France's PEA-PME account: what changed in 2024

2026-08-20 · By Lubin Danilo, founder of Lubin Investment

Analyze a stock on Lubin Investment

Since the French law of June 13, 2024, the PEA-PME tax account keeps only one eligibility test: a market capitalization below 2 billion euros. The old headcount, revenue and balance sheet thresholds are gone. Result: roughly 545 French companies and 3,400 European ones now qualify, up from about 355 before the reform.

What exactly is the PEA-PME?

The PEA-PME is the sibling of France's regular PEA account: same tax break, capital gains and dividends are exempt from income tax after five years of holding (only social contributions remain due), but a different purpose. Created in 2014, it channels household savings toward listed small and mid-sized companies rather than only the CAC 40 giants that are already well financed elsewhere. The PEA and PEA-PME share one combined deposit ceiling of 225,000 euros, of which at most 150,000 euros can sit in the regular PEA: opening both does not double your tax-free capacity, it just splits it differently.

Historically, the burden fell on the investor to check that a company genuinely met the legal SME/mid-cap definition, not just a small market value, but a headcount, a revenue figure and a balance sheet total under precise thresholds, numbers no ordinary stock quote page shows. That is exactly the part the 2024 reform changed, and most content available online has not caught up with it yet.

The real eligibility test since June 2024

Since law n°2024-537 of June 13, 2024 (the "Attractivité" law), the French tax administration's official text is explicit: a single criterion now decides PEA-PME eligibility, market capitalization, capped at 2 billion euros. The three old cumulative criteria, fewer than 5,000 employees, annual revenue under 1.5 billion euros OR total balance sheet under 2 billion euros, are simply gone from the rule.

One nuance worth knowing before reflexively selling an existing position: the rule is not a hard overnight cutoff. A company stays eligible if its market cap is below 2 billion euros today, or if it met that threshold at least once during the last four fiscal years. That clause prevents a recent stock rally from mechanically excluding a company you already held for years.

Why did the law simplify the rule?

France's Treasury Directorate states the goal plainly: strengthen financing for French and European listed companies, especially mid-sized ones (more mature and liquid than a small-cap, yet excluded under the old 1 billion euro cap). By doubling the cap threshold and dropping the headcount and revenue tests, hard for an individual investor to verify anyway, the reform widens the investable universe while making it simpler to apply yourself.

In practice, the reform is estimated to lift the number of eligible names from roughly 355 to about 545 in France alone, and to around 3,400 across the European Union, according to industry estimates. Household names French retail investors already recognize, like Manitou, ID Logistics or Bénéteau, now qualify, when they were excluded until June 2024.

Which quality stocks now clear this new bar?

I applied this single new threshold to my own quality filter (10 objective financial criteria, from profitability to debt, independent of the stock's price). Among EU-domiciled companies my screener currently rates at or near the maximum score, seven have a market capitalization below 2 billion euros, checked live as I write this:

All seven validate at least 9 out of my 10 criteria, and my model currently flags every one of them as undervalued, though by very different magnitudes I detail next. None had appeared in a PEA-PME piece on my site before: names the old 1 billion euro cap excluded until June 2024.

Three cases up close: a German pipeline builder, a Siena biotech and R&D tax-credit software

Friedrich Vorwerk builds and maintains energy transport infrastructure in Germany (gas pipelines, and increasingly pipes designed to carry hydrogen), a sector lifted by Germany's push to diversify gas supply since 2022 and its shift toward industrial hydrogen. The company's official annual results release shows revenue of 704.3 million euros in 2025, up 41.3% year over year, backed by a growing headcount (2,331 employees) and a project backlog that flows straight through to margin. Its current price-to-free-cash-flow multiple sits at the 30th percentile of its own history, so relatively cheap for this specific stock, which is why my model shows a 58.5% discount.

Philogen, meanwhile, is a Siena-based biotech developing antibodies targeting cancer and chronic inflammatory disease. Its business model leans heavily on licensing deals with large pharmaceutical companies: an option and license agreement signed with Pfizer covers several antibody-drug conjugates. Understanding this mechanism matters as much as the number itself: in this type of deal, Philogen receives an upfront payment, then milestone payments triggered by each clinical success of the product, plus royalties if the drug is ever commercialized. That is not steady, predictable revenue like a software subscription, it is a lumpy path that depends on ongoing clinical trials succeeding, which explains both the volatility and the extreme 244.7% discount my model shows: a figure to treat with the caution any pre-commercial biotech deserves.

innoscripta, finally, built software (Clusterix) that automates the process of claiming Germany's research and development tax credit, a public subsidy mechanism similar in spirit to France's own crédit d'impôt recherche. Its fee model is contingent on the tax credit amount the client actually obtains, aligning its incentive with the client's rather than charging a flat subscription regardless of outcome. Revenue grew from 27.3 million euros in 2022 to 64.7 million in 2024, but the company only went public in May 2025: the discount my model calculates here is far more modest (7.1%), a thin margin of safety to watch closely rather than an obvious bargain.

One case moving the other way: does Technogym still qualify?

Technogym, the Italian fitness equipment maker already featured in my broader PEA quality ranking, illustrates well why this threshold needs checking stock by stock rather than once and for all. Its market capitalization today stands at roughly 2.62 billion euros, above the new 2 billion euro cap, meaning a fresh purchase today would likely no longer qualify for the PEA-PME on the raw market cap test alone.

But remember the four-fiscal-year clause covered above: if Technogym dipped back under 2 billion euros at some point during that window, an already-held position could remain eligible. I have not verified its market cap history year by year, and I would rather say so than state a number I have not confirmed: if you already hold this position in a PEA-PME, check this exact point with your broker before drawing any conclusion.

Does market cap alone really settle it? The traps that remain

The new single criterion simplifies a lot, but it does not erase the PEA's underlying condition: the company's registered office must still sit within the European Union or the European Economic Area, whatever its market cap. Philogen is a good example of why that is worth double-checking: the company often describes itself as "Swiss-Italian" because of its scientific roots, but its legal registered office is in Siena, Italy, which makes it eligible. A company genuinely domiciled in Switzerland or the UK would stay excluded from the PEA-PME even at a tiny market cap and listed on a European exchange.

A second, more technical trap: the exact listing venue matters too. innoscripta, for instance, trades on the Scale segment of the Frankfurt exchange, a growth market rather than a classic regulated market. I do not verify myself the precise status of every listing segment against PEA-PME rules, a nuance that can vary by broker and change over time: confirm this directly with your broker before buying, rather than assuming it is settled just because a stock appears in this ranking.

How to verify this yourself before buying

Three simple steps before adding a position to a PEA-PME: first, confirm the company's legal registered office (in its annual report or investor page), not just where it trades, the gap between the two is exactly what trips up most investors. Second, check its current market capitalization on my screener or any quote platform: under 2 billion euros, the main box is ticked. Third, ask your broker for explicit confirmation before buying: some restrict access to stocks that are technically eligible but thinly traded or listed on a market they do not cover. For a broader European quality selection without the PME size filter, my general PEA ranking and my full methodology detail how I build every score and every discount.

FAQ

Is market capitalization alone enough to be sure a stock is PEA-PME eligible?

No. It has become the only SIZE criterion, but the requirement that the company's registered office sit in the EU or EEA still applies, and the exact listing venue can matter depending on your broker. Always check all three points before buying.

Does the PEA-PME carry the same tax benefit as the regular PEA?

Yes: capital gains and dividends are exempt from income tax after five years of holding, only social contributions remain due. Both accounts share one combined deposit ceiling of 225,000 euros.

Does a stock I already own stay eligible if its market cap rises above 2 billion euros?

Probably, thanks to the clause tolerating a breach if the threshold was met at least once during the last four fiscal years. Confirm this exact point with your broker rather than selling reflexively.

Where can I track these seven stocks and their valuation over time?

Each company's score out of 10 and updated valuation are available on my screener, and each individual page details the calculation via its ticker.

Related reading

• PEA stocks that actually raise their dividend yearly
• Undervalued European quality stocks to buy in 2026?

Analyze a stock on Lubin Investment

About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).