Buying real estate in France: How the SCI (Société Civile Immobilière) works

The SCI (Société Civile Immobilière) is a French real estate company that allows several people to jointly own a property. Unlike direct ownership, the company and its shares are registered in the land register, not the individual owners.

• Estate planning made easy & French inheritance law: For real estate in France, French inheritance law applies, not German law! Without planning, this can lead to complicated claims regarding compulsory shares of the estate, especially with cross-border properties. With a French limited liability company (SCI), it is not the real estate itself that is inherited, but rather the company shares, which simplifies estate settlement and minimizes conflicts between heirs.

• Sharing and Reducing the Wealth Tax (IFI): The real estate wealth tax (Impôt sur la Fortune Immobilière, IFI) is levied on the net asset value of real estate. Through a SCI (Société d'Incón de la Gustás), several shareholders can hold shares – thus distributing the tax burden among several individuals. Furthermore, certain debts and property-related expenses (e.g., mortgages, renovation costs) can be deducted from the tax base, reducing the taxable amount.

• Flexible Management: In the SCI's articles of association, you can specify how decisions are made, who manages the property, and how profits or losses are distributed.

• No commercial activities. The SCI is solely for the management of real estate. Anyone wishing to actively rent out properties should also establish a SAS (Société générale).

• Liability of the shareholders: Shareholders are generally liable without limitation for the liabilities of the SCI.

• Accounting is necessary. Income and expenses must be documented annually and reported to the shareholders.

A major advantage: The SCI can be founded simultaneously with the property purchase – often at the same notary's office. Here's an overview of the process:

• Preliminary Contract (Compromis de Vente): A clause can be included in the preliminary contract granting you the right to purchase the property through a SCI (Societas Europaea). You can decide later whether to use this option.

• Parallel preparation of the SCI formation: Once you decide on the SCI, the notary prepares the company in parallel with the purchase (articles of association, documents, etc.).

• Final Purchase Date (Acte de Vente): On the day of signing, you can simultaneously sign the articles of incorporation of the SCI. After that, the property officially belongs to the SCI.

The SCI France is ideal for families, investors, or partners who want to jointly acquire real estate in France. It simplifies inheritance planning under French law, tax optimization through the IFI (Individual Property Fund), and administration. By properly integrating it into the preliminary contract, you can keep all your options open and complete the incorporation process simultaneously with the purchase.