British families buying a French holiday home now face a paperwork question before the notaire’s appointment. Many hold the house through an SCI, a société civile immobilière, a French property company whose only job is to own and manage buildings. Shares belong to the family, the house to the company, and that difference decides who signs the deed, who can block a sale and how the rent is taxed.
For an agent the practical point is simple. Your buyer may not be buying bricks at all, and the questions a client asks about buying property in France are usually questions about the structure.
Why British Buyers Reach for a French SCI
An SCI is a company, not a trust and not a joint tenancy. It needs at least two partners who pool assets for a common purpose, and each shares in the losses as well as the profits. For a British couple the partners are usually the spouses; a wider family adds adult children. Before the notaire, the public officer who authenticates the conveyance, the company buys the house from the seller. From that day the land registry shows the company as owner while the family members are associés, the French word for partners in such a company.
Five things decide whether the structure survives contact with reality.
- Statutes: written for a British family rather than copied from a template, covering the registered office, a life of up to ninety-nine years and each partner’s share.
- Capital: shares that mirror the money contributed, because the tax office and the co-heirs compare the two.
- Paper trail: transfers from each partner’s account, through the company account, to the notaire, so nobody can call the arrangement a hidden gift.
- Signatories: since Brexit, British citizens are third-country nationals, and foreign buyers from outside the European Union face a slower anti-money-laundering file, so a power of attorney signed in England may need an apostille.
- Manager: a UK resident can hold the role, but with every signatory abroad, one French address and minuted annual meetings make the company look like one.
What the SCI Changes When the House Is Sold
Two different things can change hands. If the company sells the house, the gain is worked out much as for a direct owner, with relief that grows the longer the property has been held, and each partner pays tax on their share. If a parent sells or gives shares instead, the buyer steps into the company rather than buying bricks, which avoids fresh transfer duties on the building but carries the company’s loans and latent gain. Share buyers ask for full accounts, filed returns and a price that reflects the tax a sale would trigger.
Share transfers can also be blocked, and it matters who holds the key. Shares normally cannot leave the company without every partner’s approval, and the statutes can soften that to a stated majority or waive it for gifts between parents and children. On 7 December 2010 the Cour de cassation applied the rule exactly as written, in appeal 09-17.351. One sentence saves an agent from a bad promise: the French exemption for selling a main home never covers a second home, and a company doesn’t change that.
Tax on Rent, Gains and French Property Wealth
A family SCI is normally transparent. Unless it lets furnished accommodation as a business or elects for corporation tax, the company pays no income tax of its own and each partner is taxed personally on a share of the rent. Rent from a French house counts as income from French sources, so even a partner who lives in Britain declares it in France, and the treaty gives a credit at home. That credit rests on the French assessment notice, the avis d’imposition.
Letting to holidaymakers changes the activity’s character. Furnished holiday lets are a commercial activity in French law, and the company must file a prior declaration before the first guest arrives. Many communes add a registration number that has to appear on every advertisement, city centres may require a change-of-use authorisation, and fines are charged per night and per advertisement. Ask for that declaration in writing before the season starts.
| Question | Owned directly | Held through an SCI |
|---|---|---|
| On the deed | The buyer, in person | The company, family holding shares |
| What a buyer buys | The building | Shares in the company |
| Income tax | The owner is taxed on the rent | Each partner on their share |
| Holiday lets | Prior declaration, often a number | The same, in the company’s name |
| On death | An undivided share of the bricks | Shares, under the statutes and the will |
| Main-home relief | Only for a main home | Only for a main home |
| Wealth taxes | IFI above 1.3 million euros | IFI on the property fraction |
Two annual wealth charges sit behind this. The impôt sur la fortune immobilière, shortened to IFI, is chargeable above 1,300,000 euros of net property assets, and shares in a company that owns French property count for their property fraction. A 3 per cent annual tax on the market value of French property catches opaque entities, and a French SCI stays clear of it by declaring its members yearly. The Cour de cassation rejected a foreign foundation’s appeal on that point on 10 May 2024, in appeal 21-11.230.
Inheritance, Approval and the Papers That Decide
Shares are easier to divide than bedrooms. Parents can give shares gradually and keep the use of the house, and when one of them dies the children inherit shares rather than an undivided interest in bricks. A surviving parent, often the manager, keeps running the house without chasing every heir for a signature. Gifts made more than fifteen years before a death can fall outside the French gift-tax computation.
Nothing there removes the children’s protected share, the réserve héréditaire: half the estate with one child, a third with two, a quarter with three or more. Since the 2021 reform, a foreign law that leaves a child with nothing can be corrected by a compensatory levy on the French assets, so an English will in favour of a second spouse needs care. Valuation is the quiet fight: shares are worth less than the house divided by the number of shares, and the tax office accepts a reasoned discount for lack of control, not a round number.
When it goes wrong, three routes matter. Refuse the approval and the company or the remaining partners must buy the shares or present another buyer within a fixed period, failing which approval is treated as granted. Any notaire who declines to complete a transfer is usually asking for a missing document, so ask for the legal ground in writing. A reassessment arrives as a reasoned proposal that can be answered within thirty days, and silence at that stage is the expensive mistake. Only after that comes a formal claim to the tax office, and then the administrative court.
What Agents Should Check Before Advising a Client
None of this is a reason to talk a client out of the structure, and it is no reason to promise more than it delivers. It organises ownership and makes a handover manageable; it does not shield anyone from tax and cannot cut the children out of their protected share. Five checks are worth doing early.
- Ask who owns the shares, not just who lives in the house. The person signing the offer may be a manager acting for a company whose members sit in two countries.
- Read the approval clause before promising a completion date. Where every partner has to agree, one cousin can hold up a transfer for a season.
- Follow the money for the deposit and the price. A payment from a personal account for a property the company owns blurs a boundary an inspector reads against the family.
- Get the holiday-let declaration in writing. An unregistered let carries a fine per night and per advertisement.
- Ask how the shares were valued. A discount for lack of control is normal, and it needs a valuer’s reasoning, not a friendly figure.
Keep the limits in view as well: this rests on one French firm’s reading of the codes in force in September 2026, useful for framing questions, not a substitute for the client’s own notaire.
The Paper Trail Is What Makes the Structure Work
A French property company is a discipline before it is a tax plan. The families it works for pay in the capital they promised, minute the annual meeting, move every payment through the company account, declare the holiday letting and value the shares honestly. Do that and it does what it was bought for: holds a house in one place, shares its use and hands it to the children intact.
Do the opposite and the same paperwork becomes the evidence, because French courts apply these rules as written. An agent who knows which questions to ask has already earned the fee.
Questions Agents Ask About French Property Companies
Can a British resident manage a French SCI?
Yes. A UK-resident manager is lawful and common, and parents often appoint themselves jointly or in turn so either can sign an insurance renewal. Banks and insurers sometimes hesitate when every signatory lives abroad, so many families keep one manager with a French correspondence address.
Does an SCI remove French inheritance rules?
No. It divides shares instead of bricks, which makes a handover simpler, but the réserve héréditaire still protects the children: half the estate with one child, a third with two, a quarter with three or more. A foreign law that leaves a child with nothing can be corrected by a levy on the French assets.
Who pays capital gains tax when the property is sold?
If the company sells the house, each partner pays tax on their share of the gain, with relief that grows with the years of ownership. If shares are sold instead, no fresh transfer duty is due on the building, but the buyer takes on the latent gain and prices it in.
Does the company have to declare every year?
Yes, even when it owes nothing. A company that files its return, keeps minutes and records what each partner has advanced looks like the transparent owner it claims to be, and the annual disclosure of members keeps the 3 per cent tax away.
What happens if a partner refuses to approve a share sale?
The company or the remaining partners must buy the shares or find another buyer within a fixed period, failing which the approval is treated as granted. A refusal with no buy-back offer is a delay, not a wall.
