More than 1.5 million SCIs are active in France today, and nearly one in five foreign property buyers choose this structure to manage their investment. The SCI offers a flexible and tax-efficient way to own, manage, and transfer real estate, especially for families and non-residents.
But with these advantages come specific legal, tax, and reporting obligations that must be carefully followed to stay compliant and avoid penalties.
Need help setting up or managing your SCI? Our English-speaking tax experts handle registration, declarations, and full compliance with French tax law.
What Is an SCI?
A Société Civile Immobilière (SCI) is a French legal structure designed to simplify the collective ownership and management of real estate. Instead of holding the property directly, each partner owns shares in the company, which in turn owns the property.
This setup allows for flexible decision-making, as partners can appoint a manager (gérant) to handle day-to-day operations and make decisions through majority votes, avoiding the complications often seen in joint ownership (indivision), where unanimous agreement is required.
An SCI is especially popular for family ownership, investment partnerships, or estate planning, since it allows property to be transferred gradually through the sale or donation of shares, often with significant inheritance tax benefits.
There are several types of SCIs, each serving a specific purpose:
- Family SCI – used to hold and pass down property between relatives.
- Rental SCI – created to manage and rent out real estate.
- Construction SCI – formed for building or renovation projects.
- Attribution SCI – allows partners to share ownership while using specific parts of the property individually.
Watch our video to better understand how an SCI works and how it can simplify property ownership in France:
Tax Regimes: Income Tax (IR) vs Corporate Tax (IS)
The taxation of an SCI depends on its chosen regime, Income Tax (IR) by default or Corporate Tax (IS) if opted for or required. This choice has a major impact on how income, expenses, and capital gains are treated.
Under the Income Tax (IR) regime, the SCI is transparent: it does not pay tax itself. Instead, each partner declares their share of the profits on their personal income tax return, under the “property income” category. This regime is usually preferred for long-term ownership, as it offers progressive capital gains exemptions, full exemption from income tax after 22 years and from social charges after 30 years.
In contrast, the Corporate Tax (IS) regime treats the SCI like a regular company. Profits are taxed at the corporate rate, 15% on profits up to €42,500, and 25% beyond that, but the company can deduct more expenses, including depreciation of the property. While this reduces annual taxable income, it often results in higher capital gains when the property is sold, since depreciation lowers the book value.
In summary:
- IR is better suited for long-term holding and family ownership.
- IS may be more efficient for short- or medium-term investments where deductions are valuable.
Annual Declarations and Accounting Obligations
Once your SCI is established, it must comply with several annual tax and administrative requirements to remain fully compliant with French law. These steps ensure transparency with the tax authorities and prevent financial penalties.
Each year, the SCI must submit a tax declaration based on its tax regime:
- Form 2072 for SCIs under Income Tax (IR).
- Form 2065 for SCIs under Corporate Tax (IS).
These declarations must be filed electronically through the SCI’s professional account on impots.gouv.fr.
In addition, every SCI must complete an annual property occupancy declaration (déclaration d’occupation) by June 30 each year. This filing specifies whether the property is rented, used as a main or secondary residence, or vacant.
As for accounting:
- SCIs under IR are not legally required to keep formal accounts but should maintain clear records of expenses, income, and partner contributions.
- SCIs under IS, on the other hand, must keep complete business-style accounting, including balance sheets and income statements.
Maintaining accurate accounting helps track deductible expenses such as renovations, management fees, and loan interest, and is essential for tax audits, inheritance, or partner transfers.
Capital Gains and Wealth Tax (IFI)
When an SCI sells a property, the capital gains tax depends on its fiscal regime, Income Tax (IR) or Corporate Tax (IS), and can significantly affect the final profit from the sale.
Under the IR regime, each partner is taxed individually on their share of the gain, just as if they owned the property directly. The gain is calculated as the difference between the selling price and the purchase price, adjusted for eligible expenses such as notary fees, renovation works, or agent commissions. The tax rate is 19% for income tax plus 17.2% for social charges, but this burden decreases over time. After 22 years of ownership, the gain is fully exempt from income tax, and after 30 years, it is entirely free of social charges.
Under the IS regime, things work differently. The capital gain is based on the depreciated book value of the property rather than its original cost. Because depreciation reduces the property’s value over time, this usually results in a higher taxable gain when selling. The profit is taxed at the corporate rate of 25%, and any distributed dividends are generally subject to the 30% flat tax (PFU).
However, this 30% flat tax does not apply to all shareholders — non-residents are taxed differently, depending on their country of residence and any applicable double taxation treaties.
Additionally, SCI shareholders, including non-residents, may be subject to the French Real Estate Wealth Tax (IFI) if their net French real estate assets exceed €1.3 million.
To anticipate the impact of a potential sale, you can use our Capital Gain Tax Simulator to estimate how much tax would apply under each regime.
Property Transfers and Inheritance
One of the greatest advantages of holding real estate through an SCI is how simple and flexible it makes transferring ownership, whether during your lifetime or through inheritance.
Instead of transferring the property itself, partners can transfer shares in the SCI, which represent their ownership portion. This approach avoids complex notarial procedures and allows for progressive inheritance planning over time. For example, parents can gradually gift shares to their children while benefiting from French inheritance tax allowances of up to €100,000 per child every 15 years.
This structure also helps families avoid conflicts and forced sales in case of disagreement among heirs. Each partner’s share can be sold or inherited independently, ensuring that the property remains within the family or among the original group of investors.
For foreign residents, using an SCI simplifies cross-border estate planning, as it separates French real estate from global assets and aligns with local inheritance tax treaties.
Do I need to live in France to create an SCI?
No. Non-residents can fully create and own an SCI in France. The only requirement is to have a registered address in France for the company (often managed by an accountant or tax representative). Many foreign investors set up SCIs to buy or hold property remotely while complying with French tax laws.
What taxes apply when buying property through an SCI?
The taxes on the property purchase are the same whether you buy directly or through an SCI, typically 5.80% to 6% in transfer duties, depending on the property’s location. Buying via an SCI does not increase acquisition tax, even for non-resident shareholders.
If I buy shares in an existing SCI, do I pay tax?
Yes. The transfer of SCI shares is subject to a 5% registration duty based on the share value. In some cases, your country of residence may also tax this transaction, depending on its double taxation treaty with France.
Can my SCI rent out furnished property or operate short-term rentals?
Not by default. The SCI is designed for non-commercial real estate management. Renting furnished property is considered a commercial activity, which would automatically requalify the SCI under corporate tax (IS), often leading to higher taxation on profits and capital gains.