You have found the house: stone walls outside Sarlat, a pool, room for the grandchildren. At the signing meeting the French notaire (the public officer who conveys property in France) suggests buying through an SCI<\/i>. Your estate agent nods. Your neighbour in the Dordogne already has one. But what exactly are you being asked to create, what will it cost you in tax each year, and will it really protect your children when you die? This guide answers those three questions for British buyers after Brexit.<\/p>\n
An SCI, or soci\u00e9t\u00e9 civile immobili\u00e8re<\/i> (non-trading property company), is a small French company whose only business is owning and managing property. Two or more people form it, it buys the house in its own name, and each family member owns shares instead of bricks. That single change affects management, income tax, capital gains tax, wealth tax and succession. It solves real problems for British families, and it creates traps for those who set one up blindly.<\/p>\n
Below you will find, first, whether an SCI suits your family and how to create one properly, and second, how it is taxed and how the shares pass to your children, including how to challenge a French tax bill if the tax office gets it wrong. Every key rule is tied to the exact French statute or court decision it comes from. Buying property gives you no right to live in France, so the residence side is signposted separately.<\/p>\n
A company in French law starts with a simple idea. Article 1832 of the Civil Code states: “La soci\u00e9t\u00e9 est institu\u00e9e par deux ou plusieurs personnes qui conviennent par un contrat d’affecter \u00e0 une entreprise commune des biens ou leur industrie en vue de partager le b\u00e9n\u00e9fice ou de profiter de l’\u00e9conomie qui pourra en r\u00e9sulter.” (Civil Code article 1832<\/a>) An SCI applies that idea to property: family members pool money or a building into a shared venture. Article 1845 of the same Code confirms that the general rules on civil companies govern every SCI<\/a>: “Les dispositions du pr\u00e9sent chapitre sont applicables \u00e0 toutes les soci\u00e9t\u00e9s civiles, \u00e0 moins qu’il n’y soit d\u00e9rog\u00e9 par le statut l\u00e9gal particulier auquel certaines d’entre elles sont assujetties.”<\/p>\n In practical terms, the SCI becomes a separate legal person. The official service-public guide explains that the members place their buildings into an independent structure with its own legal personality, run by a manager, and notes that the company may let the properties it holds or make them available to its members. So the company can let the house to tenants or simply make it available to you, the shareholders, for your holidays. You do not own the walls; you own shares (parts sociales<\/i>) that represent them. The manager, called the g\u00e9rant<\/i>, handles day-to-day decisions under powers defined in the written articles (statuts<\/i>).<\/p>\n The main rival to the SCI is joint ownership, known as indivision<\/i>. Buy a house in your joint names and each of you owns an undivided fraction of the whole. That sounds simple until the family disagrees: under the default rules, big decisions need unanimity, any co-owner can force a sale, and on death each share falls into each estate separately. The service-public guide draws the contrast directly: joint ownership has no separate legal personality and follows stricter management rules. An SCI replaces that rigidity with tailor-made articles: majority voting instead of unanimity, a named manager, pre-emption and approval clauses controlling who may enter, and shares that divide neatly between children in unequal proportions reflecting who actually paid.<\/p>\n For British families, five situations make the SCI genuinely useful. First, couples on second marriages who want the survivor housed but the capital preserved for children of the first marriage: shares can be split between ownership and life interest. Second, parents buying with adult children where contributions are unequal: shareholdings record exactly who paid what. Third, families worried about a future row between siblings: the articles organise decision-making and exits in advance. Fourth, owners who want one person, often one parent, to keep control while gradually giving value away: keep the management shares and gift the rest. Fifth, succession planning across borders: shares in one company are easier to organise in an English will than fractions of three French cottages, and gifts of shares can be staged over the years within the renewable tax-free allowances.<\/p>\n Succession is where British buyers must think in two legal systems at once. French law reserves a protected share of the estate, the r\u00e9serve h\u00e9r\u00e9ditaire<\/i>, for children. Article 913 of the Civil Code provides: “Les lib\u00e9ralit\u00e9s, soit par actes entre vifs, soit par testament, ne pourront exc\u00e9der la moiti\u00e9 des biens du disposant, s’il ne laisse \u00e0 son d\u00e9c\u00e8s qu’un enfant ; le tiers, s’il laisse deux enfants ; le quart, s’il en laisse trois ou un plus grand nombre.” (Civil Code article 913<\/a>) Since Brexit changed nothing here, the European Succession Regulation still lets a British national elect English law for the whole succession: “Une personne peut choisir comme loi r\u00e9gissant l\u2019ensemble de sa succession la loi de l\u2019\u00c9tat dont elle poss\u00e8de la nationalit\u00e9 au moment o\u00f9 elle fait ce choix ou au moment de son d\u00e9c\u00e8s.” (EU Succession Regulation 650\/2012, Article 22<\/a>) That election, written into your will, is powerful, but France claws back protection for children through a compensatory levy on French assets where the chosen foreign law offers no reserved share. An SCI does not sidestep these rules; it gives you a cleaner vehicle, shares, through which to apply them. Our companion guide on probate and French tax where a British resident still owns a house in England<\/a> covers the cross-border side in detail. For the hold-and-pass-on strategy in depth, see how a British family holds a French house in an SCI for tax and succession<\/a>.<\/p>\n There are also cases where an SCI is a poor idea. A single buyer with no partner, no children involved and a straightforward cash purchase gains paperwork without benefit. Borrowing is harder: French banks lend readily to individuals buying a home but treat SCI borrowers with caution, often demanding personal guarantees from every member or refusing altogether, so clear the financing before you incorporate. Running costs are real: notaire fees for drafting bespoke articles, the legal announcement, registration, yearly accounts and the annual tax return typically run into four figures to set up and several hundred euros a year to maintain. And a family SCI must stay civil in nature. The service-public guide warns that the SCI\u2019s main activity must stay non-trading, such as letting unfurnished property, and gives buying-to-resell, furnished letting and hotel-style g\u00eetes as commercial examples. A gite with bed-and-breakfast-style services, systematic furnished holiday letting, or buying to resell at a profit can push the company into the commercial sphere with harsh tax consequences. Modest, occasional furnished letting is tolerated as accessory, but a British family planning a full-time holiday-let business needs a different structure and separate advice.<\/p>\n One Brexit reassurance: leaving the European Union did not close the SCI to Britons. Any adult, of any nationality, can be a member; no ministerial authorisation is required to hold shares in a French property company. What Brexit did change is residence. Owning shares, or even a whole village, gives you no right to live in France beyond 90 days in any 180-day period; long stays need a visa or residence card. The British government’s Living in France guide<\/a> is the official starting point on that separate question, and our guide on when a Briton becomes French tax resident<\/a> explains the tax-residence side.<\/p>\n Creation follows a fixed sequence, and the order matters because the company must exist before it buys. Start with the members and the money. An SCI needs at least two members, , whether individuals or companies. A married couple qualifies; a parent and one child qualifies; a single person does not and must bring in a second member, even with a token one per cent. Each member contributes cash (apport en num\u00e9raire<\/i>), property (apport en nature<\/i>), or occasionally skills, in exchange for shares. Cash contributions need not be paid up immediately, and the articles may stagger payments So the articles can stagger payments alongside mortgage repayments, which suits families funding the purchase over time.<\/p>\n Next come the articles, the heart of the exercise. Off-the-shelf templates are the most expensive saving you will ever make. The articles must fix the company name, registered office (si\u00e8ge social<\/i>, often the French house itself or the notaire’s address initially), purpose (objet social<\/i>), capital, life span (up to 99 years), the manager’s identity and powers, voting rules, and the clauses governing exits: approval of new members, pre-emption rights, valuation method and what happens on death or divorce. Draft the purpose narrowly around acquiring, holding and managing the identified property; phrases hinting at resale or hotel-type services invite reclassification. Married couples should note the spousal warning: where a member contributes jointly owned matrimonial property, the other spouse must be informed and may claim member status for half the shares. Tell the notaire your matrimonial regime, English or French, before signing anything.<\/p>\n Formalities then make the company real. The members sign the articles, publish a formation notice in an approved legal gazette (annonce l\u00e9gale<\/i>), file for registration with the company registry (registre du commerce et des soci\u00e9t\u00e9s<\/i>) via the one-stop business portal, and receive the SIREN identification number. The ultimate owners must also be declared to the beneficial-owners register. Open a dedicated bank account in the SCI’s name and route every franc of the purchase through it: contributions, the mortgage if the bank agrees, the price, the notaire’s fees. Mixing personal and company money is the classic source of later disputes. In practice the French notaire handling the purchase usually drafts the articles as part of the conveyancing package, which keeps the company and the purchase aligned, but have an independent adviser review them where significant UK assets or an English will interact.<\/p>\n Funding structure deserves a deliberate choice. Money can enter as capital (in exchange for shares) or as a shareholder loan to the company (compte courant d’associ\u00e9<\/i>), which the SCI can later repay to you tax-efficiently when it has rental income or sale proceeds. Loans must be documented, and any interest must be at a market rate and properly declared. Many British families combine a modest capital with a larger documented loan for flexibility. Record every transfer with a bank reference; the tax office loves to recharacterise undocumented movements.<\/p>\n Running the SCI is undramatic but mandatory. Hold a yearly meeting, approve the accounts, record decisions in signed minutes, and file the annual company return, form 2072, with the French tax administration (see our step-by-step on the SCI 2072 return and what happens when a British family files late<\/a>). The manager acts within the articles; acts beyond them can be challenged. Keep invoices, loan statements, rental records and minutes for at least six years. This discipline is what separates a respected family vehicle from a sham the tax office can attack.<\/p>\n Shares move under strict rules, and a recent court decision shows why procedure matters more than impatience. Article 1861 of the Civil Code provides (Civil Code article 1861<\/a>): “Les parts sociales ne peuvent \u00eatre c\u00e9d\u00e9es qu’avec l’agr\u00e9ment de tous les associ\u00e9s.” Every planned sale to an outsider must be notified to the company and each member with a request for approval, unless the articles soften the rule. In a 2023 case about an SCI family dispute, a member authorised to withdraw tried to shortcut the process by selling his shares to an outside company while the withdrawal valuation was still pending. The Cour de cassation endorsed the cancellation of that sale, holding: “La cour d’appel a retenu que M. [C] [T] s’\u00e9tait engag\u00e9 dans une proc\u00e9dure de retrait avec rachat de ses parts, accept\u00e9e par la SCI, dont l’\u00e9chec n’avait pas \u00e9t\u00e9 constat\u00e9 et qu’il lui incombait de mener \u00e0 son terme.” It added: “Elle en a d\u00e9duit, \u00e0 bon droit, que la proc\u00e9dure de cession desdites parts \u00e0 un tiers, initi\u00e9e par M. [C] [T] en m\u00e9connaissance de la proc\u00e9dure de retrait en cours accept\u00e9e par la SCI, devait \u00eatre annul\u00e9e.” Read the full reasoning at Cass. 3rd civil chamber, 25 May 2023, No 22-17.246<\/a>. The lesson for your articles: write a clear exit path, with an independent valuation mechanism and a buyback timetable, so nobody is tempted to improvise. Note also the useful default the Code preserves for families: “Sauf dispositions contraires des statuts, ne sont pas soumises \u00e0 agr\u00e9ment les cessions consenties \u00e0 des ascendants ou descendants du c\u00e9dant.” (Civil Code article 1861<\/a>) Lifetime gifts of shares to your children are approval-free unless your articles say otherwise, so check what yours say before assuming a problem.<\/p>\n By default a family SCI is tax-transparent: the company itself pays no income tax, and each member is taxed personally on their slice. Article 1655 ter of the General Tax Code states: “les associ\u00e9s ou actionnaires sont personnellement soumis \u00e0 l’imp\u00f4t sur le revenu ou \u00e0 l’imp\u00f4t sur les soci\u00e9t\u00e9s, suivant le cas, pour la part des revenus sociaux correspondant \u00e0 leurs droits dans la soci\u00e9t\u00e9.” Read it at CGI article 1655 ter<\/a>. Unfurnished rents therefore land on each member’s French return at personal rates, with social charges on top, whether or not the cash is actually distributed. If you are French tax resident, worldwide SCI income is declarable in France, with the France-UK double tax treaty<\/a> allocating taxing rights so the same rent is not fully taxed twice; our guide on declaring UK rental income as a French resident<\/a> explains the treaty-credit mechanics that also apply in reverse.<\/p>\n The SCI may instead elect for corporation tax (imp\u00f4t sur les soci\u00e9t\u00e9s<\/i>), governed by CGI article 206<\/a>. The trade is sharp and irrevocable in practice, so model it before choosing. On the plus side, rents are taxed inside the company at the company rate, loan interest and depreciation (amortissement<\/i>) of the building, impossible under the transparent regime, become deductible, which suits heavily borrowed letting investments. On the minus side, taking money out means a second layer of tax, and on sale the company gets no individual taper relief: the gain is computed from the depreciated book value and fully taxed. For a family whose priority is a holiday home to keep and eventually pass on, transparency usually wins. For a leveraged letting project, the company option deserves a spreadsheet. Get the election modelled with your actual figures before the articles are signed, because switching later triggers an immediate tax charge on unrealised gains.<\/p>\n Capital gains on sale follow the building, not just the shares. Where a transparent SCI sells the house, the gain is computed under the private capital-gains regime. Article 150 U of the Tax Code provides: “les plus-values r\u00e9alis\u00e9es par les personnes physiques ou les soci\u00e9t\u00e9s ou groupements qui rel\u00e8vent des articles 8 \u00e0 8 ter , lors de la cession \u00e0 titre on\u00e9reux de biens immobiliers b\u00e2tis ou non b\u00e2tis ou de droits relatifs \u00e0 ces biens, sont passibles de l’imp\u00f4t sur le revenu dans les conditions pr\u00e9vues aux articles 150 V \u00e0 150 VH .” See CGI article 150 U<\/a>. The longer the SCI holds, the more holding-period relief melts the bill, with full exemption after long ownership; the main-home exemption, however, never applies to a holiday home, and detention through an SCI changes nothing about that. Selling the shares instead of the house is a different transaction with its own treatment and lower buyer registration costs, which is why buyers of occupied family companies often bid for shares; each route needs its own calculation, including the UK capital-gains position of a British seller, with treaty credit where available.<\/p>\n Non-resident sellers face a special withholding. Article 244 bis A of the Tax Code provides: “Sous r\u00e9serve des conventions internationales, les plus-values, telles que d\u00e9finies aux e bis et e ter du I de l’article 164 B , r\u00e9alis\u00e9es par les personnes et organismes mentionn\u00e9s au 2 du I lors de la cession des biens ou droits mentionn\u00e9s au 3 sont soumises \u00e0 un pr\u00e9l\u00e8vement selon les taux fix\u00e9s au III bis.” See CGI article 244 bis A<\/a>. Since Brexit, British sellers living outside the European Economic Area generally need an accredited tax representative (repr\u00e9sentant fiscal<\/i>) for larger disposals, and the notaire will not complete without the computation. Budget for this from the compromis stage, not the week before completion.<\/p>\n Wealth tax reaches SCI shares too. Article 964 of the Tax Code states: “Il est institu\u00e9 un imp\u00f4t annuel sur les actifs immobiliers d\u00e9sign\u00e9 sous le nom d’imp\u00f4t sur la fortune immobili\u00e8re.” See CGI article 964<\/a>. French residents are liable on worldwide property above 1.3 million euros, newcomers benefit from a five-year partial shelter on foreign property, and non-residents only on French assets. Two SCI penalties matter: the official guide notes that the 30 per cent main-home discount is unavailable for IFI where an SCI holds the property. And on death: the same guide notes that the 20 per cent discount on the deceased\u2019s main home is likewise unavailable for succession duties where an SCI holds it. Families whose French home is their main residence should weigh those lost discounts seriously; see the official service-public SCI guide<\/a> and the Finance Ministry’s how-an-SCI-works explainer<\/a> for the full picture.<\/p>\n Finally, the levy that frightens foreign owners: the annual 3 per cent tax on the market value of French property held through entities. Article 990 D of the Tax Code provides: “Les entit\u00e9s juridiques : personnes morales, organismes, fiducies ou institutions comparables qui, directement ou par entit\u00e9 interpos\u00e9e, poss\u00e8dent un ou plusieurs immeubles situ\u00e9s en France ou sont titulaires de droits r\u00e9els portant sur ces biens sont redevables d’une taxe annuelle \u00e9gale \u00e0 3 % de la valeur v\u00e9nale de ces immeubles ou droits.” See CGI article 990 D<\/a>. A family SCI with identified British members escapes it in practice by filing the yearly declarations that disclose who stands behind the shares; the tax bites entities that hide their owners. The Cour de cassation confirmed the logic strictly in a 2024 ruling published in its Bulletin: “Il r\u00e9sulte de la combinaison de ces textes que toute entit\u00e9 est redevable de la taxe de 3 % sur la valeur v\u00e9nale des immeubles qu’elle poss\u00e8de en France, sauf \u00e0 justifier relever d’un des cas \u00e9num\u00e9r\u00e9s par le dernier.” Read Cass. commercial chamber, 10 May 2024, No 21-11.230<\/a>. The message is administrative rather than dramatic: file the disclosures every year, on time, and keep proof.<\/p>\n Transmission is the SCI’s strongest suit when prepared early. Because the capital is divided into shares, you can gift slices over the years, child by child, using the renewable allowances, rather than giving away a house all at once. Splitting ownership between a life interest (usufruit<\/i>, the right to use and take income) and the bare title (nue-propri\u00e9t\u00e9<\/i>, ownership without present use) lets parents keep the house for life while moving future value to the next generation at a discount that grows with the parents’ age. The tax code follows the split faithfully: “En cas de d\u00e9membrement de la propri\u00e9t\u00e9 de tout ou partie des parts sociales, l’usufruitier est soumis \u00e0 l’imp\u00f4t sur le revenu pour la quote-part correspondant aux droits dans les b\u00e9n\u00e9fices que lui conf\u00e8re sa qualit\u00e9 d’usufruitier.” See CGI article 8<\/a>. A gift-sharing deed (donation-partage<\/i>) before a notaire can then freeze values and stop later quarrels between siblings; on gifts of shares to children specifically, see passing SCI shares in a holiday home to your children<\/a>.<\/p>\n Coordinate the shares with your will. If you elect English law under the European rule quoted above, record the choice expressly in a valid will and tell the French notaire where the original is kept; the election governs the succession as a whole, including the SCI shares. Remember the guardrails: the reserved shares of Article 913 still bite on French assets through the compensatory levy where the elected law protects children less, gifts already made count towards the shares, and the surviving spouse has separate rights. Blended families should map every child’s position on paper before signing, because an SCI that ignores a child’s reserved share simply manufactures the litigation it was meant to prevent.<\/p>\n Death itself does not dissolve the company: the SCI survives its members, and the shares fall into the estate. Heirs step into the deceased’s shoes, subject to the articles. As noted above, lifetime gifts to children are approval-free by default, but many articles extend approval to successions, forcing the surviving members to accept the heir or buy them out. Read that clause now, not after the funeral. Where the articles require approval and the members refuse the heir, the company must offer a buyback at a fair price, with an independent valuation if the parties disagree. This is precisely the mechanism whose misuse the Cherche Midi ruling punished, so insist that your articles spell out the timetable, the valuer and who pays.<\/p>\n When the tax office disagrees with you, procedure is everything. Assessments arrive as formal notices; never ignore one. French law requires a prior complaint before any court action. Article R*190-1 of the Tax Procedures Book provides: “Le contribuable qui d\u00e9sire contester tout ou partie d’un imp\u00f4t qui le concerne doit d’abord adresser une r\u00e9clamation au service territorial, selon le cas, de la direction g\u00e9n\u00e9rale des finances publiques ou de la direction g\u00e9n\u00e9rale des douanes et droits indirects dont d\u00e9pend le lieu de l’imposition.” See LPF article R*190-1<\/a>. Send that written claim (r\u00e9clamation contentieuse<\/i>) by tracked post within the printed deadline, attach every supporting document, and ask for suspension of payment where the rules allow. If the administration rejects the claim expressly or by silence, the dispute moves to the courts: the administrative tribunal for most direct taxes, the civil courts for registration duties and wealth-tax valuation fights. Typical British flashpoints include the tax office treating a family arrangement as commercial and reassessing under corporation tax, denying holding-period relief after a contribution to the SCI, or valuing gifted shares above the declared price. Each needs its own evidence: minutes proving civil management, bank records tracing contributions, and an independent valuation report for gifts.<\/p>\n Practical checklist before you sign anything: confirm the mortgage works with an SCI borrower; fix the narrow company purpose; stagger capital payments in the articles; document every shareholder loan; align the articles with your English will and any election of English law; diarise the yearly meeting, accounts and form 2072; and file the 3 per cent-tax disclosures annually. Families who do this groundwork buy themselves calm management and a staged, tax-efficient handover. Those who skip it buy a dispute with the tax office or between siblings.<\/p>\n An SCI is neither a miracle nor a trap: it is a precision tool. It earns its keep where a British family shares a French home across generations, wants decisions by majority rather than unanimity, and plans to hand over value gradually while keeping control. It is the wrong tool for a lone buyer, a heavily mortgaged purchase the bank will not fund through a company, or a holiday-let business that belongs in a commercial structure. Tax transparency is usually the right default for a family home, with corporation tax reserved for genuinely geared investments modelled in advance. On succession, shares plus an English-law election plus lifetime gifts give you the fullest control French law allows, but the children’s reserved shares still set the boundary. Draft the articles as if the family will one day disagree, because one day it might, and put every euro of funding on a documented trail. Done that way, the SCI quietly does what British buyers actually want: one house, one manager, shares for each child, and no forced sale.<\/p>\n Talk it through with a lawyer before you sign the compromis<\/i> or the SCI articles. Our firm offers a telephone consultation within 48 hours with an avocat of the firm. Call +33 6 46 60 58 22<\/a> or write via our contact page<\/a> with a short summary of your project: the property, the family members involved and your timetable.<\/p>\n","protected":false},"excerpt":{"rendered":" British family buying in France? How an SCI works, what it costs in tax, how shares pass to children, and how to challenge a reassessment after Brexit.<\/p>\n","protected":false},"author":251031309,"featured_media":16540,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kj_source_type":"","_kj_official_id":"","_kj_official_url":"","_kj_judilibre_id":"","_kj_jur":"","_kj_lieu":"","_kj_chambre":"","_kj_rg":"","_kj_date":"","activitypub_content_warning":"","activitypub_content_visibility":"","activitypub_max_image_attachments":4,"activitypub_interaction_policy_quote":"anyone","activitypub_status":"federated","footnotes":""},"categories":[80312,80314],"tags":[],"class_list":["post-2127471","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-british-desk","category-decryptage"],"yoast_head":"\nB. How to create and run the SCI in practice<\/h3>\n
II. How is the family SCI taxed, and what happens on death or in a dispute?<\/h2>\n
A. Income tax, capital gains, wealth tax and the 3 per cent levy<\/h3>\n
B. Passing the shares to your children and challenging a tax bill<\/h3>\n
Conclusion<\/h2>\n
Need a quick opinion on your case?<\/h2>\n