Buying property in France is a dream for many, and thousands of foreign families make it a reality each year. According to data from Notaires de France, over 60,000 real estate transactions annually involve foreign buyers, with many choosing to structure ownership through a Société Civile Immobilière (SCI). This French property company is not only popular for managing real estate collectively, but also for optimising inheritance and tax planning.
However, French inheritance law is complex. It includes forced-heirship rules (réserve héréditaire) that restrict how you can pass on your assets, and inheritance tax rates that can reach up to 60% for non-relatives. For foreign owners, navigating these laws can be confusing, especially when family members live abroad or hold different nationalities.
That’s where an SCI can make a real difference. By holding property through an SCI, you can plan your estate more flexibly, transfer shares progressively, and reduce your family’s future tax burden, all while keeping control of your assets.
At French Tax Online, our English-speaking tax and legal experts help you create, manage, and optimise your SCI to protect your French property and your heirs.
How a French SCI Works
1. Structure and Ownership
An SCI must include at least two partners, who can be individuals or other legal entities, French or foreign. There is no nationality requirement, and even minors can hold shares.
Each partner contributes either:
- Cash, used to buy the property, or
- An existing property, transferred into the company’s name.
In return, they receive shares representing their ownership percentage in the SCI. These shares can later be gifted, sold, or transferred, which makes inheritance and succession planning much easier.
2. Management and Decision-Making
The SCI is managed by one or more managers (gérants), appointed in the company’s statutes.
- The manager handles day-to-day administration, paying taxes, managing rentals, maintaining the property, etc.
- Major decisions (such as selling the property or changing the statutes) require approval of the partners, based on majority rules defined in the articles of association.
This management structure provides clarity, flexibility, and protection compared to traditional joint ownership (indivision), where disagreements between heirs or co-owners can easily lead to forced sales.
3. Tax Transparency
By default, an SCI is “fiscally transparent”, meaning it does not pay corporate tax. Instead, profits or rental income are reported by each partner in proportion to their shareholding, on their personal income tax return.
However, the SCI can opt for corporate tax (IS) if it wishes to benefit from different tax treatment, for example when retaining profits within the company.
4. Duration and Legal Framework
An SCI is typically created for a duration of up to 99 years. It is governed by Articles 1832 to 1870 of the French Civil Code, which regulate all civil companies.
We’ve got a great video on this topic: “Decoding SCI: A Comprehensive Guide to French Property Ownership!”, that breaks it all down in simple terms.
Inheritance Tax and the SCI
Owning property through a Société Civile Immobilière (SCI) does not remove French inheritance tax obligations. When a partner passes away, the heirs inherit their interest in the company, not the property itself, but this interest is still subject to French inheritance tax, as it represents a right linked to French real estate.
An SCI is fiscally transparent, meaning the company itself is not taxed at death, the tax applies to the value of the deceased’s interest. For French residents, their worldwide estate is taxable in France. For non-residents, only assets connected to France, including an SCI holding French property, fall within the French inheritance tax system.
The taxable amount corresponds to the market value of the inherited interest, after deducting any company debts or loans. In practice, tax authorities often allow a valuation discount of about 10%, as an interest in an SCI is considered less liquid than direct property ownership. This can slightly reduce the inheritance tax burden for beneficiaries.
French inheritance tax rates depend on the relationship between the deceased and the heir. Transfers between spouses or civil partners are exempt, while gifts or inheritances to children benefit from generous allowances (currently €100,000 per child every 15 years). Transfers to distant relatives or unrelated persons may be heavily taxed, with rates up to 60%.
Many families use an SCI to gradually transfer their estate during their lifetime, for example, by gifting small portions of their participation over time. Each transfer benefits from the same allowances and helps reduce future inheritance taxes. Others combine this with split ownership (usufruct and bare title), allowing parents to keep use of the property while transferring future rights to their children.
For unmarried partners or co-owners outside a civil union, an SCI can also help organise succession and reduce potential taxation. However, French authorities closely examine arrangements that seem intended purely for tax avoidance, so seeking professional guidance before implementation is strongly recommended.
Inheritance Rules for SCI Shares
1. Shares, Not Property
In legal terms, the SCI owns the real estate, and each partner owns shares (parts sociales) in the company.
When a shareholder dies, their shares become part of their estate, and are transmitted to their heirs or beneficiaries, not the property itself.
This difference matters because under French law:
- Real property (immovable assets) is subject to French inheritance law if located in France.
- Company shares (movable assets) are generally governed by the law of the deceased’s country of residence or nationality.
For non-residents, this often means their national inheritance law, rather than French forced-heirship rules, may apply to SCI shares.
2. The Impact of French Forced-Heirship (Réserve Héréditaire)
France applies forced heirship, which means children (and sometimes a spouse) are legally entitled to a fixed portion of an estate.
However, owning property through an SCI can mitigate or even avoid these restrictions:
- For non-residents: SCI shares are considered movable assets, so the French forced-heirship rules usually do not apply. The owner can therefore leave their shares freely according to their will or national law.
- For residents: the SCI structure offers some flexibility, especially when combined with cross-ownership (démembrement croisé) or usufruct/bare ownership arrangements, which can control who benefits from the property during life and after death.
3. Démembrement (Split Ownership)
Many couples use an SCI to divide ownership into:
- Usufruct (life interest) – the right to live in or benefit from the property, and
- Bare ownership (nue-propriété) – the right to full ownership after the usufruct holder’s death.
In a cross-ownership arrangement (démembrement croisé), each partner owns both life and reversionary interests in overlapping shares.
This allows the surviving partner to retain use of the property without paying inheritance tax on their portion, while the children inherit the remaining shares later.
This method is particularly useful for unmarried couples or partners not in a civil union, who do not otherwise benefit from French inheritance protections.
4. European Succession Regulation
Since 2015, the EU Succession Regulation (Regulation No. 650/2012) allows foreign nationals living in France to elect their national law to govern their estate, including SCI shares.
This means that even without complex SCI structures, one can sometimes achieve a similar effect by simply stating in a will that their national law applies.
However, recent French legislation has restricted the application of this rule in certain cases, and legal challenges are ongoing. Professional advice is therefore essential before relying solely on this option.
Using an SCI for Estate Planning
An SCI separates control and management. The property belongs to the company, while one or more managers handle daily administration. This structure helps prevent disputes that often arise in joint ownership (indivision) and ensures smooth management even after the death of one partner.
From an inheritance perspective, an SCI offers greater flexibility. Instead of passing a single property to multiple heirs, which can be complex, you can transfer company interests step by step, while keeping control. Parents, for instance, can gradually give portions of their participation to their children, benefiting from generous tax allowances that renew every 15 years.
The SCI also makes it possible to apply split ownership (démembrement). This technique separates the right to use the property (usufruct) from the long-term entitlement (bare title). Parents can keep the usufruct, the right to live in or rent out the property, while transferring the remainder to their children. Upon the parents’ death, the children recover full title without paying additional inheritance tax.
Couples, especially those unmarried or in a civil partnership, can adopt a cross-ownership arrangement (démembrement croisé). Each person holds a mix of life and reversionary rights, ensuring that the surviving partner can continue to live in the property without immediate tax liability, while the family ultimately inherits the rest.
An SCI can also be paired with other estate planning tools such as a French or European will, a marriage contract, or a life insurance policy (assurance-vie) to optimise inheritance and taxation outcomes.