SCI or Your Own Name? The Decision Guide to Holding French Property

Disclaimer: This article is for general information only and does not constitute legal or tax advice. The choice between an SCI and direct ownership is consequential, hard to unwind, and depends on your family situation, your tax residence, and what you plan to do with the property. Consult a French notaire and a tax adviser in your country of residence before structuring a purchase. The English Investor accepts no liability for decisions taken on the basis of this article.

If our contact form had a leaderboard, this question would sit on top of it by a comfortable margin: “Should we buy through an SCI, or just in our own names?” It arrives from couples buying a Dordogne farmhouse, from siblings inheriting a flat in Nice, from a reader in Boston with three children and a plan, and from people whose estate agent mentioned the magic three letters at a viewing and then explained nothing further.

So here is the full answer. Not the dinner-party version (“an SCI saves tax” – it usually does not), and not the forum version (“SCIs are a trap for foreigners” – they are not, but one specific configuration is). This is a decision guide: what an SCI actually changes at each stage of owning French property – buying, holding, selling, and passing it on – followed by the five questions that decide the matter for almost everyone. We will link out to the deep-dive guides on this blog as we go, because nearly every branch of this decision tree has its own article by now.

The short version, for the impatient

An SCI is not a tax-saving device. On the day you buy, it saves you nothing: same purchase taxes, same notaire, plus a set of formation costs and a lifetime of light bookkeeping. What an SCI is, is an inheritance and co-ownership machine. It replaces France’s clumsy default regime for jointly held property (indivision) with company shares that can be gifted in tax-efficient slices, split between bare ownership and usufruct, and governed by rules you write yourself. If your horizon is long and your goal is to pass French property to your children while keeping control, the SCI is one of the best tools in the French legal toolbox.

And the configuration that genuinely is a trap: putting a furnished rental business inside a standard SCI, or holding any French property through an SCI while being a UK tax resident who has not taken advice on how HMRC sees the structure. Both are covered below.

What an SCI actually is, and what it is not

A société civile immobilière is a civil-law company whose purpose is owning and managing real estate. It needs at least two shareholders (associés) – French law, in articles 1832 and 1845 of the Code civil, does not allow a single-member SCI – and one or more managers (gérants), who are very often the same people. The company owns the property; you own shares (parts sociales) in the company. We wrote a full guide to what owning those shares actually means, rights, restrictions and exit routes included, in The Golden Cage: owning shares in a French SCI.

Two things an SCI is not. It is not a liability shield in the way a trading company is: under article 1857 of the Code civil, associés remain indefinitely liable for the SCI’s debts in proportion to their shareholding. And it is not invisible to the tax authorities of your home country: France sees a semi-transparent partnership; your home country may see something quite different, which is where the cross-border trouble starts.

Setting one up is cheap by legal-structure standards: roughly €250 to €300 in mandatory costs if you handle the paperwork yourself (legal announcement around €189, court registry fees around €60, beneficial-owner declaration around €19), €1,500 to €2,500 if a notaire or avocat drafts the statutes – which, for non-residents with an inheritance plan, is money well spent. Count two to four weeks from signing statutes to a registered company with a bank account.

Round one: buying. The SCI changes almost nothing

Whoever signs the acte authentique – you, or your freshly minted SCI – the purchase costs are the same. The droits de mutation (the French equivalent of stamp duty) apply at the same rates, the notaire’s emoluments follow the same scale, and the whole package lands at the familiar 7 to 8% of the price for an existing property. We broke the comparison with UK stamp duty down line by line in Stamp Duty vs Frais de Notaire, and the buying procedure itself in the step-by-step buying guide.

Three buying-stage differences worth knowing. First, financing: French banks lend to SCIs routinely, but they will look through the company and underwrite the associés, usually taking personal guarantees; expect the same non-resident lending criteria as a direct purchase. Second, timing: the SCI must exist before it signs, so build its formation into your purchase calendar (it can sign the compromis with a substitution clause, but cleaner is to have it registered first). Third, the one-shot warning: moving a property you already own into an SCI later is expensive – the contribution is treated as a disposal, with capital gains tax on the way in, notaire and land-registry costs, and a 5% registration duty on top if the receiving SCI pays corporation tax. The SCI decision is best made at purchase, not retrofitted.

Round two: the holding years. Identical, until you furnish the place

The default: fiscal transparency

A standard SCI is fiscally transparent: under article 8 of the CGI, the company files an information return (form 2072) but pays no tax itself; rental profits flow through to the associés, who declare their share as revenus fonciers exactly as a direct owner would. (French practitioners technically call this translucidité, semi-transparency, because the company still files its own return while you pay the tax – but transparent is the word you will meet in English.) Same rates, same social charges, same €10,700 déficit foncier ceiling, same non-resident filing routine. On unfurnished letting, the SCI is tax-neutral during the holding years. What it adds is admin: a yearly 2072, minute-book hygiene, an annual meeting, and keeping the beneficial-owners register current – an accountant will do the lot for a few hundred euros a year, or a disciplined owner can do it alone. Our guide to SCI accounting and reporting obligations covers the calendar.

One genuinely useful holding-years feature is the partner current account (compte courant d’associé): money you lend your own SCI for works or cash flow, repayable to you ahead of any profit distribution, and capable of bearing deductible interest. It is the financial plumbing of every family SCI and the subject of its own series here, starting with The Unofficial Bank and the CCA reimbursement right.

The meublé trap

Here is the configuration that catches foreign owners every year. Furnished letting is a commercial activity in French tax law, and a civil company that carries on a commercial activity loses its transparency: the SCI is automatically dragged into corporation tax (IS), with no option and no grace period. The administration tolerates incidental furnished income only if commercial receipts stay within 10% of total receipts, assessed on a rolling average over the current and three previous years – a tolerance written into its own doctrine (BOFiP, BOI-IS-CHAMP-10-30, §320). Beyond that, the régime flips, with cessation-style tax consequences: under article 202 ter of the CGI, latent gains on the property can become taxable immediately unless the strict conditions for deferral (unchanged book values, the right filings within 60 days) are met.

You also cannot run LMNP inside an SCI. The micro-BIC allowances and the LMNP amortisation machinery described in our LMNP guide belong to individuals, not to companies. So if your plan is seasonal furnished letting – the classic Airbnb model – the SCI is the wrong default vehicle, full stop. Either hold directly as an LMNP, or choose corporation tax deliberately, with your eyes open, as follows.

The IS option: deliberate, powerful, and a one-way door after five years

Any SCI can opt into corporation tax voluntarily, under articles 206-3 and 239 of the CGI. The maths is seductive: the SCI deducts depreciation of the building from its rental profits, often wiping out taxable income for years, and pays IS at 15% on the first €42,500 of profit, then 25% (the 2026 budget debates floated raising the 15% band to €100,000; the threshold was left unchanged). For owners who reinvest rents rather than live off them, the holding-years tax bill can be a fraction of the transparent regime’s.

The price is paid at the other end – see round three – and the option deserves respect: since the 2019 finance law you can revoke it, but only until the fifth financial year after exercising it, and a revocation is final (no second option, ever). After five years the door locks behind you. Take advice before signing this particular form.

Round three: selling. Where the IS bill comes due

For a direct owner or a transparent SCI, selling triggers the familiar private capital gains regime: 19% income tax plus social charges, with taper relief that exempts the gain from income tax after 22 years of ownership and from social charges after 30 – the full mechanics, including the non-EU seller’s représentant fiscal obligation, are in the CGT pillar. A transparent SCI neither helps nor hurts here: associés are taxed as if they sold directly.

An SCI à l’IS is a different world. The depreciation you enjoyed during the holding years is clawed back: the taxable gain is computed against the depreciated book value, not what you paid, and the whole gain is taxed at IS rates with no taper relief, however long you have owned the property. Twenty-five years of patient ownership that would have been tax-free in the private regime can produce a six-figure corporation tax bill inside an IS company – plus a second layer of tax when you distribute the proceeds to yourself. The IS option is a bet that holding-years savings outrun the exit bill; for short and medium horizons with a planned sale, it usually loses.

One genuine selling-stage flexibility the SCI adds: you can sell the shares instead of the walls. The buyer of the parts pays registration duty of 5% under article 726 of the CGI (SCIs being sociétés à prépondérance immobilière) rather than full droits de mutation, and the property never changes hands at the land registry. Share deals are common between family members and partners; third-party buyers tend to prefer the walls, not least because they inherit the company’s history along with the shares.

Round four: death and gifts. The reason SCIs exist

Buy a French property in two or more names, or die owning one, and the default regime is indivision: each co-owner holds an undivided fraction of the whole. It works until it does not. Selling the property requires unanimity (short of a court process that a two-thirds majority can invoke under article 815-5-1 of the Code civil); routine management acts need a two-thirds majority of the undivided interests under article 815-3; and any co-owner can force a partition at any time, because article 815 opens with the famous line that nobody can be compelled to remain in indivision. Add one divorce, one death, or one sibling who needs cash, and the farmhouse is on the market whether the rest of the family likes it or not.

The SCI replaces that fragility with corporate machinery. The property never fragments: heirs receive shares, not bricks. The gérant keeps managing – signing leases, paying contractors – whatever is happening among the shareholders. The statutes can require approval (agrément) before any share changes hands, keeping outsiders, and ex-spouses, out. And a shareholder who wants to leave exits by selling shares, not by forcing the sale of the house. If you ever need to rewrite those rules mid-flight, here is how to change the statutes of a French SCI.

Then there is the transmission arithmetic, which is where the SCI earns its keep:

• Gifts in slices. Each parent can give each child €100,000 of value free of French gift tax every 15 years, under article 779 of the CGI. A property cannot be carved into €100,000 pieces; shares can, to the euro. A couple with two children can move €400,000 of share value per 15-year cycle without a cent of gift tax, while keeping the gérance and therefore control.
• Shares are valued net of the company’s debts – the mortgage and any partner current account reduce the taxable value of what you give. A €600,000 property with €400,000 of debt is, in share form, a €200,000 gift. Combined with the abatements, early-stage gifting of a leveraged SCI is the closest thing French law offers to a free lunch (the lunch is repaid in lower acquisition cost for the children’s CGT later – nothing is truly free here).

Practitioners also commonly apply valuation discounts of the order of 10 to 20% to minority, hard-to-sell SCI shares relative to the underlying property value, a practice the case law accepts when justified – your notaire will advise what is defensible; we treat published figures here with caution. On top of all this sits démembrement: giving children the bare ownership (nue-propriété) of shares while you keep the usufruct and the income, which our French inheritance guide covers in detail, alongside the réserve héréditaire rules the SCI does not override. And one warning from this year’s case law: do not let anyone talk you into a tontine clause inside SCI statutes without reading the 2026 Cour de cassation ruling on tontine clauses and SCI nullity first.

To be clear about what the SCI does not do: it does not remove French inheritance tax – the shares are French-situs assets in your estate, taxed on the same scale as the property would be. It eases how and when value moves; it does not abolish the toll. Nor does it shelter you from the wealth tax: under article 965 of the CGI, SCI shares are included in the IFI base in proportion to the company’s French real estate.

The cross-border wrinkles nobody warns you about

UK residents: HMRC does not see your SCI the way France does. France treats a standard SCI as semi-transparent; HMRC has generally regarded SCIs as opaque companies, and UK advisers have long warned that the mismatch can produce double taxation – UK tax on what HMRC sees as company distributions, with no credit for the French tax you paid as an associé, and divergent treatment on disposals. The Anglo-French tax specialists Charles Hamer set the mechanics out plainly in their technical notes on disposing of French property: HMRC treats the SCI as “a separate and opaque tax entity”, and a payout without a formal liquidation risks being taxed as a dividend with no relief for the French CGT already paid. The analysis is fact-specific enough that no one should rely on a blog summary, including this one. If you are UK resident, the SCI question is not a French question: take UK advice before you sign anything. For many UK-resident couples buying a simple holiday home, this single paragraph is the reason direct ownership wins.

US persons: the SCI multiplies your paperwork. A French SCI is a foreign entity for IRS purposes, with classification elections, information returns and penalty exposure stacked on top of the French filings – the full machinery is mapped in our US-person tax-stack guide. Plenty of US owners still use SCIs; none should do it without a cross-border accountant.

And one piece of routine admin every foreign-held SCI should know about: the annual 3% tax on the market value of French property held by entities, under articles 990 D and 990 E of the CGI. It is designed to smoke out anonymous offshore structures, not family SCIs – a transparent SCI filing its 2072 is dispensed, and others are exempt simply by disclosing their shareholders on form 2746 by 15 May – but ignore the obligation and the 3% becomes painfully real.

The decision table

The decision tree: five questions, in order

1. Will the property be let furnished?

If yes, habitually: the standard SCI is out. Choose between direct LMNP ownership (taper relief at exit, allowances during the hold) and a deliberate SCI à l’IS (depreciation during the hold, heavy exit). If the furnished income is genuinely incidental – under the 10% tolerance – the SCI survives, but build in a margin.

2. Are you buying alone?

An SCI needs two associés. A sole buyer can still form one (a child or spouse holding one share is the classic pattern), but if there is no transmission goal, a single owner with no co-ownership problem to solve rarely needs the structure.

3. Is passing this property on a real objective?

If you intend your children (or other heirs) to keep the property, and your horizon is a decade or more, this is the strongest pro-SCI fact pattern that exists: gift slices every 15 years, démembrement, agrément clauses, a gérant who stays in charge. If the plan is “enjoy it, then sell it”, the SCI’s flagship feature goes unused.

4. Where are you tax resident?

France: the SCI behaves as designed. UK: assume nothing – the HMRC mismatch can cost more than the SCI ever saves, and the answer turns on your specific facts. US: the SCI works but brings IRS reporting; budget for the accountant. Everywhere: the French side is only half the analysis.

5. Will you reinvest the rents or live off them?

Reinvesting inside the company for the long haul makes the IS option’s deferral genuinely valuable. Drawing the income out each year, or planning a sale within 15 years, points back to transparency – or to no company at all. (And if unfurnished letting with amortisation appeals, note that 2026’s Jeanbrun dispositif now offers individuals a slice of that logic without a company.)

Three verdicts to steal

The UK couple buying a holiday home they will eventually sell: direct ownership, in both names, with a conversation about the matrimonial regime at the notaire’s office. The family with children, a 20-year horizon and unfurnished letting plans: SCI à l’IR, statutes drafted by a notaire, first round of share gifts as early as the numbers allow. The investor building a furnished-rental portfolio and reinvesting every euro: SCI à l’IS chosen deliberately, or LMNP held directly – run both projections with an accountant before the first offer.

The honest summary of twenty years of French structuring advice fits in one sentence: the SCI is a succession tool that people keep trying to use as a tax dodge, and it rewards the first group and disappoints the second.

Now over to you: team SCI, team own-name, or stuck on the fence between the two? Tell us through the contact form – which structure you chose, what swung it, and what you wish you had known at the notaire’s door. Real situations (anonymised) are exactly what the next revision of this guide, and a future reader Q&A, will be built on.

FAQ: SCI vs direct ownership

Can one person own an SCI alone?

No. French law requires at least two associés (article 1832 Code civil). In practice many SCIs are 99/1 between spouses or parent and child. If all shares end up in one pair of hands, the company must be regularised within a year or risk dissolution.

Does an SCI reduce French inheritance tax?

Not by itself. The shares are taxed in your estate like any French asset. What the SCI does is let you use the €100,000 per-parent-per-child gift abatement every 15 years with surgical precision, value gifts net of company debt, and keep control while giving value away. Used early and deliberately, that can shrink the eventual estate dramatically; used as a deathbed afterthought, it does nothing.

Can I run an Airbnb through an SCI?

Through a standard transparent SCI, no – habitual furnished letting is commercial and flips the company into corporation tax automatically once commercial receipts pass the 10% tolerance. Either hold the property directly under LMNP or opt the SCI into IS deliberately and accept the exit-tax consequences.

Can I transfer a property I already own into an SCI?

Yes, but expensively: the contribution (apport) is a disposal for capital gains tax, and brings notaire and land-registry costs – plus a 5% registration duty if the SCI is subject to corporation tax. It is occasionally worth it for inheritance reasons; it is never free. The cheap moment to choose an SCI is the purchase.

What does an SCI cost to run each year?

For a transparent family SCI: the annual 2072 return, an annual general meeting with minutes, and an up-to-date beneficial-owners register. Do it yourself for close to nothing, or pay an accountant a few hundred euros a year. An SCI à l’IS needs real commercial accounts and typically €1,000+ of professional fees annually.

Is an SCI worth it for a holiday home we never let out?

If transmission to children is part of the plan, often yes – the co-ownership and gifting machinery works the same whether or not the property earns income. If it is a couple’s own retreat with no heirs in the plan, direct ownership is simpler and the SCI adds cost without benefit. UK residents: check the HMRC angle even for a pure-use property.