SCI and VAT: buying, building, and selling property

SCI and VAT: buying, building, and selling property

Most families think of an SCI (société civile immobilière) as a stamp-duty-and-income-tax structure, and for a company that simply holds and lets a home bare, VAT (taxe sur la valeur ajoutée, TVA) barely features. But the moment an SCI buys a new building, acquires land to build, undertakes construction, or lets or sells commercially, VAT and the registration duties come squarely into play - and the two taxes interact in ways that decide the real cost of the deal. Whether VAT applies, whether the SCI can recover it, and which rate of registration duty is due, all turn on a handful of concepts: whether the parties are "taxable persons", whether a building is new or old, and what the SCI intends to do with the property. This guide maps the VAT and registration-duty treatment across the life of a property in an SCI - buying built property, buying land and building, and selling - so a family can see where the tax bites and where it does not.

The subject matters because VAT on property is technical and the sums are large - a fifth of the price on a new building, a duty of several percent on an old one - and because the recovery of input VAT, when it is available, can materially change the economics of a development or a commercial letting. Getting the analysis wrong at the purchase can leave a family paying VAT it could have recovered, or duty at the wrong rate, with no easy correction later. For an international family or investor using an SCI for anything beyond a simple bare-let home, understanding the VAT and duty map before signing is what keeps a property deal from carrying an avoidable tax cost.

Why "taxable person" status is the pivot

The whole VAT analysis begins with a single question: is the person making the supply a taxable person acting as such? The status of taxable person (assujetti) of the person who makes the delivery of goods or the supply of services is essential, in particular to determine whether VAT applies to operations on building land or on built property (CGI Art. 256 A). A taxable person is defined as someone who carries on, independently, an economic activity - the activities of a producer, a trader or a supplier of services, or the exploitation of tangible or intangible property to derive from it receipts of a permanent character. So a professional developer or a landlord letting subject to VAT is a taxable person; a private individual selling their own home is not. To decide whether a sale of a building by a taxable person falls within the scope of VAT, one must ask whether the operation takes place within the frame of that person's economic activity, or in a purely patrimonial frame.

The status matters on both sides of a deal and for both taxes. On the seller's side, it determines whether VAT is charged at all. On the SCI's side as buyer, its own status conditions whether it can recover any VAT it bears and whether it can access the favourable registration-duty regimes. And the status governs a useful relief: the VAT exemption on the transfer of a going concern (CGI Art. 257 bis) applies only between taxable persons. So the recurring first step, whenever an SCI buys, builds or sells, is to fix the taxable-person status of each party and to ask whether the operation is economic or merely patrimonial. Almost every VAT and duty consequence that follows flows from that initial characterisation - which is why it is the pivot on which this whole subject turns.

Buying a built property: new versus old

When an SCI buys an already-built property, the VAT treatment depends on who the seller is and how old the building is. Where the seller is a taxable person, two cases divide the ground:

• if the building is new - completed less than five years ago - the sale is within the scope of VAT and taxable by law, and the seller charges VAT on the full price (CGI Arts. 256, 257);
• if the building is old - completed more than five years ago - the sale is within the scope of VAT but exempt, though the taxable-person seller may opt to tax it (CGI Arts. 261, 260), the VAT then being computed on the full price or on the margin.

Where the seller is not a taxable person - a private individual selling a home, typically - the sale is outside the scope of VAT altogether, whether the building is new or old. So the same purchase can carry 20% VAT, no VAT, or VAT only if the seller elects, depending entirely on the seller's status and the building's age. The five-year line is the hinge for a new building, and it is measured from completion - the filing at the town hall of the declaration of completion of the works. The critical follow-on for the SCI is whether it can recover any VAT it pays: input VAT is deductible only to the extent of the SCI's coefficient of deduction, which depends on whether the SCI's own activity gives a right to deduct. A bare residential letting is VAT-exempt and gives no right to deduct, so an SCI letting a home bare cannot recover the VAT on its purchase - a point examined further below. The VAT charged on the purchase is only recoverable where the SCI itself makes taxable supplies, such as a commercial letting on which it has opted to charge VAT.

How is VAT charged on your SCI's purchase?

VAT depends on what you buy and from whom. Pick your purchase - the check explains the treatment.

The registration duties: common rate, and the reduced routes

Alongside VAT, the purchase bears registration duty (droits de mutation à titre onéreux), and the rate depends on the same new/old and taxable-person distinctions. Where the seller is a taxable person and the sale is of a new building, the duty is levied at the reduced rate of about 0.71% (0.71498%, CGI Art. 1594 F quinquies). Where the building is old, or the seller is not a taxable person, the sale bears the common rate. That common rate has risen: it is generally around 5.81%, but the 2025 Finance Law authorised the departments to raise their share, taking the global rate to about 6.32% in the large majority of departments that adopted the increase, for the period from 1 April 2025 to 31 March 2028, with a few departments remaining at a lower rate of about 5.09%. So an SCI buying an ordinary older property today typically pays a common duty in the region of 5.8% to 6.3%, according to the department.

Two commitments open a much cheaper route, and they are central to any SCI that buys to develop or to trade:

• if the SCI takes, in the deed and as a taxable person, an engagement to resell the property within five years, the duty falls to the reduced rate of about 0.71% (CGI Art. 1115);
• if the SCI takes an engagement to build within four years, a single fixed duty of €125 is due instead (CGI Art. 1594-0 G).

These reduced regimes are the reason a developer or a property-trading SCI pays little duty on acquisition, while a patrimonial SCI buying to hold and let pays the full common rate. The duty is liquidated on the price expressed in the deed, increased where appropriate by the capital charges and indemnities stipulated for the seller, and the "price expressed" is understood net of VAT where the VAT due from the seller is separately mentioned in the transfer deed. So the interaction of the two taxes is precise: on a VAT-taxed new building the duty is small and computed net of the VAT, while on an old building the common duty falls on the full price. Reading the two together, deal by deal, is what fixes the true acquisition cost.

Buying land and building: plots and works VAT

Where the SCI's plan is to buy a building plot and construct on it, the VAT analysis runs through the land first and the works second. On the land, the treatment depends on the seller. If the seller of the building land (terrain à bâtir) is not a taxable person, the delivery is outside the scope of VAT and the SCI's registration duty is the common rate, unless the SCI takes an engagement to resell or to build. If the seller of the building land is a taxable person acting within their economic activity, the operation is within the scope of VAT whatever the status of the buyer (CGI Art. 257), the VAT being computed on the full price or on the margin. Building land, for this purpose, is land on which construction can be authorised under the local planning rules. So a plot bought from a professional lands the SCI with VAT; a plot bought from a private owner does not - the same seller-status pivot as for built property.

On the construction itself, VAT falls on the works, and its recovery is the key question. Building works - construction, demolition, fitting-out that permanently incorporates equipment, and refurbishment, maintenance, renovation and repair of buildings - are taxed for VAT on the amount of the contracts, statements or invoices, and the SCI deducts on its VAT returns the VAT that the works contractors have charged it (CGI Art. 271), subject to the deduction rules. Whether that input VAT is truly recovered depends, once again, on what the SCI does with the finished building. Two further points arise on completion. A self-supply (livraison à soi-même, LASM) may have to be accounted for: the self-supply of new buildings intended to remain durably in the business was abolished for buildings built for sale after 21 December 2014, but it remains due for a building constructed for the SCI's own use where the SCI's activity does not give a right to full recovery of the tax, and where the SCI acts as a taxable person. So a build-to-let-exempt project can trigger a self-supply charge that a build-to-sell one does not - a technical but real cost that belongs in the development's tax model from the outset.

Can your SCI recover the VAT?

Recovery depends on what the SCI does with the property. Pick your use - the check explains whether the VAT comes back.

Selling: VAT on new, exempt on old, and the going-concern relief

When the SCI comes to sell, the same new/old line governs the VAT. A sale of a new building - one disposed of within five years of completion - by a taxable person acting within their economic activity is within the scope of VAT by law, at the standard rate of 20% (with reduced rates of 5.5% or an intermediate 10% for social housing). Completion, again, is the filing at the town hall of the declaration of completion and conformity of the works, and it is the starting point of the five-year period. A sale beyond five years, within an economic activity, is within the scope of VAT but exempt, with the taxable-person seller able to opt to tax it. The VAT is due on the sale price exclusive of tax, and the SCI declares its taxable operations on its VAT returns; the chargeable event occurs on the delivery of the property - the transfer of the power to dispose of it as owner.

One relief can remove the VAT on a sale entirely, and it is important for commercial-property SCIs. A sale of a building by a taxable person is in principle subject to VAT, but there is an exemption (dispense) in the case of a transfer of a universality - a going concern (CGI Art. 257 bis). Where an SCI sells a building it has let subject to VAT together with the lease attached to it - so that the buyer continues the same taxable letting activity - the transfer can qualify as the transfer of a going concern, and the sale is then dispensed from VAT rather than taxed. This matters because it avoids charging, and having the buyer finance or recover, VAT on a large commercial-property price, and it prevents adjustments of previously deducted VAT. So the sale of an SCI's property is not automatically a VAT event: a new building is taxed, an old one is exempt unless opted, and a let commercial building sold with its lease may pass VAT-free under the going-concern relief. Identifying which case applies before the sale is what keeps the VAT treatment correct and the cost controlled.

The practical map for a family SCI

For the great majority of family SCIs, the VAT picture is mercifully simple: a company that buys an existing home from a private seller and lets it bare is outside VAT on the purchase, cannot recover any VAT, and pays the common registration duty of roughly 5.8% to 6.3% according to the department. VAT never really enters that company's life, because bare residential letting is exempt and the seller is not a taxable person. The registration duty is the real acquisition tax, and the income-tax and capital-gains rules examined in our other tax guides do the rest. A patrimonial family SCI can, in short, largely set VAT aside.

The VAT world becomes decisive only when the SCI steps beyond that simple pattern - and then it matters a great deal. Buying a new building brings 20% VAT and a low registration duty; buying a plot from a professional and building brings VAT on the land and the works; letting commercially with a VAT option opens recovery of that VAT; building to sell makes the SCI a taxable trader; and selling a VAT-let building with its lease may pass under the going-concern relief. In each of these, the analysis turns on the taxable-person status, the new/old line, and the SCI's intended use - and the sums are large enough that getting it right before signing is worth real care. The practical rule is that a bare-let family SCI can treat VAT as a non-issue, while any SCI that develops, trades, or lets commercially should take VAT advice at the outset of each deal, because the tax is recoverable, avoidable or costly by turns, depending on choices that are made - or missed - at the very start.

SCI, VAT and registration duty - at a glance

Frequently Asked Questions

This article is for general information only and states French law and tax rates in force as published in the sources available at the date shown above, including the VAT and registration-duty rates applicable for 2026. It does not constitute legal or tax advice. The VAT and duty on a given deal depend on the parties, the property and the SCI's intentions. Always seek qualified legal and tax advice before a property transaction through an SCI.