Choosing the structure for the purchase

When buying property in France, most British buyers purchase in their own name. This is the simplest option and works well for the majority of main homes and second homes.

However, some buyers – particularly families buying together or those thinking about long-term ownership – may consider purchasing via a French property-holding company known as a Société Civile Immobilière (SCI).

Both approaches are common in France.

Buying in your personal name

Buying in your own name is straightforward and usually involves fewer administrative obligations. Ownership is clear, ongoing paperwork is limited, and selling the property later is generally uncomplicated.

For couples or families, French law allows ownership to be structured in different ways (for example equal ownership or defined shares), which can be adapted to personal circumstances with the help of a notaire.

For most buyers – particularly those unfamiliar with French legal and tax systems – this route offers clarity and flexibility.

What is an SCI?

An SCI (Société Civile Immobilière) is a French legal structure designed specifically to own and manage real estate.

Instead of owning the property directly, the buyers hold shares in a company, and the company itself owns the property.

SCIs have existed for decades and are widely used in France, particularly within families. They are commonly used to hold a second home or a property purchased jointly by several people. In some cases they are also used for long-term rental investments.

One advantage of an SCI is that it avoids direct co-ownership of a property. The rules for managing the property – such as who makes decisions and how costs are shared – are set out in the company’s statutes.

One or more shareholders can be appointed as managers (gérants), which can make day-to-day administration simpler.

SCIs and family inheritance planning

SCIs are often used as part of family inheritance planning.

Rather than passing on the property itself, parents can gradually transfer shares in the company to their children, often using the tax-free gift allowances available under French law (currently €100,000 per parent per child every 15 years).

This can be combined with a legal arrangement in which the parents retain the right to use the property or receive rental income (known as usufruit), while the children hold the long-term ownership rights (nue-propriété).

Over time, this can allow property value to be passed on efficiently within France’s gift and inheritance tax rules.

Where a couple own their main home through an SCI, arrangements can also be made so that on the death of one spouse the shares of the deceased can be structured in a way that better protects the surviving partner (see here for more details).

For families with stable long-term plans, this can therefore be an effective way of organising ownership across generations.

However, an SCI does not allow families to avoid French inheritance tax or bypass French forced-heirship rules.

Points to be aware of

An SCI is not a one-size-fits-all solution.

It involves more administration than personal ownership, including company registration, basic accounting and ongoing tax declarations.

Decisions made when setting up the structure can also have long-term consequences, potentially limiting flexibility later.

SCIs are generally less well suited to situations where the owners expect to buy and sell property frequently, or where the property will be used for short-term holiday rentals.

They may also be less suitable if owners’ personal or financial circumstances are likely to change significantly over time.

For these reasons, notaires often stress that an SCI should be created for a clear purpose, rather than simply because it is a commonly used structure in France.

Taxation of an SCI – income tax (IR) regime

An SCI is normally taxed under the income tax (IR) regime. This means profits are not taxed at company level but are declared directly by the shareholders in proportion to their shares.

Under this system, capital gains on resale benefit from the same time-based reliefs as individuals, with full exemption from French capital gains tax after 22 years and from social charges after 30 years.

Taxation of an SCI – corporation tax (IS) regime

An SCI can also opt for corporation tax (IS).

In this case, the company itself pays corporation tax on rental profits, and the gain on resale is calculated based on the company’s accounts, without access to the long-term capital gains reliefs available to individuals.

Under this system, the property can be depreciated annually. Depreciation reduces taxable profits during ownership but increases the taxable gain when the property is sold.

Shareholders may also need to pay personal tax on dividends if profits are distributed.