The SCI annual tax return: who files what

The SCI annual tax return: who files what

An income-tax SCI (société civile immobilière) is not itself taxed, but it is not left alone by the tax authorities either. The company has its own filing obligations, distinct from its members' personal returns, and getting the two levels right - what the SCI files, and what each member then reports - is the compliance backbone of the whole structure. The SCI files a declaration when it is formed and, in the ordinary case, an annual return of its result; each member then carries their share of that result to their own income-tax return. Some SCIs are exempt from the annual return, and some - those with a company among their members - must file a fuller version computed under different rules. This guide sets out who files what: the SCI's declaration of existence, its annual result return, the exemption for family-use companies, the heavier obligations where a business is a member, and the timing and penalties that attend them.

The subject matters because the SCI's filings are easy to neglect and awkward to catch up. A newly formed SCI that misses its declaration of existence starts its life out of order; a letting SCI that skips its annual return exposes its members and itself; and a company-member SCI that omits the amortisation or provisions schedules faces a specific fiscal fine. For an international family holding French property through an SCI, often at a distance, knowing exactly which return falls due, when, and on whom, is what keeps the company compliant without paying for filings it does not owe.

The two filings that start an SCI's tax life

An income-tax SCI has two basic filing obligations, and the first is one-off. Non-transparent civil property companies that are not subject to corporate tax must file:

• a declaration of existence, on plain paper, within three months of their constitution, in duplicate;
• an annual declaration of their results on form 2072 - either the simplified version (2072-S) or the complete version (2072-C).

The declaration of existence puts the company on the tax authorities' register at the outset; it is the tax counterpart of the company's registration and should be dealt with in the same early weeks. The annual result return is then the recurring obligation: on it the SCI reports the property result it has computed for the year - the rents, the deductible charges, the net profit or deficit - and, crucially, allocates that result among the members according to their rights. The 2072 is therefore the document that turns the company's single result into each member's taxable share; it is the hinge between the company's computation and the members' personal tax. Which version applies - the simplified 2072-S or the complete 2072-C - depends on the make-up of the membership, a point examined below.

Who reports what: the SCI, then the members

The filing works on two levels, and keeping them distinct is the key to understanding the whole system. At the first level, the SCI files its 2072: it computes one net property result and states how that result is divided among the members. At the second level, each member takes their allocated share and reports it on their own income-tax return. For an individual member holding their shares as part of their private wealth, that means carrying their share of the SCI's property result into their personal property-income return (form 2044), where it is taxed with the rest of their income at their progressive rate plus the social levies. The SCI's 2072 and the member's 2044 are designed to fit together: the company declares and allocates, the member absorbs their slice and is taxed on it.

This two-level design is a direct consequence of the translucent regime. Because the SCI pays no tax on its result but its members do, the law needs the company to declare and allocate the result - so the authorities can see how it is split - and then needs each member to report their share - so it can be taxed in the right hands at the right rate. The member is taxed on their allocated share whether or not the SCI has actually distributed it, so the 2072 fixes the taxable amount regardless of any cash movement. The practical upshot is that an SCI's annual compliance is never just the company's return: it is the company's return plus each member's, and a family should treat the 2072 and the members' 2044s as a single connected exercise rather than separate chores.

Which SCI tax return applies to you?

The return depends on the SCI's stage and its members. Pick what describes yours - the check explains what you file.

The 2072-S, the 2072-C, and the company-member difference

The version of the annual return, and the way the result is computed, both turn on who the members are. Where the members are individuals holding their shares privately, the SCI's result is property income and is generally declared on the simplified return. But where a member is a company subject to corporate tax, or a business taxed on its real industrial-and-commercial or agricultural profits, the share of the SCI's result attributable to that member is determined under the rules applicable to that member's own regime, and reported on the complete 2072-C. So a single SCI can have to compute its result twice over - once under the property-income rules for its individual members, and once under business rules for a company member - which is why the presence of a business among the members changes both the form and the substance of the return.

The business-rules computation differs from the property-income one in ways that matter on the return. For its corporate-tax or business-profits members, the SCI determines its profit on the basis of the receivables it has acquired during the period - an accrual basis - so it declares the rents accrued during the year rather than only those collected, and it must include the notional rent that free-provided premises would have produced. On the charges side, the return must take account of all the expenses engaged during the period even if they were not yet paid at 31 December, and the interest on debts contracted for the company's needs is deductible as it accrues, subject, for loans from member companies, to the ceiling on current-account interest. So the very same SCI is on a cash basis for its individual members and an accrual basis for its company members, and the 2072-C is where that dual computation is set out.

When an SCI is exempt from the annual return

Not every SCI has to file the 2072 every year. A real simplification exists for the family company that owns a property and simply lets its members live in it. Non-transparent property-letting companies that confine themselves to putting dwellings at the free disposal of their members - and that are not subject to corporate tax, or to real BIC or BA rules - must file a return for the year of their constitution, but are then exempted, in later years, from filing the annual 2072, on conditions. The central condition is that no remuneration is paid to the members - whether in return for a current-account deposit or for an activity such as the gérance, and in any form, including a benefit in kind such as the enjoyment of premises. So the exemption is for the genuinely passive family SCI: one that houses its members, pays them nothing, and simply holds the property.

For such a company, the obligation to file the 2072 is maintained only in specific years:

• the year in which the company was constituted;
• the years in which a change occurs in the distribution of the company's capital;
• the years in which a change occurs in the list of the company's buildings;
• the years in which a change occurs in the conditions of occupation of those buildings;
• the years in which the company or the members received income linked to the company's activity.

So a family SCI that houses its members and changes nothing in a given year need not file - but the moment the capital is reshuffled, a property is bought or sold, the occupation changes, or any income linked to the activity is received, the return falls due again for that year. One limit is important: this exemption does not apply to an SCI that has no real-estate patrimony at all, so a company holding no property cannot rely on it. The practical lesson is that the exemption is real but conditional and event-driven - a passive family SCI can enjoy years of no return, but must watch for the events that revive the obligation, and must never assume the exemption once earned is permanent.

Do you still have to file the 2072 this year?

The exemption for free-use SCIs is event-driven. Pick what happened this year - the check tells you whether a return falls due.

The schedules and penalties for company-member SCIs

Where an SCI computes its result under business rules for a corporate-tax or business-profits member, the return carries additional schedules (relevés), and omitting them is specifically penalised. For those members, the net fiscal profit is established after deducting the depreciation actually recorded in the SCI's accounts, and that depreciation must appear on a schedule to be provided at the same time as the return; the depreciation is calculated under the component method, which identifies and depreciates separately the principal parts of the building that must be replaced at intervals and have different useful lives from the building as a whole. This is a further reason a company-member SCI is heavier to run: it must keep proper accounts, depreciate its property by components, and file the depreciation schedule with its 2072-C - none of which an all-individual, property-income SCI has to do, since such a company need not record depreciation at all when its result is computed under the property-income rules.

Provisions are treated the same way, and carry an explicit sanction. Where the SCI's result is determined under business rules, account is taken of the provisions constituted to meet clearly specified losses or charges that current events render probable - but only if those provisions have actually been recorded in the year's entries and appear on a special schedule joined to the 2072. The failure to enter a provision on the schedule is sanctioned by a fiscal fine proportional to the sums omitted (CGI Art. 1763). So for a company-member SCI the schedules are not optional paperwork: the depreciation schedule conditions the deduction, and the provisions schedule is backed by a proportional penalty for omission. A family whose SCI has taken in a corporate member - or whose SCI is held through a company for structuring reasons - should be alert that its filing burden has stepped up accordingly, and that the schedules must be prepared and filed with care.

Timing and the calendar

The rhythm of an SCI's filings is set by two dates and one principle. The declaration of existence is due within three months of the company's constitution, so it belongs to the same early period as the company's registration and should not be left until the first return. The annual result return then recurs each year: the period of taxation of an income-tax SCI corresponds, in principle, to the calendar year, and the 2072 for a year is filed in the following spring, in the ordinary case in early May of the following year, feeding the members' own income-tax returns for that income. So the family's tax calendar is a declaration of existence at the outset, and thereafter an annual 2072 in the spring that flows into the members' personal returns.

One principle governs who bears the result, and it connects the return to the substance. The result declared on the 2072 is allocated to, and taxed on, the members in place at the close of the exercise, regardless of whether it has been distributed - the point examined in our guide to how an SCI's rental income is taxed. So the 2072 does more than report: it fixes, for the year, who is taxed on the company's result and in what proportion, by reference to the membership at the close. This is why the return must reflect the membership accurately, and why a change in the members during the year has to be captured - the 2072 is the instrument that assigns the year's result to the right people. Handled on time and accurately, the SCI's filings are straightforward; neglected, they are the most common source of an SCI's tax difficulties.

An SCI's tax filings - at a glance

Frequently Asked Questions

This article is for general information only and states French law and filing rules in force as published in the sources available at the date shown above. It does not constitute legal or tax advice. The filings a given SCI owes depend on its regime, its members and its activity. Always seek qualified legal and tax advice before relying on a filing position.