Supporters argue that closing the synthetic ETF “loophole” aligns with the PEA’s original mission. Critics see another example of French fiscal instability.
One commenter noted: “French fiscal stability, always practical for long-term investing… And to think some people open a PER (retirement savings plan) at 30, a locked product until retirement with no possibility of changing strategy for 35 years while the rules will definitely change.”
The PER comparison is telling. Unlike the PEA, the PER is locked until retirement (with limited exceptions). If rules change, you’re trapped. The PEA at least offers flexibility, though forced sales would eliminate that advantage.
Defenders of the potential crackdown point to the SIIC precedent. “For once it’s not a problem of stability or a legislator changing the rules mid-game”, one argued. “Yes, it would be annoying to no longer benefit from tax advantages for non-EU holdings, but of all the fiscal changes our dear Treasury could imagine, this would be one of the most justified.”
The International Context
French investors eyeing alternatives might look abroad, but the grass isn’t always greener. Sweden’s ISK (Investment Savings Account) offers complete liquidity and flat annual taxes, but you can’t deduct losses. Italy’s PIR (Individual Savings Plan) requires 70% Italian exposure, stricter than France’s PEA. Finland’s OST (Stock Savings Account) only allows direct stock holdings, not ETFs.
Germany has no equivalent product at all, while Belgium doesn’t need one because capital gains on stocks are generally tax-free for individuals. The Netherlands taxes wealth based on a fictional return, regardless of actual performance.
This patchwork makes the PEA’s simplicity attractive, if you can trust the rules won’t change.
What Should Investors Do?
First, don’t panic. Bercy is “analyzing”, not announcing. The SIIC ban took time to implement, and existing holdings were grandfathered. Any change would likely include a transition period.
Second, review your PEA holdings. If synthetic ETFs dominate your account, understand the concentration risk, not market risk, but regulatory risk. The quality of ETF selection matters more than ever when regulatory clouds gather.
Third, consider diversification across account types. The CTO offers no tax advantages but complete flexibility. Assurance-vie (life insurance) provides tax benefits after eight years and allows arbitrary fund switches. The 4% euro fund mystery shows how insurers outperform risk-free rates, though the mechanics remain opaque.
Fourth, stay informed through official channels. The AMF and DGFiP will publish guidance before any changes take effect. Brokerage platforms like Boursorama, BNP Paribas, and Société Générale will likely brief clients well in advance.
The Bottom Line
Bercy’s analysis reflects a genuine policy tension. The PEA’s tax advantages cost the French Treasury billions in forgone revenue. If that money isn’t financing European companies, what’s the point?
Yet the timing feels punitive. Synthetic ETFs have been PEA-eligible for years. Investors built long-term strategies in good faith. Changing the rules now would reinforce France’s reputation for fiscal unpredictability, precisely what the PEA was designed to combat by encouraging long-term equity investment.
The most likely outcome? A grandfathering provision similar to the 2011 SIIC ban. Existing holdings would remain PEA-eligible, but new purchases would be prohibited. This would slowly drain synthetic ETFs from PEA accounts through natural turnover, minimizing market disruption while achieving the policy goal over time.
For now, watchful waiting is the only sensible strategy. But if you’re opening a new PEA or making significant contributions, consider whether synthetic ETFs should be your primary vehicle. The tax advantage is valuable, but only if you can keep it.
Internal Links for Further Reading
- ETF selection quality and governance in PEA accounts
- PEA investment risks and retail investor exposure
- Alternative tax-advantaged investment vehicles in France
- Geopolitical safety of cross-border investment platforms
- Geopolitical risks in investment portfolios
- Shifting savings behavior away from traditional French accounts
