Many British families own their French house through a société civile immobilière, universally known as an SCI: a non-trading French property company whose only job is to own and manage the house. It was often recommended at the time of purchase as a flexible way to organise ownership between spouses, to bring children into the capital gradually, or to keep control of who inherits what. Years later, when the time comes to sell, that same SCI forces a question most sellers never had to ask when they bought: should you sell your shares in the company, or should the company sell the house and distribute the cash? The two exits look economically similar from London, but under French law they follow different procedures, trigger different taxes, and give the buyer, the co-owners and the tax administration different rights. Getting the choice wrong can add tens of thousands of euros to the bill, block the sale for months, or expose you to a reassessment long after you thought the file was closed. This guide explains both routes in practical terms, with the exact rules, the recent court decisions, and the ways to challenge a price, a duty calculation or a tax bill you believe is wrong.
I. Should you sell your SCI shares or make the SCI sell the house?
Start from the basic distinction. In a share deal, the SCI keeps the house and you transfer your parts sociales (company shares) to the buyer, who steps into your shoes as an owner of the company. In an asset deal, usually called a property deal, the SCI itself sells the house to the buyer by a normal conveyance before a notaire (the French public officer who authenticates property transfers and collects the tax), and the cash then belongs to the company before it is passed on to the owners. Everything else flows from that choice: who must agree, what the buyer checks, and which tax applies.
A. How do you sell SCI shares when the other owners must agree?
A share in an SCI is not transferred as easily as a listed share. Article 1861 of the Civil Code sets the default rule: “Les parts sociales ne peuvent être cédées qu’avec l’agrément de tous les associés.” In plain English, the other owners must approve the buyer. The statute immediately adds flexibility: “Les statuts peuvent toutefois convenir que cet agrément sera obtenu à une majorité qu’ils déterminent, ou qu’il peut être accordé par les gérants.” So the articles of association (statuts) may lower the threshold to a stated majority, hand the decision to the manager (gérant), or waive approval for transfers to existing owners, and the law adds that, unless the statutes say otherwise, transfers to parents and children escape approval. The proposed transfer must be formally notified to the company and to each owner with a request for approval. For a British seller living in the United Kingdom, this first step already matters: a buyer who discovers late that a co-owner brother, a former spouse or an adult child can veto the deal will renegotiate the price or walk away, so notifying early and in the correct form protects the timetable.
When approval is refused, the sale is not simply dead. The standard mechanism is that the shares must then be bought back, either by the other owners, by a buyer they put forward, or by the company itself with a capital reduction, within a statutory period running from the refusal. This is where price disputes are born, because the seller and the remaining owners rarely agree on what the shares are worth: the seller values the bricks in Dordogne or Provence, while the others discount for the company’s debts, latent tax and minority position. Article 1843-4 of the Civil Code provides the answer the courts apply: “Dans les cas où la loi renvoie au présent article pour fixer les conditions de prix d’une cession des droits sociaux d’un associé, ou le rachat de ceux-ci par la société, 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.” In other words, either both sides agree on an independent valuer, or the president of the court appoints one in fast-track proceedings with no appeal against the appointment, and that expert must apply any valuation rules written into the statutes or into an agreement binding the parties. A seller who signs a side letter on price before the refusal procedure has run its course can therefore find the letter used against them, while a seller who keeps the expert route open preserves leverage.
A related trap concerns owners who start an exit and then change their mind halfway. The Court of Cassation held on 25 May 2023, appeal no. 22-17.246, that where an owner has committed to a formal withdrawal with buyback accepted by the company, a parallel sale of the same shares to an outside buyer in disregard of that ongoing withdrawal must be annulled: “Elle en a déduit, à bon droit, que la procédure de cession desdites parts à un tiers, initiée par M. [C] [T] en méconnaissance de la procédure de retrait en cours acceptée par la SCI, devait être annulée.” For a British family where one sibling wants out and a local buyer makes a better offer mid-procedure, the message is clear: finish one procedure before starting another, and take advice before signing anything labelled as a withdrawal, because the courts treat it as binding.
From the buyer’s side, a share deal means buying the company’s history as well as its house. Debts, unpaid local taxes, guarantees given by the company, ongoing disputes with builders, and even undeclared works can all sit inside the SCI and pass to the new owner economically. That is why buyers of shares normally demand full company accounts, bank statements, tax returns, the minutes of owners’ meetings, and warranties from the seller about hidden liabilities, with part of the price sometimes held back for a defined period. A seller who prepares this file before marketing the shares sells faster and defends the price better than one who discovers the gaps during the buyer’s audit.
B. What tax does each exit trigger in France?
The two exits are taxed on completely different bases, and this is usually where the money is won or lost. In a share deal, the buyer pays registration duty (droits d’enregistrement) on the price of the shares. Article 726 of the General Tax Code draws the decisive line: “A 5 % : – pour les cessions de participations dans des personnes morales à prépondérance immobilière.” A company counts as property-heavy, in the statute’s words, where “l’actif est, ou a été au cours de l’année précédant la cession des participations en cause, principalement constitué d’immeubles ou de droits immobiliers situés en France”: where its assets are, or were during the year before the sale, mainly made up of buildings or property rights in France. A family SCI that owns a single French house plainly meets that test, so the buyer normally pays 5% of the share price, subject only to a small fixed allowance per share. Compare that with an asset deal, where the buyer pays the standard transfer duties on the property price itself. Sellers sometimes assume the share deal is always cheaper overall, but the duty falls on the buyer, who deducts it from the price offered: the 5% comes out of the seller’s pocket indirectly, and a buyer who fears hidden company liabilities will discount further.
In an asset deal, the tax that dominates is the capital gains tax on the property (plus-value immobilière), computed and collected through the notaire at completion. The official service-public guidance on real-estate gains puts the two levies at 19% income tax on the gain after allowances plus 17.2% social levies, with worked examples on the same page. Holding the property reduces the taxable gain year by year, with exemption from the income-tax slice after more than 22 years of ownership and from the social-levies slice after more than 30 years. The same guidance confirms the practical point sellers care about: the notaire approaches the tax authorities, computes the taxable gain and the tax due, prepares the return and pays the tax to the land registry for the area, and non-residents are warned that tax treaties may lay down different rules. A high gain can also attract the additional surtax on gains above 50,000 euros, which the notaire computes from the statutory table, so British sellers should ask for a full simulation, including allowances and surtax, before signing the preliminary contract rather than discovering the figure at completion.
The treaty position protects France’s right to tax in both exits. Article 14 of the 2008 United Kingdom–France double taxation convention, in force since 18 December 2009 and applying to capital gains tax since 6 April 2010, reserves to France the right to tax gains on the sale of French real estate, and extends the same treatment to gains on unlisted shares whose value comes mainly, directly or indirectly, from that French real estate. In short, whether the SCI sells the house or the British owner sells SCI shares whose value comes mainly from that house, France may tax the gain. Sellers who left France for the United Kingdom should also note the six-year tail clause, which preserves France’s right to tax former residents on disposals after departure, which is why anyone who moved back to Britain within roughly six years needs coordinated advice on both sides of the Channel, and why our guide for former residents on exemption windows and the treaty tail should be read alongside this article: Left France for Britain and Now Sell Your Old French Home After Brexit.
II. How do you get the proceeds out and challenge the bill?
Agreeing the sale is only half the job. The cash must travel from the buyer to the right person, through the right tax transparency, and both the French and the British tax administrations will want their statement. Each figure in that chain can be disputed, but only through the correct channel and within strict time limits.
A. Who receives the money when parents kept the use and children hold the bare ownership?
Many British parents organised their SCI with a split of ownership (démembrement): the parents kept the usufruit, which is the lifelong right to use the property or receive its income, while the children received the nue-propriété, the bare ownership that becomes full ownership when the split ends. When the SCI sells the house and distributes the cash, a painful family question follows: does the money belong to the parents who enjoyed the use, or to the children who owned the capital? The Court of Cassation answered on 19 September 2024, appeal no. 22-18.687: where the general meeting votes such a distribution, the dividend goes to the bare owner unless the two holders agreed otherwise, while the surviving parent’s enjoyment continues as a money claim, known as quasi-usufruit, rather than outright ownership of the cash: “Il en résulte que, dans le cas où l’assemblée générale décide une telle distribution, le dividende revient, sauf convention contraire entre le nu-propriétaire et l’usufruitier, au premier, le droit de jouissance du second s’exerçant alors sous la forme d’un quasi-usufruit sur la somme ainsi distribuée.” Families who assumed the parents would simply keep the proceeds discover the opposite default rule, which is exactly why a written distribution agreement, drawn up before completion and covering who receives what, what interest if any accrues, and what happens on the parent’s death, is worth more than any argument afterwards.
The income tax treatment follows the transparency of the family SCI. Article 8 of the General Tax Code provides that owners of transparent entities “sont, lorsque ces sociétés n’ont pas opté pour le régime fiscal des sociétés de capitaux, personnellement soumis à l’impôt sur le revenu pour la part de bénéfices sociaux correspondant à leurs droits dans la société”: they are personally liable to income tax on their slice of the company’s profits where the company has not elected for corporation tax. The same article refines the split-ownership case: “En cas de démembrement de la propriété de tout ou partie des parts sociales, l’usufruitier est soumis à l’impôt sur le revenu pour la quote-part correspondant aux droits dans les bénéfices que lui confère sa qualité d’usufruitier.” In practice, the rental profits of an SCI that stayed under income tax are declared by the person entitled to the income under the split, not automatically by the bare owner. Contrast that with an SCI that elected for corporation tax (impôt sur les sociétés): the company pays tax on its own profit when it sells, and the owners are taxed again when the cash reaches them as dividends, which can make the asset deal noticeably heavier than in a transparent SCI. Checking the company’s tax election before choosing the exit route is therefore essential, because the election reshapes the whole calculation and cannot be undone retrospectively for the sale.
On the British side, a seller who is resident in the United Kingdom must report the disposal to HM Revenue and Customs under the United Kingdom’s own capital gains rules and deadlines, which run separately from the French notaire’s timetable, and then claim relief for the French tax under the treaty so the same gain is not taxed twice in full. Keep every French document: the completion statement showing the gain computed by the notaire, the proof of French tax paid, the share transfer deed or withdrawal minutes in a share deal, and the distribution resolution in a split-ownership case. Where the treaty allocates the taxing right to France but the United Kingdom also taxes its residents on worldwide gains, the United Kingdom normally gives credit for the French tax within the limits of its own rules, so the quality of the French paperwork directly controls the size of the British credit. Anyone who kept a French tax household for part of the year, or who
moved mid-year, should align the French and British residence positions before filing either return, because a mismatch is the most common source of double payment followed by a long reclaim procedure.
B. How do you challenge the price, the duty or the gain?
Start with the share price. Where approval was refused and the buyback goes to expert valuation, the expert must follow any valuation method written into the statutes or into an agreement binding the parties, and challenges to method, to the perimeter of debts deducted, or to the reference date belong in that expert process first, with reasons and documents, not after the report is final. Where the parties appointed the expert by agreement, the appointment itself can still be attacked before the court in fast-track proceedings if the statutory conditions were not met, but the merits of the valuation are far harder to reopen, which is why the choice of expert and the written instructions given to them deserve as much attention as the negotiation of the price itself. Any owner who believes the remaining owners engineered the refusal to force a cheap buyback should preserve every message and minute from the approval meeting, because the chronology of the refusal is the evidence on which everything else turns.
Next, the duties and the gain. If the tax administration reassesses the 5% duty on a share deal by arguing that the declared price was understated, the dispute turns on valuation evidence: independent appraisals of the house at the transfer date, the company’s certified accounts, proof of debts and provisions deducted, and comparable transactions. If the notaire’s gain computation on an asset deal looks wrong, for example because purchase costs, works, or years of ownership were misstated, the correction starts with a documented request to the notaire, whose file contains the declaration and the payment, and continues, if needed, through the formal tax claim procedure, which runs under short statutory time limits that punish late discovery. Keep the preliminary contract, the deed, the financing plan showing the original price and costs, all invoices for works with proof of payment, and the ownership history, because each allowance and each deduction must be evidenced, and an undocumented euro is a taxed euro.
Practical timing and place deserve a final word. In Paris and the inner suburbs, an asset sale passes through the usual urban pre-emption check by the local authority, which can substitute itself as buyer at the stated price, while a sale of shares as such does not go through that check: one more concrete difference between the two exits for flats in the capital. Sellers based in the United Kingdom act in France through a written authority given to their agent or lawyer for each step, since distance is no excuse for missed deadlines, and every notification, from the request for approval to the expert phase, should travel by a traceable method with proof of receipt. The files that succeed are the prepared ones: complete statutes, up-to-date company records, a clean ownership history, a simulated tax bill for each exit, and a distribution agreement where ownership is split. The files that fail are the ones where the family discovers the default rules after the money has moved.
Conclusion
Selling a French home held in an SCI gives British owners a genuine choice, but it is a choice between two fully regulated paths, not an automatic right to the cheaper tax. The share deal avoids the property conveyance but needs the co-owners’ approval, exposes the buyer to the company’s past, and carries 5% duty on the share price for a property-heavy company. The property deal runs through the notaire with 19% income tax and 17.2% social levies on the gain, softened by holding allowances, computed and collected at completion. Treaty law lets France tax both, split ownership sends the distributed cash to the bare owner by default while the surviving parent keeps only a money claim, and each figure can be challenged only through its own procedure and on evidence. Model both exits with real numbers, secure the approvals and the distribution agreement in writing before completion, and keep every deed, account and receipt: that preparation is what turns a cross-border sale from a dispute into a transaction.