Société Civile Immobilière basics

Société Civile Immobilière basics

An SCI (Société Civile Immobilière) is a rather specialist type of French company (société) that is constituted for the ownership and management of property (immobilière). 

The fact that it is also civile means that it is a non-trading company, thereby distinguishing it from a company set up to pursue commercial objectives. The company will have a distinct legal identity from that of its shareholders, although except in very particular circumstances, it has no separate fiscal identity. For this reason it is said to be 'fiscally transparent'. Where an SCI is used for the purchase of a private home, the owners effectively then become non-paying tenants or occupants of the property owned by the company. The company may also hold more than one property in it, including main and second homes, as well as properties to for letting. Many French and international buyers choose to buy a French property through an SCI because of the advantages it offers over the other two forms of ownership. 

The main reasons are:

  • To allow purchase of the property by multiple persons;
  • To provide stability and continuity in the ownership and management of family property;
  • To facilitate the transfer and ownership of property;
  • To avoid the constraints of French inheritance laws;
  • To create tax advantages;
  • To protect the family home from business creditors.

 

Despite these potential advantages, as a result of legislative and fiscal changes in recent years, the arguments for owning a family property through an SCI have become weaker, so you need to consider carefully whether it is really necessary for you to use an SCI. There are plenty of professional advisors who will no doubt tell you it would be worthwhile to set up an SCI, but if they are the same advisors who will earn the fees from setting up the company (including notaires), then you need to weigh that advice very carefully! SCI are specifically not a commercial company; that is to say they can only be established for non-trading purposes. 

Nevertheless, it is possible to let out a property held by an SCI on an unfurnished basis as this is not considered to be a 'commercial' activity, but one that falls within the definition of une activité civile. 

This article is not a substitute for detailed advice on specific transactions and problems and should not be taken as providing legal advice on any of the topics discussed.