French SCI: setting up, income or corporation tax, transfer

What an SCI is for

The purpose of an SCI is to acquire or build properties, and to manage and administer them. It may let them or make them available to its partners. Its activity must remain civil (unfurnished letting): buying to resell or furnished letting are commercial activities, tolerated only on an ancillary basis (entreprendre.service-public.gouv.fr).

Service-public.gouv.fr highlights four uses:

• investing together beyond each person’s own means, which can make bank financing easier;
• separating property from a business: the business premises remain out of reach of the operating company’s creditors;
• avoiding indivision (joint ownership) on a partner’s death: an heir who wants out sells their shares without forcing the sale of the property;
• passing on assets gradually, by giving shares over time.

The drawbacks are real: partners have unlimited liability for the company’s debts (in proportion to their shares, and only after proceedings against the SCI have failed), mandatory accounts and annual return, loss of the 30% allowance on the main residence for IFI (property wealth tax) and of the 20% allowance on the deceased’s main residence for inheritance tax.

Setting up an SCI: the steps

The service-public.gouv.fr page “Comment créer une société ?” describes the sequence:

1. Draft the statuts (articles of association): the company is formed when they are signed. They set out the company’s purpose, its management, the voting rules and the approval of new partners.
2. Build up the capital: contributions in cash and/or in kind (a property, for example). There is no deadline for paying up cash contributions; depositing the capital is optional for a société civile (non-trading company).
3. Publish a notice of formation in a medium authorised to carry legal notices, then obtain the certificate of publication.
4. Register the company on the guichet des formalités des entreprises (business formalities portal), with the declaration of beneficial owners.

The contribution of a property must be registered with the tax office: registration is free for a straightforward contribution to an SCI under income tax, but costs 5% of the value contributed for an SCI under corporation tax, unless exempt (property used for the business and shares held for at least 3 years).

SCI under income tax or corporation tax

Under income tax (the default), profits are taxed in the name of each partner in proportion to their shares, whether or not they have received them. The SCI files a 2072-S return (if all partners are individuals) or a 2072-C, no later than the 2nd working day after 1 May. When the SCI sells a property, the capital gain for partners who are individuals falls under the private individuals’ property capital gains regime, with relief calculated from the date the SCI bought it (service-public.gouv.fr).

Under corporation tax, the SCI pays the tax itself: 25%, reduced to 15% on profits up to €42,500, subject to conditions. It must switch to it if its commercial activity (furnished letting, for example) exceeds 10% of its turnover excluding VAT, according to the guidance cited by service-public.gouv.fr. A voluntary election must be notified before the end of the 3rd month of the financial year concerned and can be revoked until the 5th financial year that follows. Switching to corporation tax in principle triggers immediate taxation of profits and gains not yet taxed.

The choice depends on the amount of rent and expenses, how profits are allocated and the partners’ marginal tax rate. One often decisive argument is noted by service-public.gouv.fr: under corporation tax, the building can be depreciated, which is not possible under the revenus fonciers (rental income) regime.

Passing on an SCI

Selling shares. Shares can only be sold with the approval of all the partners; the statuts may provide for a different majority or allow the gérants (managers) to give approval and, unless the statuts say otherwise, sales to the seller’s ascendants or descendants (parents, grandparents, children, grandchildren) do not need approval (code civil, Civil Code, art. 1861). The proposed sale is notified, with the request for approval, to the company and to each partner. If no offer to buy is made to the seller within 6 months of the last notification, approval is deemed given, unless the other partners decide within the same period to wind the company up early (art. 1863). Since 27 June 2026, the sale of shares in an SCI that is predominantly a property company must, on pain of nullity, be recorded in a notarial deed, in a deed countersigned by a lawyer or, only where they are legally authorised to draft it, in a deed drafted by a chartered accountant (art. 1865-1, created by loi n° 2026-534 du 25 juin 2026, the Act of 25 June 2026). Full details are in the guide céder des parts de SCI (selling SCI shares). The deed must be registered within one month, and the buyer pays:

• 5% of the price for a company that is predominantly a property company (more than 50% of its assets in buildings not used for its own operations), “the most common case in practice”;
• otherwise 3%, after an allowance of €23,000 reduced in proportion to the shares sold;
• never less than €25.

Giving shares. Parents can give shares in stages while remaining gérant, using the allowance of €100,000 per child (€31,865 per grandchild), renewable every 15 years (page F38553).

Which professional to consult

The notaire (notary) drafts the statuts, records the contribution of a property and advises on passing on shares: they are the central contact for a family SCI. The courtier en crédit (mortgage broker) helps finance the purchase in the SCI’s name, and the agent immobilier (estate agent) helps value the property, on which the value of the shares depends in a sale or gift.