SCI Structure: Complete Guide for International Buyers

Buying Property via an SCI

1) SCI (Société Civile Immobilière) — what it is and why

SCI is a civil company created to hold and manage real estate in France.

Legal basis:

• Code civil, art. 1832 et seq. — civil companies.
• Code général des impôts — SCI tax regime.

Facts:

• Not a trading company.
• Used solely for holding and managing real estate.
• Can be created before or during signing the PRMS / Compromis.
• In the final notarial deed, the buyer is the SCI.
• If furnished rental is planned (location meublée), the SCI is treated as commercial, with a different tax base.

SCI creation process (details confirmed by the notaire):

1. Draft the statutes (statuts).
2. Appoint a manager (gérant).
3. Register the SCI (RCS).
4. Open the SCI bank account.
5. Name the SCI as buyer in the final notarial deed.

2) Buying through another person / structure (SCI)

Legal mechanism: The offer and PRMS can be made in the name of a physical person, with the wording: “pour lui-même ou toute personne morale de son choix” (for himself or any legal entity of his choice).

Consequence: Before signing the Acte Authentique de Vente, the buyer may substitute the SCI. The notaire records the change of buyer without terminating the transaction.

Legal basis: Code civil — freedom of contractual obligations. Notarial practice: substitution d’acquéreur / cession de bénéficiaire.

3) PRMS / Compromis de vente

Facts:

• The preliminary agreement sets the price, parties, and conditions.
• It includes the right to buy “for another person/company”.
• A 5-10% deposit is placed in the notaire's escrow account.
• A 10-day withdrawal period applies after receipt of the notaire's notice.

4) Deal price and tax optimization

Impact on taxes and fees: In this case a search mandate applies (honoraires de négociation). The agency commission is separated → not included in the tax base for notary fees.

Result: Reduction of:

• droits de mutation
• notary fees

This practice is fully acceptable when correctly stated in the notarial deed.

5) IFI — property wealth tax

IFI (Impôt sur la Fortune Immobilière): Applies if the net property value exceeds €1.3M. Annual tax, progressive scale ~0.5-1.5%.

Example: Deal price: €1.25M, including commission → Threshold of €1.3M is not exceeded → IFI does not apply, provided there is no other taxable property in France.

Legal basis: Code général des impôts — IFI provisions.

6) Notary fees

Existing property (not new build): 7.5-8% of the taxable base.

Include:

• droits d’enregistrement
• taxe de publicité foncière
• notary fee
• administrative costs

Optimization:

• Separating the agency commission.
• Correct purchase structure (via SCI).

7) Deal logic (brief)

1. Offer submitted by a physical person (with the right to buy for another entity).
2. PRMS / Compromis signed.
3. SCI is created in parallel (notaire / lawyer).
4. SCI is named as the buyer.
5. Deal price: €1.25M (commission separated, search mandate used).
6. IFI does not apply.
7. Notary fees: ~7.5-8%.
8. Signing of the Acte Authentique de Vente.

Timeline

On average about 2 months from submitting the offer. Shorter timelines are possible depending on the property's status and history.

SCI tax regime (IR/IS)

SCI vs Direct Ownership

When to Use an SCI

Recommended For:

• Purchasing with multiple parties
• Estate planning for children
• High-value properties (>€500K)
• Properties intended for rental
• Business owners seeking structure

Not Recommended For:

• Primary residence (lose CGT exemption)
• Simple purchase by single buyer
• Short-term ownership (less than 5 years)
• Very low-value properties

Setting Up an SCI

Step 1: Draft the Statutes

The statutes (statuts) define:

• Company name and registered office
• Purpose (real estate holding)
• Capital structure and share distribution
• Management rules
• Decision-making procedures
• Transfer/sale of shares rules
• Duration (usually 99 years)

Step 2: Initial Capital

• Minimum capital: €1 (but not recommended)
• Typical capital: €1,000-10,000
• Capital can be increased later
• Shares distributed among shareholders

Step 3: Registration

Required registrations:

1. Publish notice in legal journal (JAL)
2. Register with Commercial Court (Greffe)
3. Obtain SIRET number
4. Open bank account
5. Register for taxes

Step 4: Purchase Property

The SCI (not you personally):

• Signs the compromis (if created before) or becomes the buyer before the acte authentique
• Takes out any mortgage
• Signs the acte de vente
• Becomes the legal owner

Annual Obligations

An SCI must maintain:

Tax Considerations

Under IR (Default)

• Rental income taxed at shareholder level
• French social charges (17.2%) on rental income
• Capital gains taxed at shareholder level
• Tax treaty benefits may apply

Under IS (Optional)

• Company pays 15% on profits up to €42,500
• 25% on profits above that
• Depreciation can reduce taxable income
• Different capital gains treatment on sale

Important Warnings

Mortgage Considerations

Banks may require:

• Personal guarantee from shareholders
• Higher interest rates
• Larger deposit
• Specific insurance requirements

Not a Tax Haven

An SCI does not:

• Eliminate taxes
• Hide ownership (disclosed to authorities)
• Avoid French inheritance taxes
• Automatically reduce wealth tax (IFI)

Management Requirements

You must:

• Hold annual shareholder meetings
• Keep proper accounting records
• File tax returns on time
• Update statutes if circumstances change

Our Recommendation

For most international buyers purchasing on the French Riviera:

Consider an SCI if:

• You're buying with family/partners
• You want to plan inheritance for children
• The property value exceeds €500,000
• You plan to rent the property

Stick with direct ownership if:

• Buying alone for personal use
• The property will be your primary residence
• You value simplicity over flexibility
• Short-term ownership planned

Need Expert Advice?

While this guide provides a comprehensive overview, SCI setup requires professional legal and tax advice tailored to your situation. We can connect you with specialist notaires and tax advisors who regularly work with international clients.