You bought the stone house near Bergerac or the flat in Normandy years ago, the children grew up spending August there, and now, settled in France after Brexit or dividing your year between Kent and the Dordogne, you want one thing above all: that the house passes to the children without a fight, without a surprise tax bill, and without a French notaire, meaning the public officer who alone can settle a succession with French assets, refusing to release the file. Many British families in your position hold the house through an SCI, meaning a société civile immobilière, a non-trading French property company whose shareholders own parts sociales, meaning shares in the company, rather than owning the bricks directly. The SCI is a flexible tool for organising a family house, but it changes nothing about the two questions that decide every British succession in France: which law governs the estate, and what slice of it the children are guaranteed. An SCI does not remove the French forced heirship, it does not remove French succession tax on the French house, and since Brexit it does not spare a British family the cross-Channel paperwork of wills, sworn translations, and foreign grants of probate. This article explains, for a British reader and in plain English, how a family SCI is properly created and run, how its shares pass to your children when a parent dies, which English-law choices actually work, and how to challenge the refusals and tax assessments that most often block British files.
The structure follows the life of the project. Part I deals with the company itself: whether an SCI suits a British family, how to set one up without leaving a defective file, and how to run it year after year so the tax office and the bank never have a reason to attack it. Part II deals with the transmission: which succession law applies to the shares, what the children’s guaranteed share really takes from your freedom, which court decides when the family is spread between Britain and France, what tax France levies on the shares, and, at each stage, how to challenge a notaire, a bank, or the tax administration that says no. Every decisive proposition below is tied to the exact French text or court decision it comes from, quoted word for word, because a British family dealing with a French succession deserves verifiable law rather than expatriate folklore.
I. Should a British Family Put Its French Holiday Home Into an SCI, and How Is the Company Set Up Properly?
A. What an SCI Is, and How British Parents Create One Without Leaving a Defective File
A French SCI is not a company in the English commercial sense at all. It is a civil-law vehicle whose only lawful purpose is to own and manage property, never to trade. Article 1832 of the Civil Code gives the foundation: “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.” A British couple therefore qualifies naturally, since two people are enough, and the children can join as shareholders from the start or receive shares later. The civil character matters because it draws the boundary the family must never cross: Article 1845 of the Civil Code states that “Ont le caractère civil toutes les sociétés auxquelles la loi n’attribue pas un autre caractère à raison de leur forme, de leur nature, ou de leur objet.” In practice, a family SCI that starts running a full-time furnished-holiday business with daily lettings, staff, and hotel-like services risks being treated as commercial, with consequences for its tax position and for the validity of decisions taken under civil-company rules. A family that simply lives in the house, lets it unfurnished, or takes occasional holiday bookings through an agent stays comfortably inside the civil perimeter. The official Service-Public guide to the SCI describes the same logic in administrative language and is worth reading before you sign anything: Société civile immobilière (SCI): ce qu’il faut savoir. Readers who want the general mechanics of SCIs for foreign buyers, outside the British succession angle of this article, can consult our companion overview of the SCI for foreign buyers in France, and then return here for what is specific to a British family passing the house to its children.
The creation itself is a small conveyancing project, and British buyers should treat it with the same seriousness as the house purchase. The statuts, meaning the written articles of association that form the company’s constitution, are the document everything else depends on. Good statuts for a British family do five jobs at once. They identify the shareholders and their contributions, the apports, meaning the cash or property each person puts into the company in exchange for shares, and they record how many parts sociales each contribution buys. They name the gérant, meaning the appointed manager who signs for the company, opens the bank account, and represents the SCI towards the tax office and the tenants, and they define what the gérant may do alone and what requires a collective vote. They set the rules for selling or giving away shares, the agrément clause, meaning the prior-approval mechanism that lets the remaining shareholders accept or refuse a new entrant, which Part II below shows to be decisive when a parent dies. They organise what happens on death, divorce, or incapacity, so that the surviving spouse is not left negotiating with hostile co-owners. And they fix the company’s duration, registered office (siège social), and financial year. Cheap template statuts downloaded from the internet almost always fail at least two of these jobs, typically the death clause and the approval clause, and the saving of a few hundred euros at creation regularly costs tens of thousands in litigation later. Have the statuts drafted or at least reviewed by the notaire handling the house, with an English translation you genuinely understand, because you will be bound by the French text alone.
Getting the house into the company is the next step, and there are two honest routes with very different costs. Where the family has not yet bought, the SCI buys the house directly at the advertised price, and the parents simply capitalise the company with the purchase funds. Where the family already owns the house outright, the parents contribute it to the company, the apport en nature, meaning a contribution of property rather than cash, which requires a formal valuation, a published deed, and registration duties that the notaire will calculate. Selling the house to your own SCI instead of contributing it is possible but usually wasteful, since it triggers the full transfer taxes and agent-like costs of an arm’s-length sale. Whichever route you take, the company must then be registered with the companies register, the registre du commerce et des sociétés, published as the law requires, given its own tax number, and given its own bank account, entirely separate from your personal accounts. Since Brexit, British-resident shareholders should expect French banks to ask for more identity and tax-residence paperwork than before, including proof of address, tax identification numbers, and sometimes evidence of the origin of funds under anti-money-laundering rules. A bank that refuses to open the SCI account must be asked for its reasons in writing, and a second bank approached promptly, because the company cannot lawfully operate through the parents’ joint account in London. Keep every certificate the register and the bank give you with the statuts: the complete company file, opened on day one and never scattered across two countries, is what the notaire will demand on the day of the succession.
B. Running the SCI Year After Year: Meetings, Accounts, Rent and the Mortgage Lender
A family SCI fails in slow motion, through years of informality that nobody notices until the succession or the tax audit. French company law expects even a two-shareholder family vehicle to behave like a company: the gérant prepares annual accounts, the shareholders meet at least once a year in an assemblée générale, meaning the formal general meeting of shareholders, the meeting approves the accounts, decides what to do with any profit or loss, and records all of this in signed minutes kept with the company books. British families very often skip all of this, on the understandable theory that husband and wife agree on everything around the kitchen table in Kent. That informality becomes dangerous twice. First, where the shares were bought with a French mortgage, the lender’s consent to the transfer of the house into the company, and later to any gift of shares to the children, is usually a contractual requirement, and a lender that discovers years of undocumented decisions may treat the loan as breached at exactly the moment the family needs a clean file. Second, where the tax administration opens a file, the absence of minutes, accounts, and bank separation is read as evidence that the SCI is fictitious, a mere screen for direct ownership, which invites reassessment of the whole arrangement. Hold the meeting, even by video call, sign the page, file it with the accounts, and keep the company bank statements away from the household spending. Ten minutes of paperwork a year is the cheapest succession insurance a British family in France can buy.
Money inside the SCI follows tax rules that surprise British owners, because the default French treatment is the opposite of an English limited company. Unless the shareholders actively choose otherwise, the family SCI is translucent for income tax purposes. Article 1655 ter of the General Tax Code provides that the companies concerned “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”, so that each shareholder is personally taxed on their slice of the rental profit or loss, whether or not the money was actually distributed. A British couple letting the Dordogne house unfurnished therefore declares its share of the rent in France each year, and, as French tax residents or not, handles the British reporting of the same income under the France-United Kingdom double tax treaty of 19 June 2008, whose allocation rules decide which country taxes first and how the other gives relief. The alternative is to elect for corporation tax, the impôt sur les sociétés, under which the company itself pays tax on its profits at company rates and the shareholders are taxed only on what they take out. That election can suit a family accumulating rental profits for works, but it changes the taxation of a later sale profoundly, since the capital gain is then computed from the company’s depreciated book value rather than the parents’ original price, and the election is very difficult to undo. Never elect for corporation tax on a bank-hallway tip. Ask your accountant to model both routes over a ten-year horizon, in writing, before the election deadline of the year concerned.
Two yearly realities complete the picture and both carry British traps. The first is local property tax. The SCI does not shield the house from the taxe foncière, meaning the annual land-and-buildings tax paid by the owner, nor, where still due on second homes, from the taxe d’habitation, meaning the residence tax now concentrated on secondary residences and empty homes. The assessment arrives in the company’s name at the siège social, and British owners who never see the letter because it went to an empty house in winter discover the debt with penalties a year later. Our detailed guide to British owners’ taxe foncière and taxe d’habitation bills explains how to check, pay, and challenge these assessments, and everything written there applies equally where the owner on the bill is your SCI. The second reality is insurance and the mortgage. Insure the house in the company’s name, declare the true occupancy pattern to the insurer, and notify the lender in writing before any gift of shares, any change of gérant, or any switch of tax regime, keeping proof of each letter. A lender that learns of the gift of half the shares from a third party is a lender looking for a default clause, while a lender notified properly almost always consents. None of this administration is difficult; it is simply relentless. Families that accept the routine keep a company that a notaire can settle smoothly, while families that treat the SCI as a drawer for the deeds inherit a dispute.
II. How the SCI Shares Reach Your Children When a Parent Dies, and How to Stop the Succession From Blocking
A. Which Law Decides the Succession, What the Children Are Guaranteed, and Which Court Hears the Case
The death of a shareholder does not transfer the house; it transfers the parts sociales, and everything turns on which country’s succession law governs them. Since Brexit changed nothing in this corner of French private international law, the European Succession Regulation, Regulation (EU) No 650/2012, still decides in France which law applies and which courts are competent, (Regulation (EU) No 650/2012 of 4 July 2012, whose full English text is published on the European Union EUR-Lex portal). The default rule looks to the deceased’s habitual residence at death, the résidence habituelle, meaning the country where the centre of family and social life actually sits, assessed on the facts rather than on nationality or tax status. But a British parent can choose English law for the whole estate in a valid will, the professio juris, meaning the written choice-of-law clause by which a person designates the law of their nationality to govern their succession. For a British family with an SCI, that choice is usually the single most valuable sentence in the file, because it lets English testamentary freedom govern the shares alongside the rest of the estate, instead of leaving the notaire to apply French law by default. The choice must be express, written into a will that is itself valid, and consistent across the English and French wills where the family holds two. Our companion article on British wills, French houses and the choice of English law works through the drafting in detail; for SCI families the lesson is identical, with one addition. Make sure the choice clause expressly covers the parts sociales of the named SCI and any shares acquired later, because a choice drafted only for “my French property” invites argument that the company shares, being movable assets, fall outside it.
Even with English law chosen, British parents must understand what French law would otherwise guarantee the children, because the guarantee follows the family in three ways. First, the réserve héréditaire, meaning the forced share of the estate that French law reserves to the children, is defined by Article 912 of the Civil Code: “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.” The arithmetic is fixed by Article 913 of the Civil Code: “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.” A British father with two children who leaves everything to his second wife therefore exceeds the disposable share under French law, and the children hold a claim for the excess. Second, since the 2021 reform, a child cut out by a foreign law with no forced-share mechanism can take compensation directly from the French assets: the same Article 913 continues that each protected child “peuvent effectuer un prélèvement compensatoire sur les biens existants situés en France au jour du décès”, the compensatory levy that restores the child to the French reserved position out of property lying in France. For an SCI family this levy can fall on the company’s house itself, which is why lifetime gifts of shares that ignore the reserve regularly explode at the succession. Third, the remedy is the action for reduction, the action en réduction, meaning the court claim by which an injured reserved heir claws back excessive gifts. Article 921 of the Civil Code restricts standing strictly: “La réduction des dispositions entre vifs ne pourra être demandée que par ceux au profit desquels la loi fait la réserve, par leurs héritiers ou ayants cause”, and it sets a sharp time limit: “Le délai de prescription de l’action en réduction est fixé à cinq ans à compter de l’ouverture de la succession”. A child who suspects the reserve was breached should therefore see a lawyer quickly, and a parent planning gifts should have the reserve arithmetic checked before signing, because the same article obliges the notaire who spots a possible breach to warn each heir individually of the right to sue.
Two company-law mechanisms then decide whether the children’s shares arrive cleanly or stuck. The first is the approval clause. By default, shares in a civil company cannot change hands without the consent of all the existing shareholders. Article 1861 of the Civil Code lays down the rule: “Les parts sociales ne peuvent être cédées qu’avec l’agrément de tous les associés.” The same article immediately softens it for families: “Sauf dispositions contraires des statuts, ne sont pas soumises à agrément les cessions consenties à des ascendants ou descendants du cédant.” Well-drafted family statuts therefore exempt gifts and inheritances passing to children and between spouses, while keeping approval for sales to outsiders, and the whole succession then flows without a vote. Poorly drafted statuts do the opposite, and the courts enforce them literally. The Court of Appeal of Versailles held on 26 March 2024, in case number 22/03773, that “la clause 12 des statuts précitée ne prévoit nullement une dérogation à la règle de l’article 1861 alinéa 1er du code civil puisqu’aucune règle de majorité n’y est expressément définie” (CA Versailles, 26 March 2024, No 22/03773), annulling a transfer of SCI shares approved without all the shareholders. Read your own clause today: if it does not name a majority or name the family exemptions, assume unanimity applies and fix the statuts while both parents are alive. The second mechanism is the protection of the surviving spouse. French families commonly combine a gift of the bare ownership, the nue-propriété, meaning ownership stripped of the right of use, to the children, with a reserved life interest, the usufruit, meaning the lifelong right to occupy the house or receive its income, for the surviving parent. Done by notarial deed in the parents’ lifetime, this démembrement, meaning the splitting of ownership between a life tenant and remainder owners, gives the survivor security and the children a clear remainder, and it must be mirrored in the SCI’s shareholder register on the day. Where the family never planned, the surviving spouse still holds statutory rights against the estate, but asserting them inside an SCI without paperwork is slow and expensive. Planning in life beats litigating in grief.
When the file reaches the notaire and stalls, British families need to know which judge can unblock it. The Court of Cassation gave a clear compass in a Franco-British succession that mirrors many British files in reverse. A French father had left France for London, his widow lived in the United Kingdom, and the children remained in France disputing the estate. The First Civil Chamber held that “les juridictions françaises sont donc compétentes pour statuer sur l’ensemble de sa succession en application de l’article 10, § 1, sous a), du Règlement (UE) n° 650/2012 du Parlement européen et du Conseil du 4 juillet 2012”, before ordering: “CASSE ET ANNULE, en toutes ses dispositions, l’arrêt rendu le 21 février 2019”, adding “DIT n’y avoir lieu à renvoi” and “Dit que les juridictions françaises sont compétentes pour statuer sur l’ensemble de la succession” (Cass. 1st Civil Chamber, 21 September 2022, No 19-15.438). The principle reads directly across to a British deceased with a French house or SCI shares: French nationality plus assets in France can found the jurisdiction of the French courts over the whole succession, even where the surviving family lives in Britain. In the same decision the Court recalled how habitual residence is assessed, quoting the Regulation’s own recital that “La résidence habituelle ainsi déterminée devrait révéler un lien étroit et stable avec l’État concerné, compte tenu des objectifs spécifiques du présent règlement”. Concretely, where a notaire refuses to settle because the English grant of probate is missing, the will’s choice-of-law clause is contested, or one child blocks the partition, the remedy is to apply to the tribunal judiciaire, meaning the ordinary civil court with jurisdiction over successions, for directions, for the appointment of an administrator, or for a declaration of the applicable law. A refusal letter from the notaire stating precisely what is missing, an apostilled English grant with a sworn French translation, and a lawyer’s summons drafted around the Regulation usually move a file that months of correspondence never shifted.
B. The French Tax Bill on SCI Shares, and How to Challenge the Assessments You Will Receive
French succession tax reaches the SCI shares wherever the family lives, and British heirs are regularly shocked by the bill. The territorial rule is Article 750 ter of the General Tax Code, which taxes French assets “que ces derniers soient possédés directement ou indirectement”, whether held directly or indirectly. The same article then pierces the company veil by statute: “tout immeuble ou droit immobilier est réputé possédé indirectement lorsqu’il appartient à des personnes morales ou des organismes dont le donateur ou le défunt, seul ou conjointement avec son conjoint, leurs ascendants ou descendants ou leurs frères et soeurs, détient plus de la moitié des actions, parts ou droits”. A British father holding sixty per cent of the family SCI at death therefore transmits French taxable property even though, strictly speaking, he owned only company shares, and the taxable value follows the proportion of French property inside the company’s total assets. The practical consequence is that the SCI changes the form of the tax base, never its existence: the shares are declared in the succession, valued by reference to the house, and taxed at the progressive rates with the allowances of the kinship concerned. Children each hold a personal allowance against what they receive, the surviving spouse is fully exempt, and brothers, sisters, nephews, and unrelated beneficiaries face the steeply rising tariffs that make unplanned British successions so expensive. Where the deceased was domiciled in France, the worldwide estate including the SCI shares falls into the French declaration; where the deceased lived in Britain and the heir lives in Britain, only the French assets, including the shares treated as French property, are caught, unless the heir’s own French tax residence history pulls more into the net under the third paragraph of the same article. Because the family’s domicile story decides the perimeter of the bill, take Franco-British advice on domicile before the declaration is filed: a declaration that concedes worldwide taxation when only French assets were due cannot easily be unwound.
Alongside the one-off succession bill sits a yearly charge that specifically haunts foreign-owned French property companies. Article 990 D of the General Tax Code provides that legal entities owning French property “sont redevables d’une taxe annuelle égale à 3 % de la valeur vénale de ces immeubles ou droits”, an annual tax of three per cent of the market value. Three per cent of a 600,000 euro house is 18,000 euros every year, so no British family can afford to misunderstand this provision. In practice the compliant family SCI whose shareholders are identified individuals filing their French declarations does not pay this charge, because the statute and the administration’s official guidance reserve it for opaque structures that hide their owners; the tax office’s own page on the taxe sur la valeur vénale and the detailed BOFiP guidance on the 3% tax set out who must declare and who is relieved. The danger for British families lies in the neglected SCI: the company whose gérant never filed the identifying declaration, the shareholder chain passing through a British trust or an offshore company that France treats as opaque, or the house quietly moved into a company without telling the tax office. Those files receive the 3% assessment plus penalties, and unpicking it requires disclosing the full ownership chain with supporting documents. Keep the SCI transparent from birth, file the company’s declarations every year even when nothing changed, and review the position the moment a shareholder moves country, creates a trust, or dies, because each of those events can change the answers on the form.
When an assessment or a refusal arrives, challenge follows procedure, not indignation. Against a succession-tax assessment or a 3% tax notice, the route is the formal complaint to the tax office that issued it, the réclamation contentieuse, meaning the written claim for discharge or reduction that suspends forced recovery while it is examined, filed within the statutory time limit shown on the notice, with the valuation evidence, the shareholder register, the statuts, and the succession deed attached. A bare letter saying the bill feels unfair achieves nothing; a claim that the house was overvalued by reference to comparable sales, that the proportion of French assets was miscalculated, or that the shareholders were wrongly treated as undisclosed forces the administration to answer each point. If the office maintains the charge, the dispute moves to the administrative court, where the same documentary file decides the case. Against a notaire who will not settle, the response depends on the reason: missing English probate is cured by obtaining the grant, having it apostilled under the Hague Convention, and joining a sworn translation, the traduction assermentée, meaning a translation certified by a court-approved translator; a contested choice-of-law clause or a child disputing the reserve is cured only by a court order from the tribunal judiciaire. The United Kingdom government’s Living in France guidance usefully lists the everyday registrations a British resident must keep current, and keeping those registrations consistent with the SCI file, same address, same marital status, same names in the same order, avoids the identity mismatches that stall successions for months. Build the challenge file as the mirror of the creation file: every certificate the notaire or the tax office says is missing, obtained, translated, and sent by tracked post, with a diary of the time limits. French succession disputes reward the family whose paperwork is complete and punish the family whose file is emotional.
Conclusion
A family SCI gives British parents with a French house something English co-ownership cannot: a company whose shares can be divided, gifted, and approved for the children while the house itself stays intact and the surviving spouse stays protected. But the vehicle only works inside the law that surrounds it. Create it with statuts that exempt family transfers from approval and organise death and divorce, run it with meetings, accounts, and a separate bank account, choose the tax regime on written modelling rather than hearsay, and write an English-law choice into a valid will that expressly covers the parts sociales. At the succession, expect France to tax the shares by reference to the house, expect the children’s reserve or its compensatory levy to police excessive gifts, and expect the notaire to demand complete cross-Channel paperwork. None of these obstacles is fatal to a prepared family, and each of them has a defined legal remedy, from the complaint to the tax office to the application to the civil court. The British files that fail are almost never defeated by the substance of French law; they are defeated by template statuts, unfiled declarations, and wills that never mention the company. Put the file in order while both parents are alive, and the house your children grew up in will reach them as you intended.
Need a quick opinion on your case
Our firm offers a telephone consultation within 48 hours with a lawyer of the firm to review your SCI statuts, your English and French wills, your shareholder register and any succession or 3% tax notice you received. First telephone consultation: 80 EUR including VAT. Call +33 6 46 60 58 22, or write via our contact page with the company name, the date of death or planned gift, and copies of the notices you want challenged.