You own a house in France, or you are about to buy one, and somebody at a dinner party in the Dordogne has told you to put it in an SCI. The three letters stand for soci\u00e9t\u00e9 civile immobili\u00e8re, a French non-trading property company, and the advice is so common among British owners that it is easy to forget it is a serious legal decision. An SCI changes who owns your house in the eyes of French law, how rental income and capital gains are taxed, what happens to the property when you die, and what happens when the family falls out. This guide explains, for a British reader living with the consequences of Brexit, how a family SCI works day to day, how it is taxed while everyone is alive, how shares in it pass to the next generation, and what to do when the notaire, the French conveyancing solicitor with public-officer status, or the tax office says no.<\/p>\n
Two warnings before we start. First, an SCI is a tool, not a tax shelter. Used for the wrong reason, it adds cost and rigidity without saving a penny. Second, every French term below is explained the first time it appears, and every decisive legal proposition is tied to the exact text or court decision it comes from, so that you can check everything with your notaire.<\/p>\n
A soci\u00e9t\u00e9 civile immobili\u00e8re is a civil company, meaning a company whose lawful purpose is civil rather than commercial, most often the ownership and management of property. Article 1832 of the Civil Code defines the company in general terms: “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.” In plain terms, two or more people agree to put assets together for a shared purpose. A family SCI applies that idea to one house, or a small portfolio of houses: the parents, and often the children, become associ\u00e9s, the French word for shareholders or members, and each holds parts sociales, company shares, instead of owning bricks and mortar directly. The full text is published on L\u00e9gifrance, article 1832 of the Civil Code<\/a>.<\/p>\n Nothing in French company law stops a British citizen from being an associ\u00e9 of an SCI, whether that person lives in London, Edinburgh or Eymet. Since Brexit, British citizens are third-country nationals in France, which complicates visas and residence permits, but it does not disqualify them from holding shares in a French company or from being its g\u00e9rant, the manager. The SCI itself is French, with a French registered office, French accounts and French tax filings, even if every associ\u00e9 carries a British passport. That French nationality of the company is exactly why the structure survives Brexit: the house continues to belong to a French person, the company, whatever happens to the residence status of the humans behind it.<\/p>\n British families usually reach for the SCI for one of four practical reasons, and it helps to identify yours before paying any formation costs. The first is avoiding indivision, the default co-ownership regime in which each co-owner owns an undivided fraction of the whole and any important decision requires agreement. Indivision between siblings after a death is the single greatest source of blocked French houses, because one heir who refuses to sell can paralyse the rest. In an SCI, by contrast, the house belongs to the company and the family members own shares, so the statutes, the written articles of association, can organise majority voting, appoint a g\u00e9rant with day-to-day powers, and set the price and procedure for buying out whoever wants to leave. The second reason is bringing children into the ownership gradually, by giving them a few shares at a time, which is far simpler than giving them fractions of a house. The third is organising the use of a holiday home shared between two branches of a family, with the statutes recording who pays for the new roof and who gets August. The fourth, often overstated, is tax.<\/p>\n Day-to-day running is deliberately light, which is part of the appeal. The g\u00e9rant signs the insurance, pays the taxe fonci\u00e8re, the local property tax, collects any rent and calls the annual general meeting. The associ\u00e9s vote, in principle in proportion to their shares unless the statutes say otherwise, and the meeting approves the accounts. But light does not mean informal. The SCI needs its own bank account, proper minutes, known as proc\u00e8s-verbaux, and accounts that distinguish the company’s money from yours. British owners who treat the SCI account as a second current account create the exact evidentiary mess that poisons later disputes and tax audits. Keep every transfer documented, reimburse personal expenses through the current account of the associ\u00e9, the shareholder loan account known as compte courant d’associ\u00e9, and never pay a builder in cash from the company till.<\/p>\n The statutes deserve more attention than most families give them, because they are the private constitution of your SCI and the courts will hold you to them. Three clauses matter above all for British families. The approval clause, or clause d’agr\u00e9ment, controls who can enter the company: article 1861 of the Civil Code states that “Les parts sociales ne peuvent \u00eatre c\u00e9d\u00e9es qu’avec l’agr\u00e9ment de tous les associ\u00e9s.” The statutes may soften that default to a majority, or waive approval for gifts to children, but the starting point is unanimity, and the official text is on L\u00e9gifrance, article 1861 of the Civil Code<\/a>. Think carefully before waiving it, because the person you allow in today may be your daughter’s husband, who becomes your ex-son-in-law tomorrow. The continuation clause decides whether the company survives the death of an associ\u00e9 or dissolves, a point developed in Part II. The withdrawal clause sets how an associ\u00e9 who wants out gets paid; article 1869 of the Civil Code provides that “Sans pr\u00e9judice des droits des tiers, un associ\u00e9 peut se retirer totalement ou partiellement de la soci\u00e9t\u00e9, dans les conditions pr\u00e9vues par les statuts ou, \u00e0 d\u00e9faut, apr\u00e8s autorisation donn\u00e9e par une d\u00e9cision unanime des autres associ\u00e9s. Ce retrait peut \u00e9galement \u00eatre autoris\u00e9 pour justes motifs par une d\u00e9cision de justice.” The full provision is on L\u00e9gifrance, article 1869 of the Civil Code<\/a>. Draft these clauses for the divorce and the falling-out, not for the happy day of signature, because nobody amends statutes while arguing.<\/p>\n Two misunderstandings should be cleared up at once. An SCI does not protect the house from your creditors in the way an English trust might be imagined to do; shares in the SCI are assets in your estate that a creditor can seize. And an SCI does not remove the house from your French succession; it changes the legal wrapper, from a building to movable shares, but the value remains taxable and the forced heirship rules examined below continue to bite. Anyone selling you an SCI as invisibility cloak is selling you a future reassessment.<\/p>\n The default tax regime of the family SCI is transparency, and the word is used here in its technical sense. Article 1655 ter of the General Tax Code provides that companies whose real and sole purpose is the construction, acquisition or management of buildings for division among the members are deemed to have no personality distinct from their members for direct taxes. The key sentence reads: “sont r\u00e9put\u00e9es, quelle que soit leur forme juridique, ne pas avoir de personnalit\u00e9 distincte de celle de leurs membres pour l’application des imp\u00f4ts directs, des droits d’enregistrement, de la taxe de publicit\u00e9 fonci\u00e8re exigible sur les actes qui donnent lieu \u00e0 la formalit\u00e9 fusionn\u00e9e en application de l’article 647 , ainsi que des taxes assimil\u00e9es (1).” And the same article adds: “Notamment, 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.” The official text is on L\u00e9gifrance, article 1655 ter of the General Tax Code<\/a>. Concretely, if the SCI lets the house unfurnished and collects 12,000 euros of rent, each associ\u00e9 is taxed personally on their slice, under the same rules as if they owned the house directly.<\/p>\n For British associ\u00e9s, that transparency has a cross-border consequence worth understanding early. An associ\u00e9 who is tax-resident in France declares their share of the SCI income on the French return, in the property-income category. An associ\u00e9 who is tax-resident in the United Kingdom, for example an adult child who stayed in Manchester while the parents retired to France, is taxable in France on French-source rental income and declares it in the United Kingdom with a credit under the France-United Kingdom double tax treaty of 19 June 2008. Keep both filings consistent: the figures the French return shows for the SCI must match what the British return claims as foreign income, because mismatches are exactly what exchange-of-information agreements are designed to catch. Where the house is simply enjoyed by the family and never let, there is no rental income to declare, but the SCI still files, and the associ\u00e9s still report the structure where required, including the UK-resident child on their UK return if HM Revenue and Customs asks about interests in foreign entities.<\/p>\n The SCI may instead opt for corporation tax, known as imp\u00f4t sur les soci\u00e9t\u00e9s and shortened to IS. The option is irrevocable in practice and changes everything: the company pays tax on its profits at the corporate rate, the associ\u00e9s pay tax only on what is distributed, and a later sale of the house is taxed inside the company without the private capital-gains allowances for length of ownership. That can suit an SCI that carries on a genuine rental business and retains profits for further investment, but it is usually a poor choice for the family holiday home, because the parents end up paying tax twice, once in the company and once on dividends, and lose the main-residence and holding-period reliefs examined below. The companies liable to corporation tax are listed in article 206 of the General Tax Code<\/a>, and the option deserves a written simulation from your accountant before signature, not after. One related trap matters for British owners tempted by holiday lets: a transparent SCI that furnishes and lets the house commercially, year after year, risks being treated as carrying on a commercial activity, which pushes it into corporation tax by operation of law. If short-term letting is the plan, take advice first and read the furnished-rental analysis alongside this guide.<\/p>\n When the SCI sells a property, or when an associ\u00e9 sells shares, the private capital-gains regime follows the asset into the structure. Article 150 U of the General Tax Code charges the tax on “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,” which “sont passibles de l’imp\u00f4t sur le revenu dans les conditions pr\u00e9vues aux articles 150 V \u00e0 150 VH”. The official text is on L\u00e9gifrance, article 150 U of the General Tax Code<\/a>. For a transparent SCI, selling the house more than thirty years after purchase can therefore still shelter the gain, while selling shares in the SCI is taxed by reference to the underlying property. The notaire computes the bill, but the family should model it before deciding whether the parents sell the house or the children sell their shares.<\/p>\n Wealth tax is the next layer. France abolished the general wealth tax and replaced it with the imp\u00f4t sur la fortune immobili\u00e8re, the tax on real-estate wealth universally shortened to IFI. Article 964 of the General 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.” The official text is on L\u00e9gifrance, article 964 of the General Tax Code<\/a>. Crucially for SCI families, shares count: article 965 of the same code includes in the base the shares of companies “\u00e0 hauteur de la fraction de leur valeur repr\u00e9sentative de biens ou droits immobiliers d\u00e9tenus directement ou indirectement par la soci\u00e9t\u00e9 ou l’organisme”, meaning your SCI shares are taxable to the extent they represent French and, for French residents, worldwide property. The official text is on L\u00e9gifrance, article 965 of the General Tax Code<\/a>. Debts contracted for the property can be deducted within statutory limits, which is why the loan structure should be set before the valuation date of 1 January, not discovered afterwards. British readers should note that the treaty and the five-year arrival regime can soften the first years of French residence, but they do not make an SCI holding invisible.<\/p>\n Finally, a tax that surprises British families with a UK-resident structure: the annual 3 per cent tax on French property held through foreign entities. Article 990 D of the General 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.” The official text is on L\u00e9gifrance, article 990 D of the General Tax Code<\/a>. A French SCI owned by British-resident associ\u00e9s is French, not foreign, so the tax does not strike the SCI itself in the standard family case; it becomes relevant when the ownership chain passes through a UK company or trust, or when the family holds the French house through an English structure instead of a French SCI. Statutory exemptions exist for entities that identify their shareholders to the French administration each year, and your adviser should check them before the first filing deadline rather than litigating the penalty later.<\/p>\n The great practical advantage of the SCI over direct ownership appears at the moment of lifetime gifts. Giving a child a fraction of a house requires a notarial deed for an undivided share, a valuation of the whole, and everyone’s cooperation. Giving a child ten shares out of a hundred requires a transfer of shares, recorded in the company’s register, with the g\u00e9rant updating the paperwork. Repeat the operation every few years and the parents can pass the economic value of the house gradually, using the renewable personal allowances, while keeping control through the majority of the votes and the g\u00e9rance until they choose to step back. The notaire still intervenes for donations, the formal gifts under French law, because a donation of shares above the customary-present threshold needs a notarial deed to be valid and to fix its date against the tax office.<\/p>\n The classic technique pairs the gift with d\u00e9membrement, the splitting of ownership into nue-propri\u00e9t\u00e9, the bare ownership that will become full ownership, and usufruit, the lifelong right to use the asset and take its income. The parents give away the bare ownership of their SCI shares and keep the usufruit: the children own the future, the parents keep the present, including the vote on dividends and the right to live in the house or collect the rent. French company law organises that split vote with precision. Article 1844 of the Civil Code provides: “Si une part est grev\u00e9e d’un usufruit, le nu-propri\u00e9taire et l’usufruitier ont le droit de participer aux d\u00e9cisions collectives. Le droit de vote appartient au nu-propri\u00e9taire, sauf pour les d\u00e9cisions concernant l’affectation des b\u00e9n\u00e9fices, o\u00f9 il est r\u00e9serv\u00e9 \u00e0 l’usufruitier.” The official text is on L\u00e9gifrance, article 1844 of the Civil Code<\/a>. Read that twice before drafting, because families routinely assume the usufruitier parent keeps every vote, while the default rule gives most votes to the bare-owner children. The statutes may reallocate votes within statutory limits, and good statutes do, but the reallocation must be written, or the default applies at the worst possible moment.<\/p>\n The courts have given that default rule sharp teeth in two decisions every SCI family should know. In a judgment of 16 February 2022, the Third Civil Chamber of the Court of Cassation, appeal number 20-15.164, held: “Il r\u00e9sulte de la combinaison de ces textes que l’usufruitier de parts sociales ne peut se voir reconna\u00eetre la qualit\u00e9 d’associ\u00e9, qui n’appartient qu’au nu-propri\u00e9taire, mais qu’il doit pouvoir provoquer une d\u00e9lib\u00e9ration des associ\u00e9s sur une question susceptible d’avoir une incidence directe sur son droit de jouissance.” The full decision is on the Court of Cassation, 16 February 2022, no. 20-15.164<\/a>. Translation for British readers: the parent who kept the usufruit is not an associ\u00e9 anymore, only the bare-owner child is, but the parent can still force a meeting on questions directly affecting their right of enjoyment. Then, on 30 November 2022, the Commercial Chamber, appeal number 20-18.884, drew the tax consequence: “l’usufruitier de parts sociales ne peut se voir reconna\u00eetre la qualit\u00e9 d’associ\u00e9, qui n’appartient qu’au nu-propri\u00e9taire, de sorte que la cession de l’usufruit de droits sociaux ne peut \u00eatre qualifi\u00e9e de cession de droits sociaux.” The full decision is on the Court of Cassation, 30 November 2022, no. 20-18.884<\/a>. A sale of the usufruit alone is therefore not a sale of company rights for registration-duty purposes, a point the tax office sometimes overlooks when it reassesses the family. Keep both decisions with the company papers; they answer the two questions every d\u00e9membrement raises, who votes and what is taxed.<\/p>\n Gifts of shares are taxed on the value of the shares, and that value is where careful families legitimately save money. Shares in a family SCI are routinely valued below the mathematical fraction of the house, through what valuers call a d\u00e9cote, a discount, reflecting the lack of a market, the approval clause that stops you selling to outsiders, and the majority or minority position of the parcel transferred. The discount must be reasoned and documented, not plucked from the air, because the tax office compares it with the price of the underlying property and with any recent transfers. Debts also reduce the value: a house worth 400,000 euros carrying a 150,000-euro loan, and a shareholder loan account in debit, produce shares worth far less than a quarter of 400,000. Have the valuer’s report ready before the donation deed, not after the reassessment notice.<\/p>\n British families must fit these gifts into two succession systems at once. On the French side, the r\u00e9serve h\u00e9r\u00e9ditaire, the forced share that must go to the children, limits lifetime generosity. 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.” The official text is on L\u00e9gifrance, article 913 of the Civil Code<\/a>. Gifts of SCI shares that exceed the disposable portion can be clawed back, or r\u00e9duites, at death, which is why the notaire tracks every donation on a running account. On the European side, the EU Succession Regulation lets a British national living in France choose English law to govern the whole succession, a choice examined in detail in our guide to choosing English law in your French will<\/a>. That choice can neutralise the French forced share for the estate as a whole, but it does not erase French gift tax on French-situs shares, and it must be written into a valid will to work. Coordinate the will and the SCI statutes so they tell the same story, because a will that gives the house to the survivor while the statutes give the shares to the children manufactures the very lawsuit the structure was meant to prevent.<\/p>\n When an associ\u00e9 dies, the first document the notaire reads is not the will but the statutes. Well-drafted statutes provide that the company continues with the surviving associ\u00e9s and the heirs, subject to their approval, while careless statutes say nothing, leaving the heirs to argue about whether they inherit shares or a claim for the value of shares. The approval clause of article 1861 then does its work: the heirs present themselves, the surviving associ\u00e9s vote, and approval admits them as associ\u00e9s while refusal leaves them with a right to be bought out at the value of the rights. That value, fixed by expert valuation if the parties disagree, is where the d\u00e9cote debate of Part II.A returns, this time between grieving relatives. Insist that the statutes name the valuer-appointment procedure in advance, because agreeing on an expert with the sibling you are suing is rarely easy.<\/p>\n The notaire handling the succession will ask for the documents British families find hardest to produce quickly: the English grant of probate or its equivalent, with a sworn translation, the share-transfer register, the updated statutes, the loan statements proving deductible debts, and the last SCI accounts. Files stall for months while a family searches for the statutes signed fifteen years earlier in a now-closed notaire’s office. Keep certified copies with the will, tell the children where they are, and make sure the g\u00e9rant’s appointment is current, because a g\u00e9rant who died three years ago without replacement cannot sign the papers the notaire needs tomorrow. Where the deceased chose English law in their will, the notaire applies that law to the devolution of the shares while still collecting the French tax on French-situs assets; the choice of law changes who inherits, not where the tax is paid.<\/p>\n Some families do not reach the notaire’s office together. The brother who runs the g\u00e9rance stops convening meetings, the sister who lives in the house stops paying the occupancy indemnity, or the two branches simply stop speaking. French law offers an exit, but a narrow one. The company ends, among other cases, through early dissolution ordered by the court at the request of an associ\u00e9 on serious grounds, and the courts have defined those grounds strictly. In a leading judgment of 16 March 2011, the Third Civil Chamber, appeal number 10-15.459, rejected a dissolution claim by one of two associ\u00e9s and held: “ayant exactement retenu que la m\u00e9sentente existant entre les associ\u00e9s et par suite la disparition de l’affectio societatis ne pouvaient constituer un juste motif de dissolution qu’\u00e0 la condition de se traduire par une paralysie du fonctionnement de la soci\u00e9t\u00e9, la cour d’appel, qui a souverainement relev\u00e9 que les difficult\u00e9s rencontr\u00e9es n’\u00e9taient pas suffisamment graves pour paralyser le fonctionnement social, a rejet\u00e9 \u00e0 bon droit la demande”. The full decision is on the Court of Cassation, 16 March 2011, no. 10-15.459<\/a>. Bad feeling between family members is therefore not enough; you must show that the company can no longer function, with blocked accounts, unheld meetings or unpayable debts. Document the paralysis as it happens, with registered letters demanding meetings and a paper trail of refused signatures, because judges decide on evidence, not on how loudly the family quarrels.<\/p>\n Short of dissolution, the minority has weapons against a majority that votes itself the benefits. Majority abuse, or abus de majorit\u00e9, annuls resolutions that favour the majority against the company’s interest, and the Court of Cassation refined the remedy in a judgment of 11 July 2024, appeal number 23-10.013: “La nullit\u00e9 d’une d\u00e9lib\u00e9ration d’assembl\u00e9e g\u00e9n\u00e9rale pour abus de majorit\u00e9, qui constitue une nullit\u00e9 relative pouvant \u00eatre demand\u00e9e tant par les associ\u00e9s minoritaires que par les repr\u00e9sentants l\u00e9gaux de la soci\u00e9t\u00e9, peut \u00eatre couverte par la confirmation.” The full decision is on the Court of Cassation, 11 July 2024, no. 23-10.013<\/a>. Two practical lessons follow. First, even the company’s own representatives can invoke the nullity, which matters when the g\u00e9rance changes hands. Second, the nullity can be cured by later confirmation, so a minority shareholder who keeps attending and voting without protest may be treated as having accepted the decision. Protest in writing, promptly, and take advice before the next meeting rather than a year later. Symmetrically, the Commercial Chamber recalled on 8 November 2023, appeal number 22-13.851, that “Une d\u00e9cision prise \u00e0 l’unanimit\u00e9 des associ\u00e9s ne peut \u00eatre constitutive d’un abus de majorit\u00e9.” The full decision is on the Court of Cassation, 8 November 2023, no. 22-13.851<\/a>. Unanimous family decisions, properly minuted, are therefore the safest instrument in the SCI, which is another reason to keep the paperwork immaculate while relations are good.<\/p>\nB. How the SCI is taxed while everyone is alive: transparency, the corporation-tax option, IFI and the 3 per cent tax<\/h3>\n
II. Passing on the SCI: lifetime gifts, death and family disputes<\/h2>\n
A. Giving SCI shares away in your lifetime: gifts, split ownership and the tax bill<\/h3>\n
B. When an associ\u00e9 dies or the family falls out: the notaire, the courts and how to challenge<\/h3>\n