You are British, you live in France or you spend half the year there, and the French house sits at the centre of everything: the place your children come back to, the asset that will one day pass to them, and the source of every tax bill with an unfamiliar acronym. At some point a friend, an estate agent or a notaire mentions the SCI, the société civile immobilière, the family property company that owns the house while the family owns the company. It sounds tidy. Instead of three names on the title deeds you hold shares, called parts sociales, and the company owns the walls. Decisions are taken under written rules, the statuts, the articles of association, rather than by unanimous agreement every time a roof needs repairing. But the tidy surface hides real edges. The associates of an SCI answer for its debts without the shield of limited liability. Shares cannot be sold without the approval of the other associates unless the statuts say otherwise. When a parent dies, the shares fall into the estate and French reserved-share law may override whatever the English will says. And selling shares in a company whose value is mainly the house attracts its own registration duty. This guide explains, for a British family after Brexit, when an SCI helps, how to form and run one that holds up, how the tax works while you hold, what happens to the shares on death, divorce or falling-out, and how to challenge a blockage or a bill.

I. Should we put our French house in an SCI, and how do we create one that holds up

A. What an SCI is, how you form it, and how the gérant runs it day to day

An SCI is a civil company, a société civile, whose purpose is to own and manage property. The starting point is article 1832 of the Civil Code: “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.” The same article adds that “Les associés s’engagent à contribuer aux pertes.” Two people at least, a contract, assets put to a common purpose, and a share in the losses: that is the skeleton. Everything a British family needs from an SCI hangs on those few lines, because the contract is the statuts, and the statuts decide almost everything about who decides, who pays, and who leaves.

The official service-public guidance describes the practical shape of the vehicle: the associates place their buildings in an autonomous structure with its own legal personality, administered by a manager, and the SCI may let the properties it holds or make them available to its members. Legal personality arrives with registration, the immatriculation, on the business register, and only from that date can the company sign, borrow and be sued in its own name. Before that date there are only promises between individuals. A British couple who sign a purchase in their own names while “the SCI is being formed” should understand that until registration the buyers are themselves, with all that follows for liability and for the tax treatment of the acquisition.

Formation follows a fixed sequence. First the statuts, drafted in writing, which name the company, fix its registered office, the siège social, state its duration, describe each contribution, the apports, in cash or in kind, allocate the shares, and set the rules for decisions, for the approval of buyers of shares, and for the departure of an associate. Then the cash contributions are paid up under the conditions the statuts fix, the company is registered, and the house is transferred into it, either by contribution at formation or by later sale or gift. Each step costs money: legal drafting, registration duties on contributions of buildings, the notaire fee on any conveyance, and the publicity of the appointment of the manager. Families sometimes compare this with buying directly in joint names, the indivision, joint ownership without legal personality. The same official guidance draws the contrast plainly: the SCI is a legal person whose management is framed by the statuts and entrusted to a manager, while the indivision has no legal personality and follows stricter management rules, with unanimity of the joint owners, the indivisaires, as the default. The indivision regime also applies automatically where several heirs inherit together, so a family that buys directly should expect unanimity to govern the children after the parents die, unless planning is done in advance.

Running the SCI means running the gérance, the management. Article 1846 of the Civil Code provides that “La société est gérée par une ou plusieurs personnes, associées ou non, nommées soit par les statuts, soit par un acte distinct, soit par une décision des associés.” The manager, the gérant, need not be an associate: the service-public guidance confirms the manager may be an outsider, an individual or a legal entity, chosen for competence. The same article sets the default majority, a decision of associates holding more than half the shares, and it organises the fallback where the company is left without a manager: any associate may convene the associates or, failing that, ask the president of the court, ruling on petition, to appoint an agent whose sole task is to have one or more managers appointed. For a British family this matters in two everyday situations. Where both parents manage and one dies or loses capacity, the survivor must be able to appoint a successor without the file stalling at the bank. And where the parents hold the majority and the children the balance, the statuts should say who calls meetings, how accounts are presented, and what the manager may sign alone, because the bank, the insurer and the letting agent will each ask for that paper.

The warning that advisers repeat, and that British buyers raised on limited companies sometimes miss, sits in article 1857: “A l’égard des tiers, les associés répondent indéfiniment des dettes sociales à proportion de leur part dans le capital social à la date de l’exigibilité ou au jour de la cessation des paiements.” Associates answer indefinitely for the company’s debts, in proportion to their share of the capital. There is no limited-liability shield. A lender that finances the SCI’s purchase knows this and will routinely ask each associate to stand surety, to give a cautionnement, in addition. The practical consequence is straightforward: keep the company’s debts serviceable from rents or family contributions, record every advance by an associate in the accounts as a current-account loan, a compte courant d’associé, with written terms, and never let the manager give the company’s guarantee for a third party’s debt unless the statuts expressly allow it and the associates have weighed the risk, because that guarantee engages the indefinite liability of every associate.

For families in Paris and the inner suburbs, the Paris dimension is concrete rather than decorative. Values per square metre mean the capital stated in the statuts, the bank borrowing, and later the wealth-tax base are all larger than in most provincial files, so the drafting of contributions and of current-account advances deserves Paris-level care. The competent notaire for the conveyance into the company will practise in the Paris region where the property sits or where the family lives, registration runs through the same national one-stop register, and any court action to appoint a manager or an expert in valuation goes to the Paris court, the tribunal judiciaire de Paris, where waiting times and documentary demands are what they are: a file with complete statuts, minutes and accounts moves, a thin file waits.

B. How the money is taxed while the SCI holds the house: income shares, the corporation-tax election, and wealth tax on the shares

While the SCI holds the house, the tax follows the transparency of the vehicle. The family SCI starts outside corporation tax and each associate is taxed on a share of the company’s rental result, at personal rates, whether or not the cash is distributed. The legal anchor for the boundary is article 206 of the General Tax Code, which lists the companies liable to corporation tax, the impôt sur les sociétés, subject to a reservation that includes article 1655 ter: the family property company falls under that carve-out, so it begins outside corporation tax. The SCI may then elect for corporation tax, and that election changes the whole picture: gains on a later sale are taxed inside the company, losses are trapped there, and distributions become dividends in the hands of the associates. For a British family the election is rarely neutral. A company taxed as such that sells the Dordogne house pays tax on the gain at company level, and the associates who later sell their shares or draw the proceeds are taxed again on their side, while the capital-gains reliefs that individuals enjoy on property, including the treatment of the main home, do not pass through. Electing, revoking, and living with the election each carry formalities and costs, and the decision should be modelled in figures with the notaire and the accountant before the option is signed, not reconstructed afterwards from bank statements.

Day-to-day rental changes nothing about the structure but everything about the paperwork. An unfurnished letting produces rental income taxed in the associates’ hands in the property-income category; a furnished letting, common for Paris studios and for holiday houses that take paying guests, follows its own industrial-and-commercial regime with different deduction and depreciation logic. Either way the SCI must keep accounts that show, associate by associate, what was received, what was spent, and what was advanced on current account, because the French tax return of each British-resident associate will take up that share, and the UK return will take it up too, with the France-United Kingdom double tax treaty allocating the taxing rights and the foreign tax credit relieving the same income taxed twice. Keep the two returns consistent line by line: the treaty relieves double taxation, it does not bless figures that differ between Paris and London.

Wealth tax, the impôt sur la fortune immobilière, the IFI, reaches the British associate through the shares. The taxable base includes the shares in the company to the extent of the underlying French property, and article 973 of the General Tax Code fixes how the assets are valued: “La valeur des actifs mentionnés à l’article 965 est déterminée suivant les règles en vigueur en matière de droits de mutation par décès.” The same article grants the well-known reduction for the main home: “un abattement de 30 % est effectué sur la valeur vénale réelle de l’immeuble lorsque celui-ci est occupé à titre de résidence principale par son propriétaire.” A British family that actually lives in the house held by the SCI, as its résidence principale, its main home, therefore values the property element with that reduction, while a second home held for holidays takes none. The same article then warns borrowers: for the valuation of the shares, debts taken on directly or indirectly by a company to acquire a taxable asset are left out of account. In plain terms, borrowing inside the SCI to buy the house does not shrink the IFI base the way a personal mortgage shrinks an estate valuation. Families that refinanced through the company expecting the debt to reduce the wealth-tax bill discover the rule the year the assessment arrives, when correction is more expensive than planning.

On the British side of the Channel, the family’s UK position does not sleep while France taxes the house. The UK government guidance for British nationals living in France, published on gov.uk under Living in France, gathers the practical threads, residence, healthcare, driving, and tax, and points to the French administration for permits and property matters. A British associate of an SCI who becomes French tax resident must report worldwide income in France and keep reporting the UK-source items the treaty allocates to the United Kingdom, while a family member who stays UK resident declares the French rental in the United Kingdom with credit for the French tax. The SCI does not change residence; people do. Each move in or out of France, each arrival of a child-partner as a new associate, and each distribution should be logged with its date, because residence dates decide which return carries which euro of rent.

II. What happens to the shares when someone dies, divorces or wants out, and how do you sell or challenge

A. Death, divorce and deadlock: who gets the shares, who must approve them, and how an associate leaves with a fair price

Death does not dissolve the SCI; it transmits the shares. The deceased associate’s parts fall into the estate and pass to the heirs, and the surviving associates wake up alongside successors they did not choose. Whether those successors can vote, receive rents and stay in the capital depends first on the statuts. Article 1861 of the Civil Code sets the default: “Les parts sociales ne peuvent être cédées qu’avec l’agrément de tous les associés.” The agrément, the prior approval, is unanimous unless the statuts set a different majority or entrust approval to the managers, and the same article lets the statuts exempt transfers to associates, to a spouse, and, unless the statuts provide otherwise, to ancestors and descendants. A British family SCI whose statuts require unanimous approval for every transmission, including to the children, builds its own deadlock: on the father’s death, the mother and the surviving associates must approve the children who inherit by law, and a refusal leaves shares whose owner cannot sit at the table. The cleaner clause approves transmissions to the surviving spouse and to issue automatically, keeps approval for outsiders and for former spouses after divorce, and fixes the timetable and the price mechanism that applies where approval is refused, so the refusal produces a buyout rather than a stalemate.

Choosing English law in the will does not sidestep French succession protections for the house and the shares. The European Succession Regulation, Regulation (EU) No 650/2012, which France applies and which continued to govern successions connected with France after Brexit for the French side, provides in article 22 that a person may choose the law of the State of his nationality, held when the choice is made or at death, to govern his succession as a whole. The choice must be made expressly in a declaration in the form of a disposition of property upon death, or be shown by the terms of such a disposition. A British parent can therefore designate English law for the whole estate, including the SCI shares, in a properly drawn will. But where French law governs, or where French protections bite on French assets, the reserved share, the réserve héréditaire, limits what the testator may dispose of by will. Article 912 defines the two halves of every French estate plan: the reserved share is the portion of the estate the law secures to certain heirs, the reserved heirs, and the disposable portion, the quotité disponible, is what remains at the testator’s disposal. Article 913 then fixes the fractions: “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.” One child takes half as of right, two children share two thirds, three or more share three quarters, and gifts and legacies that exceed the disposable portion are reduced. The Court of Cassation stated the principle without nuance in a published judgment of 11 September 2013, appeal No 12-11.694: “il résulte de ce texte qu’aucune disposition testamentaire ne peut modifier les droits que les héritiers réservataires tiennent de la loi”. No will clause enlarges or shrinks what the reserved heirs hold from the law itself. British parents who assumed the English will disposes of the French house as they please, giving everything to the survivor and asking the children to wait, learn at the notaire’s office that the children can claim their reserved portion, including against the SCI shares, and that lifetime gifts of shares count towards the reckoning. The same article 913 adds, for families spread across legal systems, a compensatory levy, the prélèvement compensatoire: where the deceased or at least one child is, at death, a national of or habitually resident in a European Union Member State, and the foreign law governing the succession provides no reserved-share mechanism for children, each child may take a compensatory levy on the assets situated in France. English law provides no forced heirship for children, so the children of a British parent who chose English law may still levy on the French house or the SCI shares to restore the protection French law promises. The interaction between the English choice, the French reserve and the levy is exactly the point on which a will drafted only in England fails a family that owns in France, and the point developed at length in our companion guide to choosing English law for a French house in a will while keeping children protected.

Divorce reaches the SCI through the shares as assets. Shares acquired during the marriage fall into the matrimonial division according to the applicable regime, and the spouse who keeps the house in substance keeps shares whose transfer needs the approval the statuts require. Three clauses prevent the standard injuries: approval that survives divorce so the ex-spouse cannot automatically remain an associate; a pre-emption, a droit de préemption, giving the other associates first refusal at an expert price; and a withdrawal right for the departing spouse with the same expert mechanism. Without them, the divorce judge divides value while company law keeps the ex-spouse in the meetings, and every subsequent decision, from selling the roof to changing the letting agent, needs the cooperation of two people whose cooperation has just been judicially dissolved. Where the family also owns the Paris flat in which one spouse continues to live, the valuation date and the occupation indemnity interact with the company accounts, and the file should carry a single consistent valuation rather than one figure for the judge and another for the tax return.

Deadlock between associates who can no longer speak to each other has its own exit, the judicial withdrawal, the retrait judiciaire. Article 1869 of the Civil Code provides that an associate may withdraw totally or partially on the conditions laid down by the statuts or, failing that, after authorisation given by a unanimous decision of the other associates, and that “Ce retrait peut également être autorisé pour justes motifs par une décision de justice.” The withdrawing associate is entitled to repayment of the value of the rights, fixed, absent amicable agreement, in accordance with article 1843-4. The courts give content to “justes motifs” case by case, and a published judgment of the Third Civil Chamber of 28 March 2012, appeal No 10-26.531, shows the pattern judges recognise: no general meeting held since 2004, a manager-associate producing no act of management and no accounts, the property, the company’s sole asset, unmaintained for years with the main building in poor interior condition and significant deterioration, and, since the previous manager’s death, no agreement between the associates on the decisions for administration, development or even routine maintenance of the estate. Those facts together characterised the just grounds for withdrawal. A British family SCI that has held no meetings for years, where one sibling-manager collects the rents and circulates nothing, and where the house deteriorates while everyone waits, sits squarely in that pattern, and the remedy is an action for authorised withdrawal with repayment, not silent endurance.

The price of the departing associate’s shares is where most family exits turn bitter, and the statute answers with an expert. Article 1843-4 of the Civil Code provides that where the law refers to it for fixing the price of a transfer or buyback, the value is determined, in case of dispute, by an expert appointed either by the parties or, absent agreement, by order of the president of the competent court, ruling under the fast-track procedure on the merits without appeal, and that “L’expert ainsi désigné est tenu d’appliquer, lorsqu’elles existent, les règles et modalités de détermination de la valeur prévues par les statuts de la société ou par toute convention liant les parties.” The expert applies the valuation rules the statuts or the parties’ agreement lay down, where such rules exist. That sentence decides whether the family pays for a valuation method in advance or litigates about method afterwards: statuts that say the shares are valued at net asset value with a stated discount for minority and illiquidity, with the property valued by an independent valuer, produce an expert mission the judge can supervise; statuts silent on method hand the expert a blank page and the family a second dispute about the first. The Commercial Chamber added the timing rule in a published judgment of 15 January 2013, appeal No 12-11.666: the value of the rights of the withdrawing associate must be determined at the date closest to the repayment of their value, and the court of appeal had rightly held that the expert who valued the shares at the date of the judgment authorising the withdrawal had committed a gross error. The court’s own words deserve quotation because families negotiate against them: “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”. Between authorisation and payment, Paris prices move, works are done or neglected, debts are repaid or grow: the valuation follows the economics to the payment date, not the procedure to the judgment date.

B. Selling the shares or the house, paying the duty, and challenging a refusal or a bill

Selling takes two different roads and the family should price both before signing anything. The SCI may sell the house itself, by notarised conveyance, with the price entering the company and the gain taxed according to the company’s regime; or an associate may sell the shares, by private deed notified to the company, with the buyer stepping into the company and the house never changing hands. The share sale is quicker and cheaper in notaire fees, but it carries its own registration duty, the droit d’enregistrement, and it imports the company’s history, debts, disputes and tax liabilities into the buyer’s lap, which is why buyers of shares discount and demand guarantees. Article 726 of the General Tax Code fixes the rates: transfers of shares in companies whose capital is not divided into stock pay 3 per cent, with each share reduced by an allowance equal to 23,000 euros divided by the total number of shares, since “il est appliqué sur la valeur de chaque part sociale un abattement égal au rapport entre la somme de 23 000 € et le nombre total de parts sociales de la société”; and transfers of interests in companies with a preponderance of real estate pay 5 per cent, because the article taxes “A 5 % : – pour les cessions de participations dans des personnes morales à prépondérance immobilière.” A family SCI whose assets are mainly the French house is a company with a preponderance of real estate, so the buyer of the shares pays 5 per cent on the price of the interests, without the 23,000-euro allowance. On a house worth several hundred thousand euros the difference between the two roads runs into five figures, and the notaire models it before the family chooses, not after the preliminary contract is signed.

Approval governs the share sale from the first approach by a buyer. The default of article 1861, approval by all the associates, means a single dissenting sibling can block an outside buyer, and the project of transfer, the projet de cession, must be notified to the company and to each associate with the request for approval. The refusal is not the end of the story where the statuts organise the aftermath: the company or the remaining associates buy the shares at the expert price, or the company reduces its capital, and the seller leaves with money rather than with a veto. The sale file that survives challenge therefore contains the notification with proof of receipt, the associates’ decision within the clause’s time limit, and, on refusal, the written offer of buyback or the expert appointment. A buyer who paid a deposit before approval was granted, or a seller who notified only the manager where the statuts required notice to every associate, hands the other side the annulment argument.

Challenges follow the nature of the blockage. Where the remaining associates refuse approval and then refuse to buy, the seller petitions the court for the expert appointment under article 1843-4 and for orders giving effect to the buyback, relying on the valuation-date rule the Commercial Chamber fixed in 2013. Where the manager paralyses the company, refusing meetings, accounts and distributions, the associates seek withdrawal for just grounds under article 1869 with the 2012 pattern in support, or the appointment of a provisional manager to break the paralysis, and they do so with the meeting convocations, the unanswered registered letters and the photographs of the deteriorating house that prove the grounds. Where the tax office assesses the 5 per cent duty on a higher base than the price, or denies the main-home reduction in an IFI assessment, or treats a distribution as something it is not, the remedy is the challenge stated on the assessment notice itself, brought within the time limit printed on it, with the valuation report, the occupation evidence and the accounts attached: French tax procedure rewards the file that arrives complete and dated, and punishes the letter that argues in general terms. In each case the Paris family litigates where the property or the company sits, before the Paris court for civil matters and before the administrative court for tax, and each step is taken in French, with the British documents translated where the court requires.

Two cautions close the practical picture. First, an SCI is not a way to disinherit children or to erase the reserved share: gifts of shares between living persons, donations, count towards the disposable-portion reckoning, and a structure built to empty the estate of French assets invites the reduction action at the succession. Second, an SCI is not a way to make a holiday home vanish from the wealth-tax base: the shares are valued on the property, the main-home reduction needs genuine main-home occupation, and company debt does not melt the base. Families that use the SCI for what it is, a stable frame for shared ownership, gradual transmission of shares within the disposable portion, and orderly management by a accountable manager, gain the calm it promises. Families that use it for what it is not gain a second dispute on top of the first.

Conclusion

A British family buys calm with an SCI only where the paperwork earns it. The statuts should name a manager who accounts, approve the children automatically, control outsiders firmly, fix the expert method for the price of shares, and organise the buyback that follows a refusal. The tax posture should be chosen in figures before the first letting, with the default transparency kept deliberately or the corporation-tax election taken with eyes open, the wealth-tax valuation run each year on the property rather than on hopes, and the two countries’ returns kept consistent to the euro. Succession planning should pair an English will that expressly chooses English law under the European regulation with French arithmetic that respects the reserved share and the compensatory levy, so the will the family reads in England and the deed the notaire reads in France tell the same story. When the frame holds, the house passes, the rents divide, and the sibling who wants to leave is paid at a price fixed by method rather than by shouting. When it breaks, the exits exist: court-authorised withdrawal, court-appointed expert, approval followed by buyback, and the tax challenge brought on time with evidence. The SCI does not remove death, divorce or disagreement from a British family’s French house. It gives those certainties a procedure, and procedure, written down before the crisis, is what lets a family keep the house instead of losing it to the dispute about the house.