You bought the stone house near Bergerac years ago, the children grew up spending August there, and now you are wondering whether to put it into a French property company with them. The estate agent mentioned an SCI, the notaire (the French public officer who handles conveyancing and successions) nodded, and a friend warned you that her brother ended up paying tax twice. After Brexit, British families face this question as third-country nationals, and the answer is no longer the routine one given to EU buyers. An SCI, short for société civile immobilière (a non-trading civil company whose only purpose is to own and manage property), can organise shared ownership, stagger gifts of shares to children and avoid a forced sale on death. It can also create tax bills you did not expect: income tax on rent you never received in cash, wealth tax on shares you thought were sheltered, and succession duty on a company interest you assumed was English. This guide explains, for a British reader, how the vehicle works while you hold the house and how it passes to your children, with the exact French rules, the official sources and the remedies when the bill is wrong.
I. Should a British family put its French house in an SCI and how does the vehicle work after Brexit?
A. What is an SCI and how do British parents set one up without falling into the commercial trap?
An SCI is a civil company, not a commercial one. The Civil Code provides that “La société est instituée par deux ou plusieurs personnes qui conviennent par un contrat d’affecter à une entreprise commune des biens ou leur industrie en vue de partager le bénéfice ou de profiter de l’économie qui pourra en résulter” (Article 1832 of the Civil Code). In plain terms, at least two people agree to put assets together for a shared purpose. For a British family that usually means two parents, or parents and children, pooling money to buy or hold one French house. The company, once registered, owns the house; each family member owns parts sociales (shares in the company) rather than a slice of the bricks. The official Service-Public guidance describes the SCI as a company set up to acquire or build, manage and administer property, run by a gérant (the appointed manager), which may let the property or make it available to its members (Service-Public: Société civile immobilière, what to know).
Registration is what gives the vehicle its legal existence. The Civil Code states that companies of this kind “jouissent de la personnalité morale à compter de leur immatriculation” (Article 1842 of the Civil Code), meaning they acquire a legal personality distinct from their members only upon entry on the companies register. Before that date the arrangement is only a contract between the family members. In practice the notaire drafts or checks the statuts (the articles of association), the family files them with the business formalities office, and the SCI is entered on the register and published. British buyers should note the United Kingdom government guidance that the notaire as a public official qualified in the French legal system who can advise on property, family and succession law, and it tells buyers to take proper advice on what happens when the owner dies, including making an appropriate will (GOV.UK: buying property in France). The conveyancing itself, with its deposit, cooling-off period and authenticated deed, belongs to the purchase process and is not the subject of this guide; what matters here is that the SCI must exist and be registered before it can usefully receive the house, whether by buying it directly or by the parents contributing (apport) a house they already own.
The single most common trap is commercial activity. The SCI must remain civil: owning, managing and letting unfurnished. Service-Public warns that the main activity must be civil, giving unfurnished letting as the example, and not commercial, giving the purchase of buildings for resale, furnished letting and serviced gîte accommodation as the counter-examples. A family that buys a Dordogne farmhouse and lets it furnished on a holiday platform every summer, with cleaning and linen provided, drifts into commercial territory. The guidance allows commercial activity only as an accessory. If furnished letting becomes habitual, the tax administration reclassifies the company and pushes it into corporation tax, with accounting obligations and a different capital-gains regime on exit. British owners who spend only school holidays in France are the most exposed, because the empty months tempt them to fill the calendar with short furnished lets. Either keep the house for family use with occasional unfurnished letting, or take advice before signing a seasonal management contract that bundles services.
Control of the shares is the second design point. The Civil Code provides that “Les parts sociales ne peuvent être cédées qu’avec l’agrément de tous les associés” (Article 1861 of the Civil Code), meaning shares can only be transferred with the approval of all members, although the articles may lower the majority or entrust approval to the manager, and may waive approval for transfers to members, spouses, ascendants or descendants. A British couple that wants the house to stay in the family should therefore write an agrément (approval) clause that requires family consent before any share can pass to an outsider, while freeing gifts to children. Without that clause, the default rule of unanimous approval applies, which can paralyse a transfer if relations sour. The articles should also name the gérant, set voting majorities, organise occupation rights (who may live in the house and when), and provide for valution of shares on exit. These clauses are enforceable between members; the litigation that fills the courts comes almost entirely from families that used a two-page template and never discussed them.
Paperwork after formation is light but real. The SCI holds a yearly meeting of members, keeps minutes, files a yearly property-income return even when the house is lent free of charge to the family, and declares the occupant of each dwelling for local-tax purposes. The manager opens a company bank account, keeps the loan in the company’s name if there is borrowing, and avoids mixing family expenses with company funds. British-resident managers should remember that French company documents must be kept at the registered office (siège social) in France, often the notaire’s office or the house itself, and produced on any tax inspection. None of this requires a commercial company structure, and company-formation providers selling expensive trading vehicles to British holiday-home owners should be viewed with caution: for a family house, the civil company is the correct tool, and the rest of this guide assumes it.
B. How is the SCI taxed while you hold the house: income tax, corporation tax option and the wealth-tax trap?
By default the SCI is transparent for tax. The General Tax Code provides that members of civil companies of this kind are “personnellement soumis à l’impôt sur le revenu pour la part de bénéfices sociaux correspondant à leurs droits dans la société” (Article 8 of the General Tax Code), meaning each member is personally liable to income tax on the share of the company’s profit matching their rights. If the house is lent free of charge to the parents and children, there is no rental profit and no income tax, though the yearly return must still be filed. If the house is let unfurnished for 9,000 euros a year and the company pays 2,000 euros of deductible charges, the 7,000 euros of net rent is divided between the members in proportion to their shares and taxed in France in their hands, whether they live in Kent or in the Dordogne. The transparency rule for attribution companies is stated in the same terms by the Code, which provides that such companies “sont réputées, quelle que soit leur forme juridique, ne pas avoir de personnalité distincte de celle de leurs membres pour l’application des impôts directs” (Article 1655 ter of the General Tax Code).
The family may instead opt for corporation tax (impôt sur les sociétés), and the option is irrevocable in most cases. Under that regime the company pays tax on its own profit, rents are taxed inside the company, and members are taxed only on dividends actually distributed. The trade-off matters on sale: a transparent SCI selling the house falls under the private capital-gains regime for individuals, with the well-known reduction for length of ownership ending in full exemption after thirty years, while a company-tax SCI computes gain from amortised book value, which usually produces a larger taxable gain. Families that plan to keep the house for decades and pass it to children generally stay transparent; families running a genuine year-round letting business sometimes prefer the company-tax route. The choice must be notified to the business tax office (service des impôts des entreprises) and should never be made simply because an adviser promised that company tax “avoids” French tax. It defers and reshapes it.
Wealth tax is the trap British shareholders discover late. France imposes “un impôt annuel sur les actifs immobiliers désigné sous le nom d’impôt sur la fortune immobilière” (Article 964 of the General Tax Code), an annual tax on property wealth known as the IFI, once the household’s taxable property exceeds 1,300,000 euros. Shares are caught in proportion to the underlying French bricks: the Code taxes “Des parts ou actions des sociétés et organismes établis en France ou hors de France appartenant aux personnes mentionnées au 1° du présent article, à hauteur de la fraction de leur valeur représentative de biens ou droits immobiliers détenus directement ou indirectement par la société ou l’organisme” (Article 965 of the General Tax Code), in substance at the fraction of the share value representing the company’s French property. A British couple holding a 1,600,000-euro house through an SCI, even with a mortgage, may therefore owe yearly wealth tax on their shares, with debts deductible only under strict conditions. Newcomers benefit from a five-year partial shelter on non-French assets, but the French house itself is taxable from year one.
Two further yearly charges deserve a line each. First, the 3 per cent tax on foreign entities owning French property: the Code provides that the entities concerned “sont redevables d’une taxe annuelle égale à 3 % de la valeur vénale de ces immeubles ou droits” (Article 990 D of the General Tax Code). A French SCI is French, so it is not directly caught, but British-resident parents holding through an English company or trust above a French SCI can be. Disclosure and the exchange-of-information treaty with the United Kingdom normally shelter honest declarants, but the file must be kept current. Second, local taxes (taxe foncière, the land tax, and the second-home taxe d’habitation, the residence tax) are charged on the property itself regardless of the wrapper; the SCI does not shield the family from them. When any of these bills looks wrong, the remedy is an administrative claim (réclamation) to the tax office that issued it, followed if necessary by an appeal to the administrative court. Keep every assessment (avis d’imposition), note the issue date, and claim within the statutory time limit printed on the notice rather than waiting for the bailiff’s letter.
II. How do you pass the SCI-owned house to your children and challenge a wrong succession or tax bill?
A. Will your English will govern the SCI shares, who inherits what, and what is the forced share?
Since 17 August 2015 a single European regulation governs which law applies to cross-border successions in France. The Succession Regulation provides that, unless the deceased chose otherwise, the whole succession is governed by the law of the state of their habitual residence at death, while allowing anyone to choose in their will the law of a state whose nationality they hold. The French courts apply this test factually, weighing years of presence, family life, and the reasons for it. In a leading case the First Civil Chamber of the Cour de cassation (the supreme court for civil matters) examined competing claims of habitual residence in Paris and in New York under Article 4 of the regulation, quashing or upholding appeal decisions according to whether the judges had assessed the duration, conditions and reasons of the stays (Cass., 1st civ., 29 May 2019, No 18-13.383). In another, it dealt with subsidiary French jurisdiction where the habitual residence lay outside the Member States but the deceased held French nationality and left property in France (Cass., 1st civ., 18 Nov 2020, No 19-15.438). For a British family the lesson is direct: a parent who has lived year-round in the Dordogne for a decade will normally die habitually resident in France, so French succession law governs unless the will validly elects English law — and that election, available because the parent holds British nationality, must be express and in a valid will.
The election has limits, and Brexit sharpened them. Choosing English law lets the parent organise the estate under English freedom of disposition, which is why many British wills leave everything to the surviving spouse. But French courts still apply the regulation’s public-policy and formal safeguards, and, crucially, the tax analysis does not follow the civil-law election: French succession duty still bites on the French house or the shares representing it. Moreover, the compensatory levy introduced in 2021 for children deprived by a foreign law applies only where the deceased or at least one child was, at death, a national of a European Union Member State or habitually resident there. A British child living in France qualifies through residence; a British family entirely resident in the United Kingdom, owning only a holiday home, generally does not. The SCI does not change this framework: the shares are movable property, but the regulation channels the whole estate to one law, so the election in the English will covers the SCI shares alongside the rest.
Without an election, the French forced share (réserve héréditaire) applies. The Civil Code defines it as follows: “La réserve héréditaire est la part des biens et droits successoraux dont la loi assure la dévolution libre de charges à certains héritiers dits réservataires, s’ils sont appelés à la succession et s’ils l’acceptent” (Article 912 of the Civil Code). The protected portion depends on the number of children: “Les libéralités, soit par actes entre vifs, soit par testament, ne pourront excéder la moitié des biens du disposant, s’il ne laisse à son décès qu’un enfant ; le tiers, s’il laisse deux enfants ; le quart, s’il en laisse trois ou un plus grand nombre” (Article 913 of the Civil Code). With two children, for example, two-thirds of the estate is reserved and only one-third is freely disposable (quotité disponible). An English will leaving a French house worth 600,000 euros entirely to the surviving spouse, where two children survive, collides head-on with this rule if French law governs. The SCI softens the practical consequences — the spouse can keep control as manager while the children hold shares — but it does not abolish the children’s reserved money claims. Gifts of shares made during lifetime count towards the reserve at death and can be reduced (réduction) if excessive, which is why large one-off gifts without a family computation are dangerous.
Transfers of shares during the parents’ lifetime therefore need the same care as wills. Remember that “La cession de parts sociales doit être constatée par écrit” (Cass., 1st civ., 21 May 2025, No 23-10.119), meaning every transfer of company shares must be recorded in writing, and that the supreme court holds that “les héritiers désignés par la loi sont saisis de plein droit des biens, droits et actions du défunt”, meaning the heirs designated by law step automatically into the rights and obligations of the deceased. In that 2025 decision, concerning thirty-three shares in an SCI said to have been transferred by a father to one son without proper publication, the court held that heirs who accept the succession stand in their author’s shoes as parties to his contracts and cannot invoke the lack of publication against each other. For British families the message is concrete: handshake gifts of shares, unrecorded minutes and transfers never notified to the company seed precisely the sibling litigation this decision illustrates. Every gift should pass by notarial deed (acte notarié) or registered private deed, be notified to the SCI, be entered in the company’s records, and be disclosed to the tax administration within the month.
The practical succession plan for most British families combines four documents. First, an English will covering English assets with an express election of English law for the French estate, drawn alongside French advice so the election is valid under the regulation. Second, a French will (testament) dealing with the French property and the SCI shares consistently, rather than contradicting the English one. Third, SCI articles with an approval clause, a management clause protecting the surviving spouse, and, where appropriate, a dismemberment (démembrement) splitting bare ownership (nue-propriété) for the children and a lifetime interest (usufruit) for the parents. Fourth, staggered gifts of bare ownership of shares using the renewable tax-free allowances described below. Families that already hold the house directly can contribute it to a new SCI, but the contribution itself triggers registration duty and resets the capital-gains clock, so it should be costed before it is signed.
B. What tax hits gifts and deaths involving SCI shares, and how do you challenge an excessive bill?
French gift and succession duty (droits de mutation à titre gratuit) catches the French house whether it is held directly or through an SCI. The Code taxes worldwide assets where the donor or deceased was fiscally domiciled in France, and, where they were not, it taxes French assets “que ces derniers soient possédés directement ou indirectement, situés en France”, that is, whether held directly or indirectly, situated in France (Article 750 ter of the General Tax Code, Article 750 ter of the General Tax Code). Shares in an SCI owning a Dordogne house are the textbook case of indirect ownership. A British parent domiciled in London who gives SCI shares to a child, or dies holding them, therefore faces French duty on the French fraction of the share value, with the 1963 France–United Kingdom succession treaty and the current income-tax treaty allocating the charge and normally granting a credit against United Kingdom tax rather than a full exemption. The treaty avoids double taxation; it does not remove the French filing.
Rates and allowances are the same as for direct property. The Code provides that “Les droits de mutation à titre gratuit sont fixés aux taux indiqués dans les tableaux ci-après, pour la part nette revenant à chaque ayant droit” (Article 777 of the General Tax Code), with the direct-line table running from 5 per cent on the first 8,072 euros to 45 per cent above 1,805,677 euros per beneficiary. Against that scale, each parent may give each child 100,000 euros free of duty, since “il est effectué un abattement de 100 000 € sur la part de chacun des ascendants et sur la part de chacun des enfants vivants ou représentés par suite de prédécès ou de renonciation” (Article 779 of the General Tax Code). The allowance renews every fifteen years, which is why SCI planning proceeds by slices: a father and mother holding 90 per cent of the shares can give bare ownership of blocks of shares to two children every fifteen years, each gift absorbing the allowance, while retaining the usufruit and therefore control and occupation. Because only the bare-ownership value is given away — the retained lifetime interest reduces the taxable base according to the donor’s age scale — a 500,000-euro shareholding can often pass in two rounds with little or no duty. Gifts must be filed on the gift return (déclaration de don) within one month of the deed, and successions on the succession return (déclaration de succession) within six months of death where the death occurred in France, twelve months otherwise.
Capital gains on exit follow the transparent-company logic. The Code taxes “lors de la cession à titre onéreux de biens immobiliers bâtis ou non bâtis ou de droits relatifs à ces biens” (Article 150 U of the General Tax Code), which the Code makes taxable to income tax for individuals and for companies falling under Articles 8 to 8 ter, under the conditions set out in Articles 150 V to 150 VH. Selling the house out of a transparent SCI is therefore taxed like a direct sale by an individual, with the duration-based relief; selling the shares themselves to another buyer is taxed on the share gain with a comparable mechanism. British sellers should read one paragraph of that article with care: the exemption for a non-resident’s dwelling applies only to nationals of a European Union Member State or the European Economic Area, a condition British sellers no longer meet. Post-Brexit, a London-resident seller cannot claim that particular relief, though the main-residence exemption (where the French house genuinely was the seller’s main home at sale) and the duration relief remain available. Company-tax SCIs face a harsher computation, as noted above, which is why advisers sometimes propose contributing a house with a large latent gain to a company-tax vehicle without warning that the contribution crystallises professional-style taxation.
When the bill arrives and looks wrong, work methodically. First, identify what is being taxed: the notaire files the succession, but the assessment comes from the tax office, and errors cluster around valuation of the shares (debts of the SCI, especially the remaining mortgage, must reduce the share value), the French fraction (cash and non-French assets of the company must be excluded), the allowances already used within fifteen years, and treaty credit for United Kingdom tax paid. Second, meet the short deadlines: the succession return must be filed even to contest, payment can be made under reservation, and the administrative claim must be lodged within the time printed on the notice. Third, escalate in order: reasoned claim to the issuing office with the deeds, valuations and treaty references; referral to the departmental mediator (médiateur) if dialogue stalls; appeal to the administrative court (tribunal administratif) for tax, or to the civil court (tribunal judiciaire) for a civil dispute over shares between heirs. Keep the SCI accounts, loan statements, meeting minutes recording each transfer, and both wills together: in share-valuation disputes the family that produces contemporaneous company records wins far more often than the family relying on memory.
Conclusion
For a British family with a French house, the SCI remains a sound vehicle after Brexit, provided it is used for what it is: a civil company that organises shared ownership and staggers transmission, not a device that makes French tax disappear. Form it properly with approval and management clauses, keep it civil by avoiding habitual furnished letting, and run it transparently with yearly returns. Pair it with wills that expressly elect English law where that is genuinely wanted, while pricing the French forced share and the limits of that election. Give shares in slices inside the 100,000-euro allowances, record every transfer in writing, and remember that wealth tax, local taxes and succession duty all look through the company to the French bricks. When an assessment overstates the shares, omits the debts or denies a treaty credit, challenge it on paper and on time, with the deeds and accounts attached. Taken in that order — company, wills, gifts, returns, remedies — the SCI does the quiet job British families buy it for: the house stays in the family, the surviving spouse keeps a roof, and the children receive their shares without a dispute or a surprise bill.
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