Using an SCI to Purchase a French Property

When buying property in France, your agent, solicitor or Notaire can advise to create an SCI, a French “Private Limited Company”. The purpose of this property investment partnership (société civile immobilière, or SCI) is to acquire or, in some cases, provide for the construction of buildings to be rented to third parties or provided free of charge to the partners. An SCI must consist of at least two partners.

What are “Statuts” in a French SCI?

A written contract, known as the ”statuts” (French articles of association), is required of every SCI. These ”statuts” must contain information on the firm and its partners (including its name, headquarters, total assets, functions, conditions such as clauses on reduction of capital, selling of properties, details of the Company manager, etc.).

Once the ”statuts” have been signed by the founding partners, the partnership is registered with the local trade and companies register. (French Tribunal de Commerce).

SCI have Shareholders

The shareholders own the shares, which own the property in the proportions specified within the statutes. The shareholders of the SCI are responsible for the company’s debts in proportion to their shareholdings. If an SCI has two shareholders, each one is responsible for 50 percent of the debts of the company.

Key Benefits of an SCI

The creation of the SCI offers several benefits when purchasing and owning real estate in France.

• Children and parents can be included in the acquisition (such as the purchase of a second home or vacation home). Later on, the parents’ share of the property can be gradually transferred to children or grandchildren in small increments.

• Non-resident shareholders in an SCI are not taxed in France, as the shares are treated as movable assets; they are taxed in their country of residence. This means that if a shareholder dies, because the shares are considered movable assets, the probate laws of the deceased’s country of residence apply.

• An SCI is liable for Capital Gains tax for the first 15 years; however, it is considered a transparent company. Taxes are declared only when the property within the SCI is professionally rented out.

• When several partners join forces, they can undertake projects that would be impossible for a single person acting alone.

Learn more about the buying process, as well as about tax, French insurance or currency with our experts.