A société civile immobilière (SCI) is a legal structure composed of at least two people, each holding the status of partner, allowing the management of one or more real estate properties for non-commercial purposes. The property portfolio is owned by the SCI, and each partner receives shares proportional to their contribution.
There are different types of SCIs depending on your needs, such as:
• management or rental SCI,
• time-share use SCI,
• family SCI,
• etc.
Like all companies, an SCI has articles of association governing its functioning. Drafting these articles makes it possible to define decision-making procedures, for example, unanimous approval or majority voting.
In addition, the partners of an SCI appoint a manager (gérant), who is responsible for the day-to-day management of the company’s property or properties, without needing to carry out formal procedures with the other partners.
SCI and joint ownership: what is the difference?
Co-owning a property with several people most often occurs under the regime of joint ownership (indivision). This structure requires no formalities and applies automatically, particularly in inheritance situations involving several heirs.
Under joint ownership, each co-owner holds an ideal (undivided) share, but their rights extend to the entire property. In contrast, in an SCI, each partner holds only the shares they have contributed, and their rights are limited to those shares.
SCI: what are the advantages?
An SCI makes it easier to manage and transfer a real estate portfolio.
Management of properties within an SCI
In an SCI, debts and profits generated by the company’s properties are shared among the partners. If work needs to be carried out on the properties the company owns, the costs are borne by all partners in proportion to their shares.
Furthermore, selling a property requires at least the approval of partners representing the majority of the company’s shares. In the event of disagreement or conflicting intentions, the SCI structure helps protect the property portfolio. This makes an SCI particularly well-suited for managing family property.
Transfer of property within an SCI
An SCI also makes it easier to transfer property. If, as parents, you wish to transfer a property to your children, you may gradually transfer shares in the SCI to them. This allows you to benefit from the tax allowances applicable to direct-line inheritance, amounting to €100,000 per child for each donation, renewable every 15 years.
What steps are required to create an SCI?
To set up an SCI, you must:
• draft the articles of association, specifying the manager and the company’s registered address (which may be the manager’s residence),
• contribute and deposit the company’s capital in a bank,
• publish a notice of incorporation in a legal announcement newspaper,
• register the company online.
What taxation applies to an SCI’s profits?
Your SCI can generate profits if the properties it owns are rented out and you receive rental income.
Real estate income received through an SCI is subject to personal income tax. Each partner must declare the amounts they receive from the SCI in their personal tax return.
If your SCI rents out furnished properties, this may be considered a commercial activity. This is the case if the SCI engages in commercial activity to an extent that is no longer incidental to its civil purpose—i.e., if it exceeds 10% of turnover excluding VAT. In such cases, the company becomes subject to corporate tax.
Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NICE
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
Camilla.nissen.michelis@brahin-avocats.com www.brahin-avocats.com
