{"id":32407,"date":"2026-03-24T16:40:19","date_gmt":"2026-03-24T15:40:19","guid":{"rendered":"https:\/\/www.fbt-avocats.ch\/?p=32407"},"modified":"2026-03-24T17:31:47","modified_gmt":"2026-03-24T16:31:47","slug":"french-real-estate-holding-companies-sci-key-pitfalls-for-non-resident-investors","status":"publish","type":"post","link":"https:\/\/www.fbt-avocats.ch\/en\/french-real-estate-holding-companies-sci-key-pitfalls-for-non-resident-investors\/","title":{"rendered":"French Real Estate Holding Companies (SCI): Key Pitfalls for Non Resident Investors"},"content":{"rendered":"<div  data-size='featured_large'  data-lightbox_size='large'  data-animation='slide'  data-conditional_play=''  data-ids='32393'  data-video_counter='0'  data-autoplay='false'  data-bg_slider='false'  data-slide_height=''  data-handle='av_slideshow'  data-interval='5'  data-class=' avia-builder-el-0  el_before_av_heading  avia-builder-el-first   '  data-css_id=''  data-scroll_down=''  data-control_layout='av-control-default'  data-custom_markup=''  data-perma_caption=''  data-autoplay_stopper=''  data-image_attachment=''  data-min_height='0px'  data-default-height='42'  class='avia-slideshow avia-slideshow-1  av-control-default av-default-height-applied avia-slideshow-featured_large av_slideshow  avia-builder-el-0  el_before_av_heading  avia-builder-el-first    avia-slide-slider '  itemprop=\"ImageObject\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\" ><ul class='avia-slideshow-inner ' style='padding-bottom: 52.333333333333%;' ><li  class=' av-single-slide slide-1 ' ><div data-rel='slideshow-1' class='avia-slide-wrap '   ><img src='https:\/\/www.fbt-avocats.ch\/wp-content\/uploads\/2026\/03\/Tax-Focus-French-Real-Estate-Holding-Compagnies_March-2026.png' width='1200' height='628' title='Tax-Focus-French-Real-Estate-Holding-Compagnies_March-2026' alt=''  itemprop=\"thumbnailUrl\"   \/><\/div><\/li><\/ul><\/div>\n<div style='padding-bottom:10px; font-size:26px;' class='av-special-heading av-special-heading-h1  blockquote modern-quote  avia-builder-el-1  el_after_av_slideshow  el_before_av_hr   av-inherit-size '><h1 class='av-special-heading-tag '  itemprop=\"headline\"  >French Real Estate Holding Companies (SCI): Key Pitfalls for Non Resident Investors<\/h1><div class ='av-subheading av-subheading_below  ' style='font-size:15px;'><p>Tax Focus &#8211; March 2026<br \/>\nAlain Moreau<\/p>\n<\/div><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div>\n<div style='height:30px' class='hr hr-invisible   avia-builder-el-2  el_after_av_heading  el_before_av_button  '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class='avia-button-wrap avia-button-left  avia-builder-el-3  el_after_av_hr  el_before_av_hr  '><a href='https:\/\/www.fbt-avocats.ch\/wp-content\/uploads\/2026\/03\/FBT-Tax-Focus-French-Real-Estate-Holding-Compagnies_March-2026.pdf'  class='avia-button   avia-icon_select-no avia-color-theme-color avia-size-large avia-position-left '  target=\"_blank\"   ><span class='avia_iconbox_title' >Download pdf<\/span><\/a><\/div>\n<div style='height:30px' class='hr hr-invisible   avia-builder-el-4  el_after_av_button  el_before_av_heading  '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div style='padding-bottom:10px; font-size:20px;' class='av-special-heading av-special-heading-h2  blockquote modern-quote  avia-builder-el-5  el_after_av_hr  el_before_av_hr   av-inherit-size '><h2 class='av-special-heading-tag '  itemprop=\"headline\"  >Introduction<\/h2><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div>\n<div style='height:30px' class='hr hr-invisible   avia-builder-el-6  el_after_av_heading  el_before_av_textblock  '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p>The <em>soci\u00e9t\u00e9 civile immobili\u00e8re<\/em> (SCI) is a French legal structure commonly used to hold and manage real estate assets. Its apparent flexibility \u2014 adaptable bylaws, facilitated transfer of shares, simplified formalities \u2014 makes it particularly attractive to foreign investors seeking to acquire property in France. Yet this apparent simplicity often conceals numerous legal, tax and estate\u2011planning complexities that non\u2011resident investors, and sometimes their advisers, tend to overlook. The purpose of this article is to provide a concise overview of the main pitfalls faced by investors who choose to structure their French property investments through an SCI.<\/p>\n<\/div><\/section>\n<div style='padding-bottom:10px; font-size:20px;' class='av-special-heading av-special-heading-h2  blockquote modern-quote  avia-builder-el-8  el_after_av_textblock  el_before_av_textblock   av-inherit-size '><h2 class='av-special-heading-tag '  itemprop=\"headline\"  >1. Furnished lettings: a major source of tax risk<\/h2><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p>Under French law, an SCI is ordinarily subject to personal income tax (<em>imp\u00f4t sur le revenu<\/em> or IR) at the level of its partners, under a so\u2011called \u201ctax transparency\u201d regime. This favourable regime is available only where the SCI engages solely in civil (i.e. non-commercial) activities, i.e. primarily the letting of unfurnished property or the mere holding of real estate.<\/p>\n<p>However, once a property held through an SCI is let on a furnished basis \u2014 even occasionally or seasonally, for example via a short\u2011term rental platform such as Airbnb \u2014 the activity becomes commercial for French tax purposes. The SCI then automatically switches to the corporate income tax (<em>imp\u00f4t sur les soci\u00e9t\u00e9s<\/em> or IS) regime. This change of regime is irreversible and fundamentally alters the SCI\u2019s tax status, subjecting it to the full set of obligations applicable to commercial companies.<\/p>\n<p>While the SCI may then depreciate its real estate assets, it can no longer allow partners to occupy the property free of charge without this constituting an <em>acte anormal de gestion<\/em> (an abnormal management act). Partners who use the property must therefore either pay a market rent to their own company or impute a notional market rent for corporate tax purposes.<\/p>\n<p>Particular caution is therefore required before offering a property for short\u2011term or seasonal rental, even on an exceptional or very limited basis.<\/p>\n<\/div><\/section>\n<div style='padding-bottom:10px; font-size:18px;' class='av-special-heading av-special-heading-h2  blockquote modern-quote  avia-builder-el-10  el_after_av_textblock  el_before_av_textblock   av-inherit-size '><h2 class='av-special-heading-tag '  itemprop=\"headline\"  >2. Gift and inheritance: valuation challenges<\/h2><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p>The SCI is often presented as a convenient estate\u2011planning vehicle. However, where no accounting records are kept, the transfer of SCI shares \u2014 whether by gift or upon death \u2014 can prove hazardous.<\/p>\n<p>The value of the shares must accurately reflect the net asset value of the company (i.e., the value of the real property minus the outstanding liabilities). In the absence of proper accounts or financial statements, the French tax authorities are entitled to conduct their own valuation \u2014 often at a higher level \u2014 which mechanically increases the taxable base and the amount of gift or inheritance tax due.<br \/>\nThis risk is particularly acute where partners\u2019 current accounts (<em>comptes courants d\u2019associ\u00e9s<\/em>) exist but have never been properly documented. Such advances to the SCI are common in practice, but without appropriate documentation (loan agreement, bank statements, etc.), the tax authorities may reclassify them as disguised gifts or hidden profit distributions, with all the resulting tax consequences.<\/p>\n<p>It should also be recalled that, in the context of the estate of a non\u2011resident partner, the receivable owed by the SCI to the deceased (<em>de cujus)<\/em> will, in most cases, constitute an asset subject to inheritance tax in France.<\/p>\n<p>The rigorous maintenance of the SCI\u2019s accounts and proper documentation of partners\u2019 current accounts are therefore an absolute necessity to secure any transfer operation.<\/p>\n<\/div><\/section>\n<div style='padding-bottom:10px; font-size:18px;' class='av-special-heading av-special-heading-h2  blockquote modern-quote  avia-builder-el-12  el_after_av_textblock  el_before_av_textblock   av-inherit-size '><h2 class='av-special-heading-tag '  itemprop=\"headline\"  >Practical recommendations<\/h2><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p>Although an SCI is a flexible structure, it nonetheless remains a fully-fledged legal entity with interests distinct from those of its partners. Its management must therefore be conducted with the same rigour as that of a conventional business. In this respect, several fundamental principles apply.<\/p>\n<p>The SCI should maintain its <strong>own dedicated bank account<\/strong>, separate from the partners\u2019 personal finances, to ensure the traceability of all cash flows and avoid any commingling that could give rise to adverse tax consequences. It should also keep <strong>accounting records, even of a simplified nature<\/strong>, enabling an annual statement of assets and liabilities to be prepared and the value of the shares to be justified at any time.<\/p>\n<p>The <strong>free provision<\/strong> (i.e. rent-free use) of an SCI\u2011owned property to a partner or a member of their family is legally permissible, but must be formally recorded through an appropriate corporate act (such as a shareholders\u2019 resolution or written agreement). Finally, <strong>partners\u2019 current accounts<\/strong> should always be governed by a properly documented loan agreement, with evidence of contributions and repayments.<\/p>\n<p>Ultimately, investing in France through an SCI can offer real advantages, provided that the day\u2011to\u2011day management of the structure is not neglected. Investors should seek advice from a professional with expertise both in French law and in the tax system of the investor\u2019s country of residence, in order to anticipate interactions between the two systems and secure the long\u2011term viability of the investment.<\/p>\n<\/div><\/section>\n<div style='height:30px' class='hr hr-invisible   avia-builder-el-14  el_after_av_textblock  el_before_av_textblock  '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<section class=\"av_textblock_section \"  itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock  '   itemprop=\"text\" ><p style=\"text-align: right;\"><a href=\"https:\/\/www.fbt-avocats.ch\/en\/portfolio-item\/alain-moreau\/\">Alain Moreau<\/a><br \/>\nPartner, Paris<\/p>\n<\/div><\/section>\n<div style='padding-bottom:10px; font-size:20px;' class='av-special-heading av-special-heading-h3  blockquote modern-quote modern-centered  avia-builder-el-16  el_after_av_textblock  el_before_av_hr   av-inherit-size '><h3 class='av-special-heading-tag '  itemprop=\"headline\"  >Share on LinkedIn<\/h3><div class='special-heading-border'><div class='special-heading-inner-border' ><\/div><\/div><\/div>\n<div style='height:50px' class='hr hr-invisible   avia-builder-el-17  el_after_av_heading  el_before_av_one_fifth  '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding first  avia-builder-el-18  el_after_av_hr  el_before_av_one_fifth  \" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-19  el_after_av_one_fifth  el_before_av_one_fifth  \" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-20  el_after_av_one_fifth  el_before_av_one_fifth  \" style='border-radius:0px; '><div class='av-social-sharing-box  avia-builder-el-21  avia-builder-el-no-sibling   '><div class='av-share-box'><ul class='av-share-box-list noLightbox'><li class='av-share-link av-social-link-linkedin' ><a target='_blank' href='https:\/\/linkedin.com\/shareArticle?mini=true&amp;title=French%20Real%20Estate%20Holding%20Companies%20%28SCI%29%3A%20Key%20Pitfalls%20for%20Non%20Resident%20Investors&amp;url=https:\/\/www.fbt-avocats.ch\/en\/french-real-estate-holding-companies-sci-key-pitfalls-for-non-resident-investors\/' aria-hidden='true' data-av_icon='\ue8fc' data-av_iconfont='entypo-fontello' title='' data-avia-related-tooltip='Share on Linkedin'><span class='avia_hidden_link_text'>Share on Linkedin<\/span><\/a><\/li><\/ul><\/div><\/div><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-22  el_after_av_one_fifth  el_before_av_one_fifth  \" style='border-radius:0px; '><\/div>\n<div class=\"flex_column av_one_fifth  flex_column_div av-zero-column-padding   avia-builder-el-23  el_after_av_one_fifth  el_before_av_hr  \" style='border-radius:0px; '><\/div>\n<div style='height:50px' class='hr hr-invisible   avia-builder-el-24  el_after_av_one_fifth  avia-builder-el-last  '><span class='hr-inner ' ><span class='hr-inner-style'><\/span><\/span><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The purpose of this article is to provide a concise overview of the main pitfalls faced by investors who choose to structure their French property investments through an SCI.<\/p>\n","protected":false},"author":26,"featured_media":28955,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[655,85],"tags":[2203],"datespeciale":[],"yst_prominent_words":[],"class_list":["post-32407","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-publications","tag-tax-focus-en","competences-tax","auteurs-alain-moreau-en","date-publication-2224","diffusion-groupe-fiscal-en","diffusion-news-en","diffusion-publications-en"],"_links":{"self":[{"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/posts\/32407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/comments?post=32407"}],"version-history":[{"count":3,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/posts\/32407\/revisions"}],"predecessor-version":[{"id":32409,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/posts\/32407\/revisions\/32409"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/media\/28955"}],"wp:attachment":[{"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/media?parent=32407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/categories?post=32407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/tags?post=32407"},{"taxonomy":"datespeciale","embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/datespeciale?post=32407"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.fbt-avocats.ch\/en\/wp-json\/wp\/v2\/yst_prominent_words?post=32407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}