Civil company real estate transactions (SCI)

Civil company real estate transactions (FR. la société civile immobilière SCI) is a type of entity in French business law that lets a group of people together to make real estate transactions, optimizing taxation. These operations include the purchase, management, lease, donation and transfer by inheritance. There are also a variety of SCI, whose objective is the acquisition of land for the construction of the object and its subsequent resale (la SCI de construction-vente).

SCI is usually suspected members of the same family or group of friends, sometimes a group of investors or developers. Minimum number of participants is two, the maximum is not set by law. Each member has a certain degree of property, the amount of which depends on the amount of contributions and relationships. These shares you can buy, sell, give and bequeath. The owner of the property is a SCI. The maximum period of existence of the company is 99 years.

The members of the company shall be entitled to choose between different options of the contract at its discretion. For example, parents can give children the right to use (usufruct), while retaining the right of ownership of which is transferred to the heirs only after the death of his parents. This type of possession is denoted by the term “nue propriété”. Close people who are not married or related, you can install, in the event of the death of one of them his share is passed on to another party and not to the direct heirs of the deceased. This type of contract is called a “tontine” (la tontine).

Private types of SCI is a civil company of investment in real estate (la société civile de placements immobiliers, SCPI) and a similar institution for collective investment in real estate (l organisme de placement collectif immobilier, OPCI). Unlike other SCI, the main function of SCPI and OPCI — the receipt and distribution of investment income.

SCI can choose one of two options of taxation: to pay either income tax for individuals or Corporation tax. In the first case, the dividends paid to the company’s shareholders, are not subject to additional tax. If the property is rented, each member of the SCI separately pay income tax in proportion to their share in the company. For example, if the share of a participant is 60 %, then he pays tax on 60 % of the profits earned by the company from the lease. In the case of corporate tax, dividends are subject to tax on income from capital, but applies a tax discount of 40 %. Which of the two regimes is more profitable depends on the individual case; this issue is solved with a tax Advisor. In practice, SCI is more likely to choose income tax for individuals.

Contributions made at the time of the founding of the company, are exempt from duty on registration of ownership. Contributions made after the registration of the SCI, subject to a fixed tax in the amount of 375 euros. The rate increases to 500 euros if the amount of the contribution is more than 225 thousand euros.

The donation or inheritance of property within the SCI there are no relevant taxes. For duty on registration of ownership of specified deductions, the amount of which depends on the degree of kinship.

When selling a property the members of the company pay tax on capital gains in proportion to their shares. Its rate equal to the rate of income or corporate tax depending on the tax regime. If SCI sells real estate, this tax does not pay the member of the company that uses the object as a primary residence. When selling shares, the tax on capital gains is not paid if the share is owned by the member of SCI for over 30 years.

Yulia Kozhevnikova, Tranio.Ru

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