PER and SCPI: What Are the Tax Implications Upon Retirement or Early Withdrawal?

Although PER insurance plans offer undeniable advantages when it comes to retirement savings, it is important to remain vigilant about the tax implications of this product, which can lead to unpleasant surprises upon retirement or in the event of early withdrawal. 

Since its introduction in 2020, the Retirement Savings Plan (PER) has become increasingly popular among French people who want to build up savings for their retirement. 

Among the investment options offered under the PER, Real Estate Investment Trusts (SCPI) and Real Estate Collective Investment Entities (OPCI) are particularly popular. These vehicles allow investors to diversify their portfolios by investing in physical real estate, such as commercial buildings, offices, or residential properties. However, it is essential to consider the tax implications associated with these investments, particularly with regard to the Real Estate Wealth Tax (IFI).

Taxpayers whose net real estate assets exceed 1.3 million euros are subject to the IFI. OPCIs and SCPIs generally fall within the scope of real estate assets subject to the IFI. However, there is one exception: real estate investments held under certain non-surrenderable life insurance policies are exempt from this tax. What about PERs? It’s worth noting that there are two types of PERs: the bank-based PER, which functions like a securities account, and the insurance-based PER, offered by life insurance companies.

What is the IFI tax rate?

During the savings phase, funds invested in SCPIs through an insurance-based PER are generally not subject to the IFI tax. However, this may change upon retirement or in certain cases of early withdrawal. In fact, upon reaching the legal retirement age, the savings in the PER insurance plan become redeemable, and the real estate investments then become subject to IFI again, even if the saver has not yet withdrawn the funds. This situation can lead to unpleasant surprises for taxpayers, particularly those who become subject to IFI as a result of this rule. It is therefore crucial to consult an advisor to best anticipate this risk and make gradual adjustments as retirement age approaches.

Furthermore, the mere occurrence of an event that qualifies as a reason for early withdrawal from a PER—such as the purchase of a primary residence or disability—could result in a change in the PER’s status, thereby making it redeemable and thus subject to the IFI, even if the saver does not withdraw their savings for that reason.

Although PER insurance plans offer undeniable advantages for retirement savings, it is important to remain vigilant regarding the tax implications of this product, which can lead to unpleasant surprises upon retirement or in the event of early withdrawal. It is recommended that you consult a financial advisor to fully understand the tax implications of investing in SCPIs as part of a PER and to take the appropriate steps to optimize your tax situation.