PER (Retirement Savings Plan): Tax Authorities Finally Clarify Tax Ambiguities
The tax authorities have just clarified two issues that had long remained unclear: the eligibility of lump-sum withdrawals under the quotient system and the tax treatment of transfers of old contracts. These are two concrete developments that you should incorporate into your recommendations without delay.
The Quotient System Confirmed for Capital Withdrawals
Since October 1, 2019, the retirement savings plan (PER) has established itself as the primary vehicle for retirement savings in France, gradually replacing the former individual and group plans. However, certain tax rules governing withdrawals remained unclear, which was detrimental to both savers and their advisors.
That is no longer the case. The doctrinal commentaries published in the Official Bulletin of Public Finance (BOFiP) on February 17, 2026—which stem from a public consultation involving insurers, banks, tax specialists, attorneys, and notaries—provide answers that the profession has long awaited.
First key point: The tax authorities confirm that the lump-sum payment received upon the closure of a PER account does indeed constitute extraordinary income for tax purposes and is therefore eligible for the quotient mechanism. In practical terms, this mechanism allows for the smoothing of taxation on a lump-sum payment—such as a retirement severance payment—by including only a fraction of the amount in the taxpayer’s usual taxable income. The benefit for your clients is twofold: first, they avoid moving into a higher marginal tax bracket, which can result in savings of several thousand euros depending on the amounts involved; second, they preserve their reference taxable income, a key factor in calculating certain social benefits, property tax exemptions, and eligibility for means-tested assistance.
This clarification goes further and deserves your full attention if you are advising clients who are considering liquidating their PER in multiple installments. The tax authorities now acknowledge that the quotient system also applies to each of these installment withdrawals of principal. This method of withdrawal, which offers the advantage of allowing the amounts still invested to continue to grow within the plan, is therefore supported by tax regulations. Be aware, however, of one mandatory condition: a minimum period of three years must elapse between each installment withdrawal to qualify for this benefit. This requirement must be carefully factored into the withdrawal strategy you develop with your clients, particularly for those nearing retirement.
Transfers from Previous Plans: A Welcome Flat-Rate Schedule
The second clarification concerns account holders who have transferred the balance of a previous Popular Retirement Savings Plan (PERP) or a Madelin retirement plan to a PER. The industry had clearly identified the problem: the manager of the new plan does not always have access to detailed historical data showing whether voluntary contributions made to the old contract were deducted from taxable income. Yet this information is essential, as it directly determines the tax rate at withdrawal. Deducted contributions are subject to income tax in their entirety, while non-deducted contributions are taxed only on the portion corresponding to investment gains. Without reliable historical data, there was a risk of either overtaxing the saver or underreporting their tax liability.
To break this deadlock, the tax authorities are now proposing a standardized schedule of flat rates, indexed to the date of the transfer. These rates make it possible to determine the portion of the principal subject to income tax without unfairly penalizing the saver due to a lack of information. This pragmatic approach had long been called for by wealth management professionals. The public consultation, open through April 17, 2026, could still result in minor adjustments.
In the meantime, this table finally provides a clear operational framework to assist your clients affected by a transfer of an existing contract in making their withdrawal decisions. In practice, you should now systematically verify, in the financial statement of every client holding a PER, the source of the funds and the date of any transfer. This information, combined with the new flat-rate schedule, will allow you to refine the tax projection at withdrawal and avoid unpleasant surprises when the account is closed.
These two clarifications from the BOFiP represent concrete progress for the profession: they finally provide a stable legal foundation on which to base your recommendations for lump-sum withdrawals, whether they are lump-sum or installment payments.
