The French Société Civile Immobilière (SCI) is a flexible and powerful tool for owning, managing, and transmitting property in France. Whether you are a local buyer or a foreign investor, understanding how the French SCI works can help you optimize your real estate strategy while minimizing legal and tax risks.
1. What is a French SCI?
A Société Civile Immobilière (SCI) is a non-trading French company created to own and manage real estate. Unlike commercial companies, an SCI’s exclusive or main purpose is to hold property for private use, family ownership, or investment.
Key characteristics:
- Legal entity separate from its members
- Requires at least two shareholders
- Managed by one or more directors (gérants)
- Shares can be transferred or inherited
It is especially useful for organizing ownership between family members or multiple investors.
2. Who Can Use an SCI and For What Purpose?
Both residents and non-residents can set up and use an SCI in France. Common uses include:
- Family ownership: Avoiding indivision between children
- Estate planning: Simplifying succession and donations
- Real estate investment: Rental property, management across multiple assets
- Co-investing: Acquisitions between friends or business partners
Note: SCIs cannot engage in commercial activity by default (e.g. short-term furnished rentals), unless specifically structured for that purpose.
3. How to Create a French SCI
Setting up a French SCI involves several legal steps:
- Drafting the statutes (bylaws): Outlining the company’s purpose, rules, management
- Registering with the Commercial Court: For legal personality
- Publishing a legal notice: In an approved legal journal
- Filing with the tax authorities: For tax treatment and obligations
Documents required:
- Identification of shareholders and manager
- Address of registered office
- Purpose of the SCI
The process usually takes 2 to 4 weeks and should be supervised by a notaire or legal advisor.
4. Pros and Cons of a French SCI
Advantages:
- Flexible property management
- Facilitates donations or succession
- Allows gradual transfer of wealth (e.g. donation of shares)
- Limits indivision problems between heirs
- May offer tax planning opportunities (especially with IS option)
Disadvantages:
- Annual obligations (accounting, meetings)
- Formalities for transfers
- Limited use for commercial activities
- Tax treatment can be complex
5. Taxation of a French SCI
There are two main options for the taxation of a French SCI:
1. Income Tax (IR) – default regime
- Income taxed in the hands of shareholders
- Transparent structure (no tax at SCI level)
- Best for family use or personal property
2. Corporate Tax (IS) – optional
- SCI taxed as a company (lower rate ~25%)
- Allows depreciation of buildings
- Tax deferral possible
- Suitable for rental investment
Learn more on impots.gouv.fr
Other taxes to consider:
- IFI (wealth tax) if net real estate exceeds €1.3 million
- Capital gains on sale
- Transfer duties on purchase
6. Using an SCI for Inheritance Planning
An SCI allows:
- Donation of shares (instead of the property)
- Retaining control via voting rights or usufruct
- Avoiding indivision among heirs
This structure is commonly used in cross-border estate planning to reduce friction and apply civil law options (e.g. Brussels IV).
Related: Understanding Succession Law in France
7. Can Foreigners Set Up and Use an SCI?
Yes. Foreign individuals can:
- Create an SCI with a French address
- Appoint a local gérant or be one themselves
- Hold shares from abroad
Caveats:
- Opening a French bank account may be required
- Non-EU investors must declare ultimate beneficial ownership (RBE)
- Cross-border donations and successions must consider conflict of laws
External resource: Service-Public.fr SCI Guide
8. Compliance and Administration
An SCI has legal duties:
- Hold annual general meetings
- Maintain records and accounting
- Declare to the RBE (beneficial ownership register)
Failure to comply may result in fines or legal disputes between shareholders.
9. Frequently Asked Questions
Can an SCI take out a mortgage?
Yes. The SCI can borrow, and the bank will often require personal guarantees from the shareholders.
Can I rent a property held in an SCI?
Yes, for long-term unfurnished rental. For furnished rentals or seasonal lets, a different structure (e.g. SARL de famille) may be more appropriate.
Can I dissolve the SCI?
Yes. Dissolution requires agreement of shareholders and liquidation of assets. It can be complex if the SCI holds debt or multiple properties.
10. Conclusion
The French SCI is a strategic legal structure for holding real estate in France. It provides flexibility, simplifies transmission, and allows tailored tax treatment. Whether you are buying a second home, investing in rental property, or planning your estate, the SCI may be the right tool for you.
Before setting one up, consult a notaire or legal advisor to ensure it aligns with your goals and complies with French and international law.
Want to learn more?
- What is a Notaire in France?
- How to Buy a House in France: Legal Guide
- French Real Estate Taxation Guide
