Are you planning to set up an SCI or Société Civile Immobilière? But you don't know what capital contributions are required? This article is for you!
An SCI, or Société Civile Immobilière, is a company whose objectives are linked to the real estate sector. To develop an SCI, the partners mustmake a number of capital contributions.
The latter may then appear as contributions in cash, relating to the contribution of money to the company, or as contributions in kind, referring to the contribution of goods other than money.
Today's focus is on the capital contributions required to set up an SCI.
As mentioned above, it is essential for an SCI to have share capital. This can be made up of contributions in kind or in cash. These contributions enable the partners to receive shares in the SCI in exchange.
The law is relatively flexible regarding the definition of share capital in an SCI.
The latter can be variable or fixed, and does not necessarily have to correspond to a maximum or minimum amount.
It should be noted thata spouse who is married at the time may decide to subscribe to a certain number of shares on his or her own, using joint funds.
However, this act requires notification of the deed to the spouse, and sometimes even the spouse's consent, particularly in the case of real estate, as well as justification of the information in the deed of contribution.
The spouse may subsequently claim half of the shares then created, unless he or she has already waived this right, as stipulated in article 1832-2 of the French Civil Code.
There are a number of rules governing cash contributions to form an SCI.
General rule
To set up an SCI, it is possible to make a capital contribution in the form of cash, i.e. directly in money: these contributions are freely defined by the partners in their entirety. They are set out in the company's articles of association.
What's more, the funds deposited need not be held in a blocked account, and registration of an SCI with the CFE or Centre de Formalité des Entreprises does not require the submission of a certificate of deposit. It's a highly flexible procedure.
Lastly, the contributions made when you set up your SCI are paid up by the director of the SCI.
Cash contribution by a married partner
Note that if a partner who is married wishes to make cash contributions to the SCI that are part of the community of the marriage, it is absolutely necessary for him or her to inform his or her spouse.
Cash contribution by a minor partner
Lastly, in the case of a gift of money from a minor, no prior authorization from the guardianship judge is required unless the gift is the result of a loan.
When it comes to contributions in kind to a non-trading property company (SCI), there are a number of rules to be observed.
General rule
First of all, it's important to remember that, just like cash contributions, contributions in kind (any asset other than money) are freely determined by the partners themselves.
They must be set out in the articles of association, or in a contribution agreement drawn up by a notary if the contribution in kind refers to real estate.
A contribution in kind is then recorded once the transfer of rights has taken place and the asset has been effectively made available.
Note that contributions in kind do not require the intervention of a contribution auditor.
Finally, to determine the value of a property , it is necessary to take into account not only the market price for the geographical area in which the property is located, but also its specific characteristics.
Contribution of real estate by a married partner
Once again, if a partner is married and wishes to contribute real estate related to his or her marriage to the SCI, he or she must obtain the prior consent of his or her spouse.
Contribution of real estate by a minor partner
Finally, if the contribution in kind comes from a minor partner, prior authorization from the guardianship judge is required.
In conclusion, setting up an SCI requires compliance with a number of rules. But for what purpose and to what advantage?
The SCI status offers many advantages:
-
Choose between two tax systems (corporate income tax or personal income tax) for taxing profits
- An SCI allows several people to buy property together
- Setting up an SCI to facilitate the transfer of assets
- The flexible management characteristic of SCIs facilitates decision-making
- SCIs have a real advantage when it comes to capital gains.
So setting up an SCI may be worthwhile, depending on your own objectives.
Written by our expert Quentin Moyon
June 25, 2018
