You are buying a stone house in the Dordogne, in Provence or in Brittany with your husband, your wife, your brother or your adult children. The French estate agent smiles and says the words every British buyer hears sooner or later: you should put the house in an SCI. The notaire (the French public officer who handles conveyancing, a very different figure from an English conveyancer) nods along. Back home, your English solicitor looks doubtful and mentions tax, reporting and cost. Who is right? The honest answer is that a société civile immobilière, the French non-trading property company, is an excellent tool for some British families and an expensive irrelevance for others. It does not reduce the purchase price, it does not remove French tax, and it does not exempt you from the post-Brexit residence rules that limit your stays to 90 days in any 180-day period. What it does is organise shared ownership, prepare succession and give the family a decision-making machine that survives death, divorce and disagreement better than simple joint ownership. This guide explains, for a British reader and in plain English, what an SCI is, how a British family creates one, who can run it and live in the house, how it is taxed when it rents, sells or holds valuable property, what happens when a family member dies or wants to leave, and how to challenge a refusal or a French tax demand. Every decisive legal point is tied to the exact French text in force, quoted word for word and linked to the official source, so you can check everything with your notaire before you sign the compromis de vente, the binding preliminary sale contract that usually carries a ten-day cooling-off period for residential buyers.
I. Should my British family buy our French holiday home through an SCI, and how do we set one up?
A. What is an SCI and how do British buyers create one in France?
An SCI is a company whose only business is owning and managing property. It is not a trading company: it cannot run a shop, a building site or a furnished holiday-lettings business on a commercial basis. It buys the house, holds it, lets it unfurnished if the family wishes, pays its bills and organises who decides what. The family members are associés, the partners or shareholders of the company, and each holds parts sociales, the company shares that represent a slice of the capital rather than a physical bedroom or floor. French law defines the starting point in these terms: « 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). Two people minimum, one contract, one common project: that is the whole foundation, and a British couple or a parent with children meets the condition naturally.
British buyers usually compare the SCI with indivision, the default French joint ownership in which each co-owner owns an undivided fraction of the whole house. Indivision is simple and free, but it is fragile: any co-owner can force a sale to end it, every important decision needs agreement, and the death of one co-owner freezes the property in a wider family indivision with the heirs. The SCI replaces that fragility with shares and rules. Shares can be given to children gradually, split between a parent keeping control and children holding capital, or divided unequally to reflect unequal contributions. The company survives the death of a member, the gérant, the appointed manager of the company, keeps paying the insurance and the taxe foncière, the annual French property tax paid by the owner, and the family avoids the classic paralysis of a holiday home nobody can sell, repair or even insure because three siblings in three countries cannot agree.
There are limits you must understand before falling in love with the idea. The SCI must stay civil, meaning non-commercial. Buying, holding and letting unfurnished property is civil. Running furnished holiday lets with services, or buying to resell at a profit, is commercial and can drag the company into corporation tax with the loss of its default transparent regime. The tax rule that protects ordinary family SCIs says it plainly: the members of civil companies stay personally taxed only where those companies « ne se livrent pas à une exploitation ou à des opérations visées aux articles 34 et 35 », do not carry on a commercial operation within the meaning of those tax articles (Article 8 of the General Tax Code). So if your plan is a gîte with breakfast, cleaning and bike hire, tell the notaire and the accountant first: you may need a different vehicle, or you must accept corporation tax deliberately rather than discover it during a tax audit.
Creating the SCI follows a fixed ritual, and British buyers should go through it before signing the final purchase, because the buyer named in the deeds must be the company itself. First, the family agrees written statuts, the articles of association that are the constitution of the company. The law is strict on this point: « Les statuts doivent être établis par écrit. Ils déterminent, outre les apports de chaque associé, la forme, l’objet, l’appellation, le siège social, le capital social, la durée de la société et les modalités de son fonctionnement. » (Article 1835 of the Civil Code). In practice the statuts name the company, state its registered office, usually at the French house or at a family address, fix the capital, often a modest sum plus the cash or property each member contributes, describe the objet social, the corporate purpose, typically the acquisition, ownership, management and letting of property, appoint the gérant and set the voting rules, the approval clause for selling shares to outsiders, the withdrawal clause and what happens on death. Second, the creation is published in a journal d’annonces légales, the legal notices newspaper of the département, and third, the company is registered with the Registre du commerce et des sociétés, the French companies register, through the single online business desk, after which it receives its SIREN number and can open a French bank account. The official step-by-step description is kept up to date on the French public service website (Société civile immobilière: what to know), and your notaire normally coordinates the timetable so that the company exists on the day the purchase completes.
Brexit changed nothing about the right to buy: there is no nationality condition for owning French property or for being an associé of an SCI, and the purchase itself requires no visa. The British government’s own guidance for buyers explains the conveyancing stages, the role of the notaire and the need for independent advice (France: buying property). What Brexit did change is your right to stay: owning the house, directly or through an SCI, gives no residence right, and visits remain capped at 90 days in any 180-day Schengen period unless you hold a visa or residence card, a point explained in detail in our guide to second homes, the 90-day rule and long-stay visas. Budget honestly as well: publication costs, registration fees, the notaire’s fees for the company deeds on top of the purchase fees, accountancy if the SCI lets the property, and the annual chore of approving accounts and holding the general meeting. On the British side, take separate UK tax advice before subscribing: London may analyse your French SCI through different spectacles from the Paris tax office, and you want that conversation before the capital is contributed, with the broader picture of life after the move covered by the official Living in France guide.
B. Can one of us run the SCI alone, live in the house for free, or walk away with our share?
Yes to all three, but each answer comes with a condition written into the statuts, and families who skip these clauses are the ones who end up in court. Start with management. The gérant runs the company day to day: signing the insurance, instructing the plumber, collecting any rent, representing the SCI before the bank and the tax office. The gérant is usually one of the family, often the parent who organised the purchase, and the statuts can give that person wide powers or require the other associés to approve anything above a threshold. Banks and notaires will ask for proof of those powers, so keep an up-to-date copy of the statuts and of the appointment decision with the company papers at the house. Where the parents want the children to have capital without control, the statuts can create unequal voting rights or keep the children as non-manager associés: money and power do not have to travel together.
Free occupation is the question every family asks and the one most often answered wrongly around the dinner table. Many assume that because they own the shares, they can simply live in the house. The Cour de cassation, the French supreme court for civil matters, answered the opposite in a much-commented 2024 decision about an associé who occupied the upper floors of an SCI building under a free loan granted by himself as manager: « lorsque les statuts d’une SCI n’indiquent pas dans l’objet social la faculté de mettre un immeuble dont elle est propriétaire à la disposition gratuite des associés, cette mise à disposition ne peut être décidée par le gérant seul et doit être autorisée par l’assemblée générale des associés, statuant dans les conditions prévues pour la modification des statuts. » (Cass. 3rd civ., 2 May 2024, No 22-24.503). When the articles do not provide for free use of the building by the members, the manager alone cannot grant it; the general meeting must authorise it by the majority required to amend the articles. The practical lesson is simple and must be applied at creation: write the free-use clause into the objet social or into a shareholders’ decision from day one, stating who may occupy which part of the house, whether guests and paying visitors are allowed, and whether the occupant pays the running costs. Families sometimes go further and organise an attribution en jouissance, an allocation of use rights over divided parts of the building to particular members, a structure the tax law itself recognises for companies whose purpose is « la construction ou l’acquisition d’immeubles ou de groupes d’immeubles en vue de leur division par fractions destinées à être attribuées aux associés en propriété ou en jouissance » (Article 1655 ter of the General Tax Code). A commodat, the French free loan-for-use contract, or a written occupation agreement recording who pays for the roof, the pool and the taxe d’habitation, the French residence tax still charged on second homes, will then protect both the occupant and the company if the tax office or a co-owner later asks questions.
Leaving the SCI is the second safety valve, and here the law is protective of the member who wants out. The Civil Code provides: « Sans préjudice des droits des tiers, un associé peut se retirer totalement ou partiellement de la société, dans les conditions prévues par les statuts ou, à défaut, après autorisation donnée par une décision unanime des autres associés. » (Article 1869 of the Civil Code). A member may withdraw totally or partially on the conditions set by the articles or, failing that, with the unanimous consent of the others, and a judge can authorise withdrawal for a valid reason where the family is deadlocked. Good statuts therefore organise the exit in advance: notice period, valuation method, payment over time where the company cannot pay at once, and a clause preventing the departing member from forcing a sale of the house itself. Money follows capital: « La part de chaque associé dans les bénéfices et sa contribution aux pertes se déterminent à proportion de sa part dans le capital social », each member’s share of profits and losses follows the share of capital, unless the articles say otherwise, with one absolute limit, since any clause giving one member all the profit or excluding another from it is deemed unwritten (Article 1844-1 of the Civil Code). Parents who contributed 80 per cent and children who contributed 20 per cent can therefore split occupation time equally while splitting money 80-20, but they cannot write that the children take all the losses and none of the gains.
Valuation is where family exits turn bitter, and the procedure is deliberately taken out of the family’s hands. Where the articles or the withdrawal decision send the parties to the statutory expert procedure, « la valeur de ces droits est déterminée, en cas de contestation, par un expert désigné, soit par les parties, soit à défaut d’accord entre elles, par jugement du président du tribunal judiciaire ou du tribunal de commerce compétent, statuant selon la procédure accélérée au fond et sans recours possible. » (Article 1843-4 of the Civil Code). In case of dispute the value is fixed by an independent expert appointed by the parties or, failing agreement, by the president of the civil court, with no appeal against the appointment, and the expert must apply any valuation rules the statuts contain. The date of that valuation matters enormously in a rising market, and the Commercial Chamber of the Cour de cassation settled the principle in a family SCI dispute: « la valeur des droits sociaux de l’associé qui se retire doit être déterminée à la date la plus proche de celle du remboursement de la valeur de ces droits », the value of the withdrawing member’s shares must be assessed at the date closest to the actual repayment (Cass. com., 15 January 2013, No 12-11.666). A member who left in 2002 but is repaid years later is therefore not frozen at the old price, and the expert who valued at the wrong date commits the gross error that sends everyone back to a new expert. Families can live with this rule provided they plan for it: keep the accounts clean, have the house valued periodically, and write into the statuts whether a minority discount or a payment schedule applies, so the expert starts from the family’s own method rather than from anger.
II. How is our family SCI taxed in France, and what happens when we sell, pass the house on, or face a tax demand?
A. How are SCI rental income, capital gains and wealth tax charged in France?
The default tax regime of the family SCI is transparency, and that single word explains most of the French tax picture. The company itself generally pays no income tax; instead each associé is taxed personally in France on the share of the company’s rental profit matching the member’s rights, whether or not the money is actually distributed. The rule sits in the provision already quoted above, which taxes personally, under the same conditions, the « membres des sociétés civiles qui ne revêtent pas, en droit ou en fait, l’une des formes de sociétés visées au 1 de l’article 206 » (Article 8 of the General Tax Code). For a British family this has two immediate consequences. First, if the SCI lets the house unfurnished, each member declares the share of net rent in France under the French property-income rules, and non-resident members are taxable in France on that French rental income even though they live in Kent or Yorkshire. Our companion guide to rental income, treaty credits and double tax explains how the France-United Kingdom double tax treaty then avoids taxing the same rent twice, with a credit in the country of residence. Second, if nobody is let anything and the family simply enjoys the house, there is no rental profit to tax, but the running costs cannot be deducted against anyone’s other income: transparency shares profits, not holidays.
The family can elect the opposite regime, corporation tax, and the election changes everything about the mathematics. The companies liable to that tax are listed by the provision stating that « Sous réserve des dispositions des articles 8 ter , 239 bis AA , 239 bis AB et 1655 ter , sont passibles de l’impôt sur les sociétés, quel que soit leur objet », certain companies are liable to corporation tax whatever their purpose (Article 206 of the General Tax Code). An SCI that opts in pays tax at company level on its profit, and the members are then taxed again personally when dividends are distributed, which suits a family that wants to keep rents inside the company to repay the loan or fund works, and punishes a family that distributes everything each year or sells quickly, since the later sale is taxed under the business capital-gains regime rather than the private one. The option is in principle irrevocable after a short cooling period, can be forced on the company that carries on commercial activity such as furnished lettings with hotel-type services, and should never be chosen without a side-by-side simulation over the family’s real horizon: five years of holidays plus a sale behaves nothing like twenty years of retirement in the house. Ask the accountant to model both routes with your figures before the statuts are signed, because unwinding the wrong choice costs far more than the simulation.
Selling is where the private capital-gains regime rewards patience and punishes improvisation. When an SCI that stayed under income tax sells the house, the gain follows the private real-estate regime: « les plus-values réalisées par les personnes physiques ou les sociétés ou groupements qui relèvent des articles 8 à 8 ter , lors de la cession à titre onéreux de biens immobiliers bâtis ou non bâtis ou de droits relatifs à ces biens, sont passibles de l’impôt sur le revenu dans les conditions prévues aux articles 150 V à 150 VH » (Article 150 U of the General Tax Code). Capital gains realised by individuals and by companies under the transparency articles on the sale for consideration of built or unbuilt property fall under income tax as detailed in the following articles. In practice the taxable gain is the sale price minus the proven purchase price and qualifying costs, taxed at the proportional income-tax rate plus the social charges, with taper relief that grows with the length of ownership until total exemption after a long holding period, and with a full exemption where the property was the seller’s main home, which a British-owned holiday home by definition is not. Because the taper clock and the deductible works change regularly, the only safe method is to have the notaire compute the bill from the deeds and invoices before signing anything, and to keep every facture, the French builder’s invoice that proves deductible works, from the first renovation onwards. Selling the shares instead of the house does not make the tax disappear: the selling member is still taxed on the gain under the private securities or property-rich-company rules, and on top of that the buyer pays registration duty on the transfer of the shares, since « Les cessions de droits sociaux sont soumises à un droit d’enregistrement dont le taux est fixé », transfers of company rights bear registration duty at the fixed statutory rate (Article 726 of the General Tax Code). The rate itself tells you why buyers discount share deals: « 1° bis A 3 % : – pour les cessions, autres que celles soumises au taux mentionné au 2°, de parts sociales dans les sociétés dont le capital n’est pas divisé en actions », three per cent for ordinary share transfers with a statutory allowance, and « 2° A 5 % : – pour les cessions de participations dans des personnes morales à prépondérance immobilière », five per cent for interests in property-heavy entities such as a single-house SCI, a level that usually wipes out any saving the parties hoped to make by selling paper rather than stone.
Wealth tax is the third layer, and British owners of valuable French property meet it through the impôt sur la fortune immobilière, the French tax on real-estate wealth universally shortened to IFI. The charging provision states: « Il est institué un impôt annuel sur les actifs immobiliers désigné sous le nom d’impôt sur la fortune immobilière. Sont soumises à cet impôt, lorsque la valeur de leurs actifs mentionnés à l’article 965 est supérieure à 1 300 000 € », an annual tax on property assets applies where the relevant assets exceed 1,300,000 euros (Article 964 of the General Tax Code). Owning through an SCI is no shelter: the value of your parts reflecting the French house counts towards your taxable base, and the valuation follows the inheritance-duty valuation rules set out in the official IFI guidance. Debts linked to the property can be deducted only within the strict statutory limits, the main home enjoys a partial allowance that a holiday home does not, and the return is filed each year alongside income tax. Check the current scope, allowances and filing form against the official guidance before each deadline (which assets to declare for IFI; IFI: persons and property concerned). Remember as well the unglamorous annual bills that no structure removes: the SCI as owner pays the taxe foncière, the commune may vote a surcharge on the taxe d’habitation for second homes in high-demand areas, and the family should verify the exact local rates with the mairie, the town hall, before budgeting the decade.
B. What happens to the SCI on death, divorce or a French tax reassessment, and how do we challenge it?
Death is the event the SCI handles best, provided the family prepared it. When a member dies, the parts pass to the heirs like any other asset; the company itself continues, the surviving gérant keeps authority, and the house does not fall into the frozen joint ownership that so often paralyses an English family’s French holiday home for years. Two documents then decide everything: the statuts and the will. Good statuts contain an approval clause letting the surviving family buy out or approve the heir, a pre-emption right in their favour, and a démembrement-friendly structure, meaning the ownership of the shares can be split between usufruit, the lifelong right to use and take income, typically for the surviving husband or wife, and nue-propriété, the bare ownership that passes to the children and blossoms into full ownership when the usufruit ends. This is the mechanism our guide to the surviving spouse, usufruit and the right to stay explains step by step, and it works inside an SCI exactly as it works in direct ownership. Alongside it, coordinate an English will with a French testament: European Union succession law allows anyone to choose the law of their nationality to govern the whole estate in a disposition of property upon death, a freedom the official European text records for choices expressed in a will or clearly shown by its terms (EU Succession Regulation No 650/2012). A British national can therefore elect English law for the estate in a valid will, while the French house itself still sits in France and the French notaire still settles the transfer, collects the French death duties and registers the new associés. What the family must never do is leave contradictory wills in two countries, one giving the house to the children and the other giving everything to the spouse, or forget the practical side our guide to death, funerals and the French house covers: certificates, translations, and someone with authority to act while the estate is settled. Where the deceased held an English lasting power of attorney, check in advance whether the French bank and the notaire will honour it, and consider the French equivalent, the mandat de protection future, the notarised advance mandate for future incapacity, as explained in our guide to powers of attorney and the mandat de protection future.
Divorce and separation test the SCI differently, because the shares are matrimonial assets whose value must be fixed before they can be divided. Where the house was bought during the marriage or the shares were subscribed with joint funds, the divorce judge values them, the expert procedure of Article 1843-4 can be called in aid, and the date rule from the 2013 Cour de cassation decision protects the spouse who is repaid late in a rising market. Prevention beats litigation here as well: a marriage contract or a shareholders’ pact recording who contributed what, an annual valuation filed with the company papers, and a buy-out formula in the statuts turn a forensic war into an arithmetic exercise. Where minor children hold shares given by their parents, remember that the parents administer those shares under judicial oversight for significant acts, and selling a child’s shares to fund the parents’ separation is not a signature exercise but a court-authorised transaction.
The French tax office, finally, is not a spectator. It can question the SCI’s transparency where the company drifted into commercial activity, reassess rental income it considers understated, challenge deductible works on a capital-gains computation, or dispute an IFI valuation. The procedure always starts on paper, with a proposed reassessment to which the taxpayer has the right to reply with reasons and evidence, and continues, if the dispute persists, through a formal claim to the tax office and then an appeal to the administrative court, with strict deadlines at every stage that make speed the first duty. Our guide to tax reassessments, replies and challenges walks through that ladder in detail. The winning file is built years before the dispute: statuts matching reality, occupation agreements matching the object clause validated by the 2024 Cour de cassation decision, bank statements separating family holidays from lettings, invoices for every claimed work, minutes of the meetings that authorised free occupation and major spending, and a coherent story between the SCI’s returns and each member’s personal return. Disputes between members follow the mirror route before the civil court, the tribunal judiciaire: withdrawal under Article 1869, appointment of the valuation expert under Article 1843-4, and ultimately dissolution where the family disagreement, the mésentente, paralyses the company. In both forums the family that documented everything settles early and cheaply, while the family that ran the SCI as an informal holiday kitty pays lawyers to reconstruct five years of history.
Conclusion
The SCI is neither a miracle nor a trap: it is a discipline. For a British family buying a French holiday home to share across generations, it organises what indivision leaves to chance, giving the purchase a manager, a rulebook, a succession plan and a civilised exit route, all for an annual cost in paperwork and accountancy that the family should budget from the start. For a single buyer with no succession puzzle and no co-owners, it is usually an unnecessary layer between the owner and the house. The decision must be taken before the compromis de vente, because the buyer named in the deeds, the object clause covering free family use, the withdrawal and valuation clauses, and the choice between income-tax transparency and corporation tax all harden at creation and are painful to change later. Verify every figure with the notaire against the exact articles linked above, keep the two Cour de cassation decisions in the file you hand to your advisers, take coordinated English advice on the British side, and build the paper trail from day one. A family SCI run like a small, serious company will carry your French house through holidays, successions and disputes; one run like a nickname for the house will not survive the first disagreement or the first tax letter.
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