How the System Works: Two Phases
Both the PEL and the CEL operate on the same two-phase principle (CCH Art. L 315-1 s.). During the savings phase, the holder makes deposits that earn a regulated rate of interest and accumulate loan entitlements — expressed as a multiple of the interest earned. Once the minimum savings conditions are met, the holder may draw a below-market mortgage loan whose maximum amount and term are determined by the interest accumulated. The purpose of the loan must be residential property: acquisition, construction, extension, or qualifying improvement works, principally for a primary residence.
The system's most valuable feature is the family cession mechanism: the holder may transfer accumulated loan entitlements to qualifying family members. A grandparent who has been building up a CEL for years can direct the resulting borrowing capacity to a grandchild purchasing their first home, without giving up the deposited capital. The two products may be held simultaneously by the same person, but must be held at the same bank. One CEL and one PEL per person. Banks must verify prior holdings with the tax authority before opening either product.
Opening Conditions and the One-Account Rule
Both products are open to any individual regardless of age, nationality, or country of residence (CCH Art. R 315-5 and R 315-26). Minors may hold either, with parents or the legal representative signing at opening. Deposits made by parents into a CEL or PEL in a minor child's name are treated as customary gifts (présents d'usage), generating no gift tax liability. Each household member may individually hold a CEL and/or a PEL, enabling a family to accumulate multiple loan entitlements across accounts and pool them for a single purchase. Simultaneous holding of more than one CEL, or more than one PEL, by the same person is prohibited — the penalty is total forfeiture of all interest earned, all loan rights, and all State bonus entitlements for pre-2018 accounts. Joint accounts are not available for either product.
The CEL: Savings Phase
The CEL is a demand savings account — funds are freely available at any time with no lock-in (CCH Art. R 315-7 s.). Minimum opening deposit: €300; subsequent deposits unrestricted in timing and amount, subject to a €75 minimum per transaction. Ceiling: €15,300 (interest capitalisation may push the balance above the ceiling, but once exceeded no further deposits are accepted). Withdrawals are unrestricted at any time, provided the balance does not fall below €300 — a withdrawal taking the balance below €300 automatically closes the account. No cheque book is issued. Each transfer from the CEL requires an express instruction from the holder; the bank may not automatically sweep funds to cover an overdraft.
Interest is calculated on the same fortnightly (quinzaine civile) basis as the Livret A: deposits start earning on the first day of the fortnight following the deposit; withdrawals stop earning at the end of the fortnight preceding the withdrawal. Interest capitalises on 31 December each year. The CEL rate equals two-thirds of the Livret A rate, rounded to the nearest quarter-point. Since 1 February 2023: 2% (Arrêté ECOT2301445A du 27-1-2023 Art. 1). This rate applies to all existing CEL accounts regardless of opening date.
The PEL: Savings Phase
The PEL is a locked savings plan — any withdrawal (total or partial) closes the account. Minimum opening deposit: €225; contractual minimum €540 per year thereafter (CCH Art. R 315-30 s.). Deposits are made at regular intervals fixed in the contract. Failure to meet the annual minimum results in automatic termination. Ceiling: €61,200 excluding capitalised interest.
The plan term is freely chosen at opening within four to ten years (CCH Art. R 315-28). Once the contractual term is reached, the plan auto-extends annually by tacit renewal up to the ten-year maximum, with the bank notifying the holder at least one month before each anniversary. After ten years, no further extension or deposits are possible, but the balance continues to earn interest at the original rate and loan rights are preserved. For plans opened since 1 March 2011, if no loan is requested and no funds withdrawn within five years of the term date, the plan converts automatically to an ordinary savings account.
PEL interest rates by opening date
The PEL rate is fixed for the plan's entire life at the rate prevailing at opening. For plans opened since 1 March 2011, the Banque de France computes the rate annually by 5 December using a formula based on average interest rate swap rates, published by ministerial order taking effect from the first day of the following month.
| PEL opening date | Bank interest rate (p.a.) | State savings bonus (prime d'épargne) |
|---|---|---|
| From 1 January 2023 | 2% | None |
| 1 January 2018 – 31 December 2022 | 1% | None |
| 1 August 2016 – 31 December 2017 | 1% | Yes — equal to bank interest earned |
| 1 February 2016 – 31 July 2016 | 1.5% | Yes — ⅔ of bank interest earned |
| 1 February 2015 – 31 January 2016 | 2% | Yes — ½ of bank interest earned |
| 1 March 2011 – 31 January 2015 | 2.5% | Yes — ⅖ of bank interest earned |
| 1 August 2003 – 28 February 2011 | 2.5% | Yes — ⅖ of bank interest (capped €1,525) |
| Pre-2003 (exceeding 10 years) | 2.61%–4.62% (by vintage) | State no longer pays — plan exceeded 10 years |
The State Savings Bonus (Prime d'Épargne)
The State savings bonus was abolished for all CEL and PEL accounts opened from 1 January 2018. For pre-2018 accounts, the bonus remains available under the original rules but only where a loan is actually drawn (except for PEL opened before 12 December 2002, where the bonus is paid automatically on withdrawal). For CELs opened before 1 January 2018, the bonus equals a fraction of interest earned, varying by account vintage, capped at €1,144 per transaction across all beneficiaries. For PEL opened 12 December 2002 to 31 December 2017, a loan of at least €5,000 is required (for plans from 1 March 2011). The bonus represents a fraction of bank interest earned (ranging from ⅖ for plans opened March 2011–January 2015 to 100% for plans opened August 2016–December 2017), capped at €1,525 per plan (€1,000 for plans from 1 March 2011, increased to €1,525 for energy-efficient properties). The State ceases paying once the plan has been running for ten years or the cap is reached. A family surcharge adds 10% of the relevant interest per dependant, capped at €153 per person (€100 for plans from 1 March 2011, rising to €153 for energy-efficient properties).
Consequences of Early Withdrawal from a PEL
Any withdrawal from a PEL closes the plan, with penalties depending on when it occurs (CCH Art. R 315-31 and R 315-32):
- Before the second anniversary: all loan rights are lost and interest is recalculated retroactively at the current CEL rate (2%). For pre-2018 plans, all bonus rights are forfeited entirely.
- During the third year: all loan rights are lost; interest already earned at the PEL rate is preserved.
- During the fourth year: interest is fully preserved; loan rights are counted only on interest earned through end of the third year.
- From the fourth anniversary onward: full rights; no interest penalty.
The bank may not unilaterally close a PEL to offset an overdrawn current account. At any time, the holder may convert their PEL to a CEL (CCH Art. R 315-32): the CEL is deemed open from the PEL's original opening date, but interest is entirely recalculated at the current CEL rate applied to all deposits.
What the Loan Can Finance
Housing savings loans must be used for residential property (CCH Art. L 315-1). For accounts opened since 1 March 2011, the loan must finance the borrower's primary residence. For pre-2011 accounts, secondary and leisure residences were also eligible. The main eligible uses are: acquisition (including off-plan VEFA), construction, extension, and improvement works on the primary residence — specifically modernisation, energy efficiency, sanitation, equipment, and comfort works. For works exceeding €3,000, contractor invoices or completion certificates are required; below €3,000, materials invoices suffice. Acquisition of a garage or parking space near the primary residence is also eligible. Excluded uses include: purchasing land alone; building on land the borrower does not own; mobile homes, garden sheds, swimming pools; repaying an existing loan; notarial fees; and purely commercial properties.
A borrower may not use a housing savings loan to finance a primary residence and a secondary residence at the same time. The second loan may only be taken once the first is fully repaid (CCH Art. R 315-8). Exception: spouses who each hold separate accounts may, in certain circumstances, each finance a different property independently provided neither is borrowing under community property rules for the same operation.
Loan Conditions: CEL and PEL
CEL loan
To draw a CEL loan, two conditions must be met: the account must have been open for at least 18 months (reducible to 12 months with a family cession from a CEL open for at least 18 months); and the interest accumulated must reach minimum thresholds — €37 for repair and improvement works; €22.50 for energy efficiency works; €75 for acquisition and construction. Loan amount = interest used × 1.5 (coefficient reduced to 1.0 for SCPI unit purchases). Maximum: €23,000. Term: two to fifteen years. Rate: 3.5% for interest earned from 1 February 2023 (savings rate + 1.5%, inclusive of financial and management charges). Multiple successive loans from the same CEL are permitted provided total outstanding never exceeds €23,000. Unused interest from one loan carries forward to a future loan.
PEL loan
A PEL loan may be requested as early as the end of the third year, though loan rights and bonus entitlements are then counted only on interest earned through end of the third year (and pre-2018 bonus is halved). The normal loan request window is one year from the date of fund withdrawal, or five years from the contractual term date for plans opened since 1 March 2011. Loan amount = bank interest earned × 2.5 (coefficient reduced to 1.5 for SCPI unit purchases). Only interest from full years of plan operation up to the contractual term date is counted. Maximum: €92,000. Term: two to fifteen years. One loan per PEL only — unused interest does not carry forward. Loan rates by opening date: 3.2% for plans from January 2023; 2.2% for plans opened August 2016–December 2022; earlier vintages from 2.7% up to 6.32%. No additional file fee is due at loan grant.
Which bank grants the loan?
The loan is ordinarily requested from the institution holding the account. Another institution may grant the loan if it receives the attestation de droits acquis. Cumulation of loans from different PEL and CEL accounts is possible only if all loans are granted by the same institution. The grant of a housing savings loan may never be conditional on the borrower directing their income to the lending institution.
Cession of Loan Rights to Family Members
The holder may assign accumulated loan entitlements to qualifying family members, enabling those members to obtain a larger loan than their own account alone would support (CCH Art. R 315-35). The borrower must first fully exhaust their own rights. Eligible recipients: the holder's spouse (not a PACS partner or cohabitant — cession between PACS partners is explicitly excluded); ascendants and descendants; siblings; aunts, uncles, nephews, and nieces; the spouses of siblings, ascendants, and descendants; and, in the case of a parent's remarriage, the new spouse of that parent. The recipient must already hold their own CEL or PEL (as applicable). CEL holders may only receive cessions from other CELs; PEL holders may receive cessions from both CEL and PEL accounts. Minimum seniority: a CEL used for cession must be open at least 12 months (18 months if the recipient's own CEL is the only qualifying account); a PEL used for cession must be open at least three years. PEL loan rights must be ceded entirely to a single beneficiary — partial cessions are not permitted. Where a PEL cession is impossible, the entire plan may be transferred as a donation (notarial deed required); the taxable base for gift tax is deposited capital plus capitalised interest — loan rights and bonus entitlements are excluded.
A couple wishes to help their daughter purchase her first home. Each parent holds a CEL open for more than 18 months. The daughter also holds a CEL (required for receiving a cession) open for at least 12 months. The combined €23,000 ceiling applies across all ceded CEL rights for the same property.
Mother's CEL — interest ceded: €600 → additional loan: €600 × 1.5 = €900
Father's CEL — interest ceded: €800 → additional loan: €800 × 1.5 = €1,200
Total combined loan: €2,775 (subject to €23,000 global CEL cap)
PACS partners and cohabitants may NOT cede rights to each other. Each may, however, use their own individual CEL/PEL rights proportionally to their share of a joint purchase in indivision.
Tax Treatment
Accounts opened before 1 January 2018 — income tax exemption
Interest on a CEL opened before 1 January 2018 is fully exempt from income tax (CGI Art. 157, 9° bis). The State savings bonus is also income-tax-exempt. Both are subject to social charges at 17.2%, collected at source by the bank at capitalisation (31 December) and at bonus payment. Interest on a PEL opened before 1 January 2018 is exempt from income tax for the first twelve years of the plan. From the twelfth anniversary, further interest is taxable annually as it accrues, at PFU 12.8% (or progressive scale) plus 17.2% social charges, with a non-liberatory withholding at 12.8% applied as an advance payment. The State bonus for pre-2018 PEL plans is income-tax-exempt throughout. Social charges timing: for plans opened before 1 March 2011, social charges on all capitalised interest were due on the tenth anniversary at historical rates, then annually from the year following; for plans opened 1 March 2011 to 31 December 2017, social charges at 17.2% are levied annually from year one.
Accounts opened from 1 January 2018 — PFU from year one
Interest on any CEL or PEL opened from 1 January 2018 is subject from the first year to PFU at 12.8% (plus 17.2% social charges), or to the progressive scale on global election, with a non-liberatory withholding at source at 12.8% applied in the year of payment (CGI Art. 157, 9° bis no longer applies). If the progressive scale is elected, 6.8% of the CSG paid is deductible from the holder's global taxable income in the year of payment. No income tax exemption and no State bonus apply to these accounts.
Two holders each accumulate €30,000 in PEL deposits. In year 11, each earns €600 in bank interest.
Year 11 = still within the 12-year income tax exemption window
Income tax: €0 | Social charges 17.2%: €103.20 | Net: €496.80
PEL 2019 (post-2017 rules):
PFU applies from year 1
Income tax 12.8%: €76.80 + Social charges 17.2%: €103.20 = €180 total (30%)
Net: €420.00
Death and succession
On the CEL holder's death, the account continues to earn interest and is not frozen at the date of death. The balance is subject to inheritance tax; loan rights and bonus entitlements are excluded from the taxable estate. A CEL may be bequeathed by will to any person; multiple heirs may divide loan rights independently from the capital division. Heirs may use the loan rights in the same conditions as the original holder. For a PEL not yet at term at death: a single heir (or all heirs in agreement) may take over the plan in the deceased's name without modifying its terms. For a PEL already at term: the plan closes — though a testamentary beneficiary (single) may receive it. PEL amounts enter the succession taxed on the capital balance (deposits and capitalised interest; loan rights and bonus excluded).
Whether you are optimising a savings strategy within a family group, planning a loan drawdown from an existing PEL, or analysing the tax implications of pre-2018 versus post-2017 accounts, our guides cover the full French housing savings framework.
Book a ConsultationThis article is provided for general information and educational purposes only. It does not constitute financial, tax, or legal advice. Interest rates for savings and loans cited reflect rates in force as of the date of publication and may differ for plans opened at other dates. The State savings bonus rules vary significantly by account vintage. Certain rules applicable to PEL opened before 1 April 1992 differ in specific respects and are not fully covered here.
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Key Legal References
Housing savings loans (PEL and CEL) framework: eligible uses = acquisition (incl. VEFA), construction, extension, improvement works (modernisation, energy efficiency, sanitation, equipment, comfort) on primary residence; for accounts from 1 March 2011, primary residence only; pre-2011 accounts: secondary/leisure residences also eligible. Excluded: land alone, building on land not owned, mobile homes/sheds/pools, repaying existing loan, notarial fees, commercial properties. Contractor invoices required for works >€3,000; materials invoices for works ≤€3,000
CEL: one per person; simultaneous holding of more than one CEL triggers forfeiture of all interest, loan rights, and pre-2018 bonus. Demand savings account: free withdrawals at any time; minimum balance €300; minimum opening deposit €300; minimum per transaction €75; ceiling €15,300. No cheque book; each transfer to current account requires express instruction. Interest capitalises 31 December; fortnightly calculation. CEL rate = two-thirds of Livret A rate (2% from 1 February 2023). Bank must verify prior holdings before opening
No simultaneous financing of primary and secondary residence: second CEL loan may only be taken once first fully repaid. Exception: spouses each holding separate accounts may finance different properties independently in certain circumstances
CEL loan rate = savings rate + 1.5% (inclusive of financial and management charges). Rate 3.5% for interest earned from 1 February 2023
CEL loan: max €23,000; multiple successive loans from same CEL permitted provided total outstanding does not exceed €23,000; unused interest carries forward to future loan. Minimum interest thresholds: €22.50 energy works; €37 repair/improvement works; €75 acquisition/construction. 18-month minimum savings period (reducible to 12 months with family cession from CEL open ≥18 months)
CEL loan coefficient: 1.5 (loan amount = interest used × 1.5); coefficient reduced to 1.0 for SCPI unit purchases
CEL prime d’épargne: formula and €1,144 cap per transaction across all beneficiaries. Abolished for accounts opened from 1 January 2018. For pre-2018 accounts: conditional on drawing a loan; formula varies by opening date
PEL: one per person; simultaneous holding of more than one PEL triggers forfeiture of all interest, loan rights, and pre-2018 bonus. Locked savings plan: any withdrawal (total or partial) closes the account. Minimum opening deposit €225; minimum annual €540 (automatic termination if not met); ceiling €61,200; term 4–10 years freely chosen at opening. Rate fixed for plan life at prevailing opening rate (2% for plans from January 2023). Bank must verify prior holdings before opening
PEL term: 4–10 years; auto-extends annually to 10-year maximum by tacit renewal (bank notifies at least 1 month before anniversary); after 10 years: no further deposits, interest and loan rights preserved. For plans from 1 March 2011: auto-converts to ordinary savings account 5 years after term if no loan requested and no withdrawal
Early PEL withdrawal penalties: before year 2 = all loan rights lost, interest recalculated at current CEL rate (pre-2018: all bonus rights forfeited); during year 3 = loan rights lost, interest preserved at PEL rate; during year 4 = interest preserved, loan rights based on year-3 accruals only; from year 4 anniversary = full rights, no penalty. Bank cannot close PEL to offset overdrawn current account. PEL may be converted to CEL at any time: CEL deemed open from PEL original opening date; interest entirely recalculated at current CEL rate
PEL loan coefficient: 2.5 (loan amount = bank interest earned × 2.5); coefficient reduced to 1.5 for SCPI unit purchases. Only interest from full years of plan operation up to contractual term date counted; State bonus contribution and post-term interest excluded
PEL loan request window: one year from date of fund withdrawal for all plans; additionally, 5-year window from contractual term date for plans opened since 1 March 2011. Maximum loan: €92,000; term 2–15 years; one loan per PEL only; no carryforward of unused rights. Loan rates by opening date: 3.2% (from January 2023); 2.2% (August 2016–December 2022); earlier vintages 2.7%–6.32%. No file fee at loan grant
PEL prime d’épargne: fraction of bank interest earned varying by opening date (from ⅗ for plans March 2011–January 2015 to 100% for plans August 2016–December 2017); cap €1,525 per plan (€1,000 for plans from 1 March 2011, rising to €1,525 for energy-efficient properties). Loan of ≥€5,000 required for plans 12 December 2002–31 December 2017; no loan condition for pre-12-December-2002 plans. State stops paying once plan exceeds 10 years or cap reached. Family surcharge: 10% per dependant; cap €153 (€100 for plans from 1 March 2011, €153 for energy-efficient properties). Abolished for all accounts opened from 1 January 2018
Heirs may use CEL loan and bonus rights in same conditions as original holder. CEL continues to earn interest after holder’s death (not frozen); loan rights and bonus excluded from taxable estate; balance subject to inheritance tax
Family cession of loan rights: holder must exhaust own rights first. Eligible recipients: spouse (not PACS partner or cohabitant — cession between PACS partners explicitly excluded), ascendants/descendants, siblings, aunts/uncles/nephews/nieces, spouses of siblings/ascendants/descendants, parent’s new spouse on remarriage. Recipient must already hold qualifying account. CEL cession from CEL only (12-month minimum; 18-month if recipient’s own CEL is only qualifying account). PEL cession from CEL or PEL (PEL must be open ≥3 years; entire rights in one transfer to one beneficiary only; partial cessions not permitted). PEL inter vivos transfer = donation, notarial deed required; taxable base = deposited capital + capitalised interest (loan rights and bonus excluded)
Tax treatment: pre-2018 accounts: CEL interest and State bonus fully exempt from income tax; 17.2% social charges at source at capitalisation and bonus payment. PEL interest exempt from income tax for first 12 years; from year 13 taxable at PFU 12.8% + 17.2% PS with non-liberatory withholding at 12.8%; State bonus always income-tax-exempt. Social charges timing: pre-March 2011 PEL = lump sum at 10th anniversary at historical rates then annual; post-February 2011 PEL = annual from year 1. Post-2017 accounts (from 1 January 2018): no income tax exemption; no State bonus; PFU 30% (12.8% income tax + 17.2% PS) from year 1 with non-liberatory withholding at 12.8%; progressive scale election available (6.8% CSG deductible)
