You are buying a stone house in the Dordogne, a flat in Paris or a villa near Antibes with your husband, your wife, your brother or your adult children, and the French estate agent says what every British buyer hears sooner or later: put the house in an SCI. The notaire, the French public officer who handles conveyancing and who plays a very different role from an English conveyancer, often nods along. Your English solicitor looks more cautious and asks about tax, accounts and cost. All three have a point. A société civile immobilière, the French non-trading property company, is the standard vehicle through which French families hold a holiday home, organise who pays for the roof and prepare succession. For a British family settled in France or keeping a French second home after Brexit, it can be an excellent tool for shared ownership, for passing the house to children in stages and for avoiding the rigidities of joint ownership. It is not a tax shelter, it does not make you French resident or non-resident, it does not remove French income tax, capital gains tax, wealth tax or succession duty, and it does not exempt a British owner from declaring the structure to both the French and the British tax authorities. This guide explains, entirely for a British reader, what an SCI is, how a British family creates and runs one, how it is taxed while it holds the house, what happens to the shares when a parent dies, when a couple divorces or when a family member wants to leave, how a sale of the house or of the shares is taxed for residents and non-residents, 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, with the leading court decisions that interpret those texts, so you can verify each step with your notaire before you sign anything.
I. Should our British family hold our French house through an SCI, and how do we run it from day to day?
A. What is an SCI and how does a British family create one before buying the house?
An SCI is a company whose only business is owning and managing property. It is not a trading company. It buys the house, holds it, pays the insurance and the taxe foncière, the French local property tax paid by owners, lets it unfurnished if the family wishes, borrows from a bank and decides who may live in the house and when. The family members are associés, the partners or shareholders of the company, and each holds parts sociales, the company shares that represent a fraction 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). That definition matters because an SCI needs at least two partners, a common purpose and a contribution from each, even if one contribution is modest. A married couple, two siblings, a parent and an adult child, or four friends can form one. A single person alone cannot, except in the narrow cases where the law allows a one-person company, which is not the usual SCI.
Most British families create the SCI before the purchase so that the company itself signs the compromis de vente, the binding preliminary sale contract, and then the acte authentique, the notarial deed of sale, rather than the individuals. The practical sequence is familiar to any Paris notaire: draft bilingual-ready statutes, agree who brings cash and who brings the deposit already paid, register the company at the greffe, the court registry, obtain its Siren number, open a French bank account in its name and then let it buy. The statutes, the written constitution of the company, do the heavy lifting for decades. They name the gérant, the manager who signs cheques, instructs the insurer, declares the tax and represents the company in court. They set how decisions are taken, what majority sells the house, whether a parent keeps a veto, whether shares can be given to children with the parents keeping control, and what happens on death or divorce. They also organise occupation: which family member may live in the house without paying rent, who pays for the new boiler, whether friends may borrow it, and whether occasional letting is allowed. Because the SCI has its own legal personality, the house belongs to the company and the family owns the company. Creditors of one child cannot seize the walls directly, only that child’s shares. A sale of the house needs a company decision, not four separate signatures on four separate deeds, and a gift of shares to children can be staged over several years to use allowances progressively.
The alternative most British buyers already know is indivision, the French form of joint ownership without a company, where each person owns an undivided fraction of the house itself. Indivision is simple and cheap at the start, and for a couple buying alone it is often enough. Its weakness is structural. French law provides that « Nul ne peut être contraint à demeurer dans l’indivision et le partage peut toujours être provoqué, à moins qu’il n’y ait été sursis par jugement ou convention. » (Article 815 of the Civil Code). Any co-owner can force a sale through the court at almost any time, which is precisely what tears families apart when siblings inherit a house and one of them wants cash. Readers facing that situation will recognise the detailed companion guide on how British co-heirs escape indivision over a French house through partage or court-ordered sale. An SCI does not remove disagreement, but it channels it through company rules, majorities, approval clauses and withdrawal rights instead of an immediate forced sale of the bricks. For three generations sharing one house in the Lot, that difference alone justifies the modest formation cost. For a young couple buying their only home with a mortgage and no succession plan yet, indivision plus a well-drafted will may be perfectly adequate, and a notaire who tells you so is giving honest advice.
Two warnings belong at this early stage because they cause most British disappointments. First, an SCI that runs a genuine commercial furnished-holiday business, with daily cleaning, linen, breakfast or reception services, can lose its non-trading character and drift into company tax or trading-income treatment. Occasional unfurnished letting or simple furnished letting declared correctly is normally tolerated within a non-trading SCI, but a full serviced operation belongs in a different vehicle and needs separate advice. Second, Brexit changed residence and stay rights, not property rights. British citizens remain entitled to buy and to own through an SCI, including from London as non-residents. What Brexit limited is presence: short visits are counted under the 90 days in any 180-day Schengen rule, while living in the house year-round needs a long-stay visa and then a carte de séjour, the French residence permit. The SCI never cures an overstay and never converts a second home into a right of residence. Families who plan to settle should read the companion guide on the first French tax return after moving from the United Kingdom, with forms 2042, 2047 and 3916 alongside this guide.
B. How is our SCI taxed while it holds the house, and what must we declare in France and in Britain?
The default French tax treatment of an SCI surprises many British owners by its simplicity. The company itself usually pays no income tax. Each partner is taxed personally on their slice of the company’s rental profit, whether or not the cash is actually distributed. The code expresses this translucency in two coordinated provisions. For the specific family property companies, the law states that the 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). For civil companies generally, each member is « 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). In plain terms, if the SCI lets the Paris flat unfurnished for 12,000 euros of rent, pays 3,000 euros of deductible charges and has two equal partners, each partner adds 4,500 euros of rental income to their own French return, one as resident and one perhaps as non-resident with French-source income. If nobody is let and the family simply enjoys the house, there is usually no rental profit to declare, but the company still files, still holds its accounts and still pays its local taxes.
British families must keep three layers of French tax in mind while holding. The first is income tax on any rent, with the usual French categories for unfurnished and furnished letting, plus the 17.2 per cent social charges, the prélèvements sociaux, which apply to French rental income of French residents and, with important exemptions for holders of a British S1 healthcare certificate or for certain non-residents, need careful checking each year. The second layer is local ownership taxes, principally the taxe foncière paid by the SCI as owner and, for second homes in many pressured communes, the surcharged taxe d’habitation on second homes that has generated a wave of 60 per cent uplifts. The third layer is the impôt sur la fortune immobilière, the French wealth tax on real estate above 1.3 million euros of net taxable property, where SCI shares representing French property count in the taxable base of the individual holder. An SCI that opts for company tax, the impôt sur les sociétés, changes this picture fundamentally: the company pays annual tax on its profit, capital gains on a later sale are computed under business rules with depreciation recapture, and distributions become dividends. The option is irrevocable in practice after five years and suits families who want to retain profit inside the company or deduct substantial interest, but it usually worsens the private capital-gains treatment on the family home. Most British families holding one home for private use stay with the default translucency and should only elect for company tax after modelling both routes with figures.
The British side cannot be ignored. A French SCI is transparent in France but opaque in British eyes, and HM Revenue and Customs may treat it differently from a French tax office. Rental profit declared in France must also be reported in Britain if the partner is British resident, with relief for French tax under the France-United Kingdom double tax treaty. The treaty tie-breaker for dual residents, explained in the companion guide on how dual French and British tax residence is decided and challenged, often determines which country taxes first and which gives credit. Practical compliance means a French bank account for the SCI, annual French returns for the company and for each partner with French-source income, the 3916 form for foreign accounts where relevant, and matching British self-assessment entries with treaty relief claims. Families should also check the United Kingdom guidance on living in France as a British citizen for residence, healthcare and reporting reminders, and keep every notarial deed, bank statement and tax notice for at least six years. When the French tax office sends a proposition de rectification, the written proposal correcting the return, the deadline to reply is short, usually thirty days, and a reasoned response with bank proof and the exact statutory quote often narrows or cancels the demand before any court action is needed. Keep the assessment, the proof of payment or letting, the treaty article relied upon and the reply in one file, because the same bundle will be needed for the réclamation, the formal administrative claim, and later for the tribunal if the dispute continues.
II. What happens to our SCI shares on death, divorce or disagreement, and how do we sell or challenge the bill?
A. How do SCI shares pass on death or divorce, and how does French succession duty reach them?
Death does not dissolve an SCI. French law states the principle plainly: « La société n’est pas dissoute par le décès d’un associé, mais continue avec ses héritiers ou légataires, sauf à prévoir dans les statuts qu’ils doivent être agréés par les associés. » (Article 1870 of the Civil Code). Well-drafted statutes use that option deliberately. They may continue the company with the surviving spouse alone, with the children, or with a named person, or they may require the heirs to seek agrément, the formal approval of the remaining partners, before becoming partners themselves. Without an approval clause, the children step into the parent’s shoes automatically. With one, the family keeps control over who joins the decision-making circle, while the heir who is refused keeps a financial claim to the value of the shares. British parents should align that clause with their English wills and with the European Succession Regulation, which lets a person choose the law of their nationality to govern the succession as a whole. A British parent who writes in a valid will that English law shall govern the whole succession can, for most assets, displace French forced-heirship mechanics, though French tax and the physical transfer of French property still follow French procedural rails through the notaire. The companion guide on choosing English law for a French house while protecting children sets out that articulation in detail and should be read before redrafting either the will or the statutes.
French succession duty reaches SCI shares even though the family owns paper rather than stone. The territorial rule provides that « Les biens meubles et immeubles, que ces derniers soient possédés directement ou indirectement, situés en France » are taxable when the deceased was not French resident, and it adds that « 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 » (Article 750 ter of the General Tax Code). In ordinary language, if a British father living in Kent holds 60 per cent of the SCI that owns the Dordogne house with his two daughters, the French house counts as indirectly owned and French duty applies to its value apportioned to his shares, with the Franco-British succession treaty of 1963 allocating taxing rights and the French return due within twelve months of death for a death abroad. Gifts of shares during lifetime follow the same logic and can be staged: each parent can give shares to each child up to the allowance, currently 100,000 euros per parent per child every fifteen years, with a donation-partage, the notarised advance distribution among heirs, fixing values and reducing later disputes. Démembrement, the splitting of ownership into usufruit, the lifelong right to use and take income, and nue-propriété, the bare ownership that becomes full ownership when the usufruit ends, is frequently combined with an SCI: parents give the bare ownership of the shares to children and keep the usufruit, so they keep living in the house and voting on daily matters while the taxable value transferred is discounted for their age. The commercial court has examined such planning closely, including a case where members of a family property company had « cédé l’usufruit temporaire des parts qu’ils détenaient dans cette société à la société [F] participations » and the tax office sought proportional registration duty (Cass. com., 30 Nov. 2022, No 20-18.884). The lesson for British families is not to avoid démembrement, which remains a mainstream tool, but to deed it correctly, price the temporary usufruit on a defensible basis, register it properly and keep the valuation report, because the tax office attacks form and price before attacking principle.
Divorce interacts with the SCI through both family law and company law. Shares bought with joint funds during marriage usually fall into the matrimonial regime, the communauté, the community of property, unless they were acquired before marriage or by gift or inheritance kept separate. The divorce judge values the shares at a date close to the final settlement, orders compensation, the soulte, where one spouse keeps more than their share, and can attribute the use of the house to the parent with whom the children live. The SCI statutes cannot override the divorce court’s powers, but they shape the aftermath: an approval clause can prevent an ex-spouse’s new partner from becoming a partner, a pre-emption clause can give the remaining spouse first refusal on the shares, and a clear valuation method avoids a second war after the divorce. Couples who bought before marriage or through parents should check the detailed analysis for British couples married in England and living in France on matrimonial regimes before negotiating the financial clean break, because the regime decides what falls into the pot before the SCI decides how it is shared. Where spouses are also co-managers, banks often require both signatures for borrowing, and a separation should trigger an early letter to the bank, the insurer and the accountant so that one signature cannot bind the company alone during the dispute.
B. How do we leave an SCI, sell the house or the shares, and challenge a refusal or a tax bill?
Leaving an SCI is a company-law act, not a conveyancing act, and the statutes should offer three orderly doors before anyone reaches for the court. The first door is sale of the shares to another family member or to an outsider, but shares « ne peuvent être cédées qu’avec l’agrément de tous les associés » unless the statutes lower the threshold or empower the managers to approve (Article 1861 of the Civil Code). The draft transfer is notified to the company and to each partner with a request for approval, the partners vote, and a refusal must normally be followed by an offer to buy the shares back or to find another buyer, failing which the approval is deemed given after a statutory period. The second door is withdrawal, where a partner takes back the value of their shares and walks away while the company continues. The law provides that « 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. » and that « Ce retrait peut également être autorisé pour justes motifs par une décision de justice. » (Article 1869 of the Civil Code). Courts grant judicial withdrawal for serious reasons such as lasting exclusion from decisions, refusal to distribute any profit while the manager pays themselves, or a family breakdown that makes cooperation illusory, and the commercial court regularly handles such valuation fights, including a long-running dispute where an expert appointed under Article 1843-4 fixed « la valeur unitaire de la part à 48 546 euros, en se fondant notamment sur les derniers résultats comptables obtenus en 2009 et 2010 » (Cass. com., 9 Nov. 2022, No 20-20.830). The third door is dissolution of the company itself, which ends the vehicle and returns the house to joint ownership or to a sale. The court may order « la dissolution anticipée prononcée par le tribunal à la demande d’un associé pour justes motifs, notamment en cas d’inexécution de ses obligations par un associé, ou de mésentente entre associés paralysant le fonctionnement de la société » (Article 1844-7 of the Civil Code). The leading decision on family property companies holds that courts were right in « ayant exactement retenu que la mésentente existant entre les associés et par suite la disparition de l’affectio societatis ne pouvaient constituer un juste motif de dissolution qu’à la condition de se traduire par une paralysie du fonctionnement de la société » (Cass. 3rd civ., 16 Mar. 2011, No 10-15.459). Mere loss of affection between two cousins is not enough. Blocked accounts, an uncallable meeting, a manager who cannot be replaced, or two equal halves voting opposite ways on every resolution can be. British families should therefore minute every meeting, keep the accounts current and put formal notices in writing, because the paper trail decides whether a judge sees everyday friction or genuine paralysis.
Valuation is where most exits succeed or fail. Where the law refers to an expert, « 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). The expert must apply any valuation rules written into the statutes or into a shareholders’ agreement, and courts only overturn the report for gross error. The commercial chamber has held, for a withdrawing partner, that courts were right in « ayant à bon droit retenu que 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 » (Cass. com., 15 Jan. 2013, No 12-11.666). That date matters enormously in a rising market: valuing at the date of the withdrawal request rather than at the date of actual repayment can deprive the departing partner of years of appreciation, which is why statutes should state the valuation date, the treatment of latent gains and who pays the expert. A British daughter leaving an SCI after ten years in which the Dordogne house doubled in value will recover a very different sum depending on that single clause, and independent advice before signing the withdrawal deed is essential.
Selling triggers French capital-gains machinery whether the SCI sells the house or a partner sells the shares. If the translucent SCI sells the house, each individual partner is taxed as if they had sold their fraction directly: « les plus-values réalisées par les personnes physiques ou les sociétés ou groupements qui relèvent des articles 8 à 8 ter » and « 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 » (Article 150 U of the General Tax Code), with the familiar taper relief for holding period, the 19 per cent income-tax rate plus social charges for residents, and full exemption for a main home that will rarely apply to a British-owned second home. If a British non-resident sells shares in a company whose assets are mainly French property, or sells the house through the company while living in Britain, the non-resident levy also looms. « Sous réserve des conventions internationales », the gains described « sont soumises à un prélèvement selon les taux fixés au III bis » (Article 244 bis A of the General Tax Code), collected through an appointed French tax representative, the représentant fiscal, for sellers resident outside the European Economic Area, with the treaty then deciding whether France may tax and whether Britain gives credit. Families often ask whether to sell the house out of the SCI or to sell the buyer’s shares instead. Selling shares avoids new conveyancing duty on the bricks but passes 5 per cent registration duty on the share price to the buyer, who will discount the offer accordingly, while the seller’s own gain on the shares follows its own computation with a different taper. There is no universal answer. A young SCI with little latent gain favours a share deal. An old SCI with a heavily appreciated Riviera villa often favours an asset deal with clean title. Both routes need a completion statement modelled in euros, a clearance tweak for the exact holding period and, for non-residents, confirmation that the treaty tie-breaker and the foreign-tax-credit mechanics in the companion guide on selling a British home while French resident have been mirrored for the French gain in the British return, with HM Revenue and Customs guidance and United Kingdom inheritance-tax rules for British domiciliaries checked for the British side.
Challenging a refusal or a bill follows the same discipline whatever the trigger: an approval refused, a withdrawal blocked, a dissolution opposed or a tax assessment disputed. Start with the paper: the statutes, the minutes, the registered letter requesting approval or withdrawal, the expert report, the notarial valuation, the assessment and the treaty article. For company disputes, a formal mise en demeure, the recorded formal demand to act, followed by an assignation before the tribunal judiciaire, the ordinary civil court, concentrates minds and stops limitation from running. For tax, file a réclamation contentieuse, the formal claim to the tax office, within the statutory deadline shown on the notice, attach the bank proof, the letting history, the S1 certificate where social charges are at stake and the exact statutory quote, then appeal to the tribunal administratif, the administrative court, if the reply disappoints. In Paris and the Île-de-France, where many British-owned SCI deeds are registered, allow extra weeks for greffe and notarial scheduling, keep a Paris address for service where possible and budget for sworn translations of English wills, grants of probate and company documents, because the notaire will ask for them. Throughout, the family should keep living arrangements, school choices and travel plans separate from the legal file: judges and tax officers decide on documents, dates and figures, not on how much the house is loved. An SCI rewards families who write things down, value things properly and act within deadlines, and it punishes those who rely on handshakes across the Channel.
Conclusion
A société civile immobilière does not make a French house cheaper, exempt from tax or immune from Brexit residence rules, but for many British families it makes shared ownership workable across decades. It replaces fragile joint ownership with a company whose statutes decide who manages, who lives there, who joins, who leaves and at what price. While the house is held, the default translucency taxes rental profit in the partners’ hands, leaves local taxes and possible wealth tax where they are, and demands clean Franco-British reporting with treaty relief rather than double payment. On death, the company survives the deceased, the statutes choose between automatic continuation and approval of heirs, and French duty reaches the shares representing French stone through the indirect-ownership rule, with lifetime gifts and démembrement available to plan ahead. On divorce or disagreement, approval, withdrawal, expert valuation and, only for genuine paralysis, court-ordered dissolution provide an ordered ladder instead of an immediate forced sale. On sale, the choice between selling the house and selling the shares, and between French tax and treaty credit, turns on holding period, residence and figures modelled in advance. British owners who grasp those five mechanics, who draft the statutes for the worst day rather than the best, and who challenge refusals and assessments with documents, deadlines and the exact text will find the SCI what French families have long found it to be: an unglamorous, durable machine for keeping one beloved house in the same hands.