- An SCI makes it easier to manage and pass on property assets without the constraints of joint ownership.
- The key steps in setting up an SCI include drafting the articles of association, registering the company and publishing a legal notice.
- A family real estate investment company (SCI familiale) is an effective way of organizing property ownership between members of the same family, while benefiting from tax advantages.
- It's impossible to set up an SCI on your own, but there are ways of ensuring almost total control over the company.
- Costs and taxation vary according to the system chosen, between income tax (IR) and corporation tax (IS).
How do I set up a Société Civile Immobilière (SCI)?
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Setting up an SCI (société civile immobilière) offers a number of advantages when it comes to property management. In this guide, find out what an SCI looks like, what you need to do to set it up, and the benefits of deploying it as part of a real estate investment.
What is an SCI?
Definition and operation
A Société Civile Immobilière (SCI) is a legal form enabling several people to jointly own and manage one or more properties. Unlike joint ownership, it offers a more stable structure and greater management flexibility.
The SCI is a legal entity, which means that it has a legal existence distinct from its associates. The associates hold shares in the company in proportion to their contributions, and make decisions collectively in accordance with the rules set out in the articles of association. Day-to-day management is generally entrusted to one or more managers, appointed in advance by the partners.
This legal framework makes it possible to :
- Facilitating the transfer of assets
- Structuring real estate investments
- Optimize management of jointly-owned assets.
The different types of SCI
There are several types of SCI, adapted to different objectives:
The family SCI
A family non-trading property company (SCI familiale) is mainly used to hold property between members of the same family and simplify its transfer.
SCI for management or rental
Intended to acquire and manage rental properties, enabling profits to be distributed among associates.
Allocation SCI
Often used in the context of collective real estate projects, the aim is to build or acquire housing units and then distribute them among the partners.
The SCI construction-sale company
Used by property developers, it enables them to buy land, build homes and resell them, although this activity is considered commercial and therefore subject to specific tax constraints.
Please note: The choice of SCI type depends on the partners' wealth and tax objectives. Each model offers specific advantages and obligations, particularly in terms of management and taxation.
Why set up an SCI?
The advantages of creating an SCI
Creating a Société Civile Immobilière (SCI) offers many advantages for individuals and investors wishing to manage a property as a group. This structure offers greater organizational flexibility and facilitates the transfer of assets:
Simplified property management
Unlike undivided ownership, where every decision must be taken unanimously, the SCI allows decisions to be taken according to the rules set out in the articles of association. This avoids blockages and facilitates the administration of the property.
Optimized wealth transfer
An SCI allows you to pass on a property gradually via donations of shares, thus benefiting from tax allowances renewable every 15 years.
Protection of personal assets
In principle, SCI debts are separate from those of the partners. However, the partners remain indefinitely liable for the company's debts, in proportion to their shares.
Flexible distribution of profits
The SCI offers a choice betweenincome tax (IR) andcorporation tax (IS). This flexibility makes it possible to optimize taxation according to the situation of the partners and their wealth objectives.
Disadvantages and limitations
While SCI offers many advantages, it also entails certain constraints that it's important to anticipate.
Set-up and management costs
Drafting the articles of association, publishing a legal notice, registration, etc. Setting up an SCI involves initial costs, as well as accounting and tax obligations.
Administrative complexity
Holding general meetings and regularly updating the company's articles of association require rigorous management.
Unlimited liability of partners
In the event of debts, creditors can take action against associates to the extent of their shares in the company.
How to set up an SCI?
Setting up a Société Civile Immobilière (SCI ) involves a number of administrative and legal formalities, from drafting the articles of association to registering the company. This structure is ideal for managing a property portfolio and simplifying its transfer.
As with other forms of company, it's crucial to anticipate these steps, particularly when it comes to legal and administrative obligations.
Step 1 - Drafting the bylaws
The articles of association are the founding document of the SCI and define how it operates. They must be drawn up in writing and signed by all partners.
Some elements are mandatory:
- Company name: corresponding to the name of the SCI ;
- corporate purpose: this must specify that the company's purpose is to manage real estate assets;
- registered office address ;
- the amount of the share capital: you will also need to specify how it is distributed among the partners;
- decision-making procedures at the Annual General Meeting ;
- appointment of the manager: defining the scope of his powers.
The articles of association can be drawn up privately (between the partners) or by notarial deed, which is recommended for property contributions. Once drawn up, they must be registered with the tax authorities if real estate is contributed to the SCI.
Step 2 - Setting up share capital
The share capital of an SCI is freely determined by the partners.
It can be composed of :
- Cash contributions (sums of money).
- Contributions in kind (real estate).
There is no legal minimum for the share capital of an SCI, so partners are free to choose the amount they wish to invest. However, too little capital can make it difficult to obtain bank financing.
Capital is distributed in the form of shares, allocated according to the contributions of each associate. These shares may be sold or transferred under certain conditions defined in the articles of association.
Step 3 - Publication of the legal notice
Before registering the SCI, a legal announcement must be published in an authorized newspaper in the département where the head office is located.
This announcement informs third parties of the creation of the company and must mention :
- The name of the SCI.
- Legal form (SCI).
- Corporate purpose.
- Head office address.
- The amount of share capital.
- The identity of the manager(s).
The cost of a legal announcement varies according to the département, and is generally between 185 and 230 euros. Once the announcement has been published, a certificate of publication is provided and must be included in the registration file.
Step 4 - Registration with the Commercial Court
The SCI must be registered with the "guichet unique des formalités des entreprises" (replacing the former commercial court registries). This will enable you to obtain a Kbis extract, the official document certifying the legal existence of the SCI.
The registration file must contain :
- A copy of the signed articles of association.
- Proof of publication of the legal announcement.
- The completed M0 form (available on the INPI website).
- A declaration of beneficial owners (indicating holders of more than 25% of the capital).
- A sworn statement that the manager has no criminal record.
- Proof of identity and address of the manager.
Registration costs around 70 euros. Once the registration has been validated, the SCI receives a SIRET number, an APE code and is registered with the Registre du Commerce et des Sociétés (RCS).
Family SCI: a solution to protect your assets
The SCI familiale is a form of non-trading property company (Société Civile Immobilière ) specially designed to manage property between members of the same family. It simplifies the management and transfer of property assets, while benefiting from an appropriate legal and tax framework.
Why opt for a family SCI?
The family SCI is often preferred to avoid the constraints of joint ownership and facilitate the management of a property between several heirs or family members. Its main advantages are :
Easier transmission
Rather than inheriting a property directly, family members can gradually transfer shares to each other, benefiting from tax allowances renewable every 15 years.
More flexible management
Unlike undivided ownership, where every decision requires unanimity, the SCI allows collective decision-making governed by the articles of association and one or more appointed managers.
Protection against joint ownership
As part of an inheritance, an SCI avoids the fragmentation of assets and prevents deadlock between heirs.
Tax benefits under certain conditions
A family SCI can be subject toincome tax (IR) orcorporation tax (IS), depending on the objectives of the partners, enabling tax optimization depending on the type of rental (furnished or bare).
Legal and tax specificities
Before setting up a family SCI, it is essential to understand the legal and tax implications:
Tax system
By default, a family SCI is subject toincome tax. However, the partners may opt forcorporate income tax if this is justified by the management of the property (particularly in the case of furnished rentals).
Accounting obligations
An SCI must keep accounts, especially if it is subject to corporation tax. It must also hold general meetings, whose decisions are recorded in a register.
Transfer of shares
Any transfer of shares is subject to registration duties, but these are lower than the inheritance taxes applicable to joint ownership.
Management and decision-making
The SCI allows you to appoint a single manager, who will make important decisions according to the terms set out in the articles of association.
Can I set up an SCI on my own?
When considering the creation of a Société Civile Immobilière (SCI), the question of the number of partners arises. Unlike other legal forms, such as the sole proprietorship, the SCI cannot be formed by a single partner.
Is a one-person SCI possible?
The law requires a minimum of two partners to set up an SCI. There is therefore no such thing as a one-person SCI, unlike a SASU or EURL, which can operate with a single partner.
However, there are several ways of getting around this constraint:
Involving a family member
A spouse, parent or child may hold a symbolic share in order to comply with the two-partner rule.
Unequal distribution of shares
There is no requirement for equality between partners. For example, one investor may hold 99% of the shares, with the other partner holding only 1%.
Using a nominee
Some SCI founders call on a close friend or relative to become a partner on a temporary basis, but this solution needs to be backed up by a clear legal document.
Lastly, if a non-trading property company ends up with only one partner during the life of the company (e.g. after a death or transfer of shares), it has one year to regularize the situation, failing which it will be dissolved.
Cost and taxation of an SCI
Setting up a non-trading property company (Société Civile Immobilière - SCI ) involves costs and tax obligations that you need to anticipate. These costs vary according to a number of criteria, including the need to hire a professional to draw up the articles of association, and the choice of tax regime.
When an SCI is subject to corporate income tax (IS), it is required to adopt stricter accounting rules. This implies obligations similar to those imposed for the management and domiciliation of a company.
How much does it cost to set up an SCI?
Setting up an SCI involves several types of costs:
Drafting by-laws
This operation is free if carried out between partners. Otherwise, it costs between €150 and €2,000 if carried out by a notary or lawyer.
Publication of the legal notice
It is compulsory to formalize the creation of the company, and costs vary according to the département, generally between 185 and 230 euros.
Registration with the Trade and Companies Registry (RCS)
Submitting the application to the one-stop shop costs around 70 euros.
Declaration of beneficial owners
Charged at around 20 to 25 euros, this formality makes it possible to identify those who hold more than 25% of the share capital.
Accounting fees (optional but recommended)
An SCI subject tocorporation tax (impôt sur les sociétés - IS) will have to keep more rigorous accounts, which can generate annual costs of between 500 and 2,000 euros for a chartered accountant.
These fees may vary depending on the complexity of the project and the need to call on a professional to assist the partners with the process.
How is an SCI taxed?
An SCI can be subject to two different tax systems:
Income tax (IR)
This is the most common system. Each partner is taxed individually on profits in proportion to his or her stake in the SCI.
Corporate income tax (IS)
This option allows the property to be depreciated and the tax base to be reduced, but leads to double taxation in the event of profit distribution (corporate tax then dividend tax).
The choice between income tax and corporation tax depends on the partners' objectives. A family real estate investment company (SCI) will often opt forincome tax to avoid capital gains tax on the sale of shares, while a rental investment company (SCI) may opt forcorporation tax to benefit from property depreciation.
Finally, the taxation of an SCI may be impacted by other parameters, such as VAT on certain operations or registration fees on the sale of shares.
Managing and optimizing your SCI
Once a Société Civile Immobilière (SCI) has been created, it is essential to manage it properly to ensure its smooth running and maximize its benefits. Rigorous management avoids conflicts between partners and optimizes the profitability of the real estate assets held.
Best practices for managing an SCI
Well-organized management helps to anticipate potential difficulties and ensure the long-term survival of the SCI. Here are a few essential tips:
Comply with accounting and administrative obligations
An SCI subject to corporate income tax must keep formal accounts, including an annual balance sheet. Even when subject to income tax, it is advisable to keep clear accounting records.
Organize regular general meetings
Important decisions must be taken at a general meeting and recorded in a register. These include profit distribution, changes to the articles of association or the appointment of a new managing director.
Managing shares with care
Any sale or transfer of shares must comply with the clauses set out in the articles of association, and may be subject to registration fees.
Anticipating conflicts between associates
Properly drafted articles of association from the outset of the SCI prevent disagreements by precisely defining the rights and obligations of each party.
How to optimize an SCI for a real estate project?
An SCI can be an excellent tool for optimizing a real estate investment, provided you make the most of it:
Choosing the right tax system
Depending on the nature of the project (bare or furnished rental), the option betweenincome tax andcorporation tax can have an impact on profitability.
Using an SCI to secure a rental investment
It brings together several investors and organizes the management of rents and charges.
Optimizing the transfer of assets
By gradually transferring shares, it is possible to reduce inheritance tax and avoid tying up an undivided property.
Anticipating capital gains taxation
In the event of resale of a property held by the SCI, taxation depends on the tax regime chosen, and may influence the investment strategy.
Conclusion
Setting up a Société Civile Immobilière (SCI) is an advantageous way of managing and passing on property assets in complete security. This structure avoids the constraints of joint ownership, optimizes taxation and facilitates the transfer of property between partners or members of the same family.
However, there are a number of key steps involved in setting up an SCI: drafting the articles of association, depositing the capital, publishing a legal notice and registering the company. Rigorous management is then essential to ensure the company's profitability and longevity.
If you'd like to find out more about the legal and administrative formalities involved in setting up a company, read this article on the formalities involved in domiciling an SCI.
Whether for rental investment or family succession, the SCI is a flexible and efficient tool. Before taking the plunge, it's a good idea to define your project carefully and surround yourself with experts to optimize the management of your company.