What Is an SCI? France's Property-Holding Company Explained

What is an SCI in France? The short answer

An SCI (société civile immobilière) is France's civil property company: a company formed by at least two people who agree, by contract, to commit assets to a common venture and to share the results (C. civ. Art. 1832), whose purpose is to acquire or build property, hold it, manage it, and let it - or reserve its use for its own members. It is the standard French vehicle for owning property with other people: family holdings, joint purchases by couples, buy-to-let portfolios, business premises held apart from the operating company, and the transmission of property to the next generation.

It is, just as deliberately, none of three things: not a trading company, not a development vehicle, and not a limited-liability shield. Its purpose must remain civil, its shareholders answer for its debts without limit in proportion to their shares, and it exists as a legal person only once registered - the four points this guide takes in turn: the legal definition, the permitted and prohibited activities, the SCI's place among France's property companies, and what its partnership character and legal personality mean for the people who own it.

The legal definition of the SCI in France

The SCI has no statute of its own. It is a civil company (société civile) applied to property, governed by Title IX of Book III of the Civil Code - Arts. 1845 to 1870-1 - completed by decree 78-704 of 3 July 1978 for companies seated in France. Unlike commercial companies, civil companies are the subject of no specific European directives; the general law of contracts applies to them subject to the special rules of company law (C. civ. Art. 1105).

Civil character is the default: every company to which the law does not attribute another character by reason of its form, nature or purpose is civil (C. civ. Art. 1845, al. 2). The exceptions, however, are wide. Certain companies are commercial by their very form whatever their purpose - general partnerships, limited partnerships, the SARL and the share companies (C. com. Art. L 210-1) - while there is no such thing as a company that is civil by form. An SCI is civil, therefore, only for as long as what it actually does remains civil. The company's real activity, not the label in its articles, decides.

What an SCI can do - and the operations that are off-limits

Managing property is civil in essence. An SCI can buy or build one or several properties, administer them, and let them - including letting unfurnished premises to a business tenant under a commercial lease, which remains a civil activity. It can reserve the occupation of its property for its own shareholders.

The boundary is drawn by the Commercial Code's list of commercial acts (C. com. Arts. L 110-1 and L 110-2). Off-limits as a main activity: buying property to resell it as-is (including a plot bought to be resold in serviced lots - and an acquisition for renovation-and-sale is, as a rule, on the commercial side too); acting as intermediary in the purchase, subscription or sale of property or of shares in property companies; and building works carried out as a construction enterprise. Letting furnished premises, for tax purposes, is likewise a commercial activity - the classic trap for holiday-property owners, examined with its consequences in our guide to buying property in France through an SCI.

A civil company may carry out commercial operations without automatically losing its civil character, provided they remain an accessory to the civil activity - useful to it, and of reduced importance beside it; the classic example is an occasional guarantee given for a related commercial company. When commercial acts become the principal business, the consequences accumulate: an action for nullity of the company on the ground of an unlawful purpose (C. civ. Arts. 1833 and 1844-10), a possible requalification as a de facto commercial company - the Cour de cassation has censured judges who rejected that qualification without examining whether the company's actual activity was civil or commercial (Cass. 3e civ. 5 July 2000, n° 98-20821) - and, on the tax side, liability to company tax with the cessation consequences of CGI Art. 202 ter. The tax administration tolerates accessory commercial receipts up to 10 % of total receipts excluding VAT (CGI Art. 206, 2).

The SCI among France's property companies

Several kinds of civil property company exist, and the sigle « SCI » in common speech designates only one of them. The attribution companies build or acquire buildings to divide them into fractions allocated to their members in ownership or enjoyment (CCH Arts. L 212-1 to L 212-13), with a time-share variant governed by the law of 6 January 1986; the construction-sale companies (sociétés civiles de construction-vente) exist specifically to build in order to sell - the one civil company permitted to do so (CCH Arts. L 211-1 to L 211-4); and the SCIAPP gives social-housing tenants a path to progressive ownership of their homes (CCH Arts. L 443-6-2 to L 443-6-12).

The subject of this series is the property-management SCI (SCI de gestion): the company whose principal purpose is to acquire or build one or more properties, manage and administer them, and most often let them - or reserve their occupation for its members. One label needs clearing up: the « family SCI » (SCI familiale) is not a distinct legal category. An SCI formed between relatives follows the general regime of civil companies in every respect; the family composition matters only where a specific rule attaches to it - as with the shorter residential leases available to companies formed exclusively between close relatives.

Is an SCI the right vehicle for your French property project?

Pick the project closest to yours - the check tells you whether the SCI fits, and which point of law decides.

The SCI is a partnership: what that means for its shareholders

French law distinguishes companies of persons - where the identity of each member is decisive - from companies of capital, where investors are interchangeable. The SCI belongs to the first family: it is concluded intuitu personae, and everything characteristic about it follows from that. Share transfers obey strict rules, with an approval procedure for outsiders. In the silence of the articles, collective decisions require unanimity (C. civ. Art. 1852) - the majority principle of capital companies is the exception here, not the rule. And where a capital company confines each investor's exposure to their contribution, the SCI's shareholders are liable for the company's debts without limit, in proportion to their share of the capital (C. civ. Art. 1857) - tempered by the rule that creditors must first pursue the company itself, and in vain, before reaching any shareholder (C. civ. Art. 1858).

The regime has nonetheless been softened where it matters for continuity: unless the articles provide otherwise, the death of a shareholder does not end the company (C. civ. Art. 1870). Two structural constants complete the picture. The SCI needs at least two shareholders at all times - the civil company has no single-member form, and a company whose shares all end up in one hand must regularise or face dissolution. And its shareholders are identified, not anonymous: their full civil status must be declared to the trade and companies register at incorporation and on every share transfer (C. com. Art. R 123-54). Where shares are split between usufruct and bare ownership, the declaration names the bare owner - who alone holds the quality of shareholder, the Cour de cassation having ruled that the usufructuary cannot be recognised as an associé (Cass. com. 1 December 2021, n° 20-15164; CCRCS opinion 2013-001).

The SCI's legal personality: what registration creates

The rule of C. civ. Art. 1842 put an end to the historic « clandestinity » of civil companies: the SCI enjoys legal personality only from the date of its registration at the trade and companies register. Companies formed before 1 July 1978 had to register by 1 November 2002 to preserve their personality - those that missed the deadline lost it, with consequences that still surface in property files today. Registration is what turns the contract into a person.

From that date, the SCI has a domicile - in principle, the registered office stated in its articles - a nationality distinct from that of its shareholders, and a patrimony of its own. The separation of patrimonies is rigorous: the company's creditors and the shareholders' personal creditors must be kept apart, no set-off is possible between the company's obligations and a shareholder's, and a loan made to the company cannot serve to pay up a shareholder's own contribution. The shareholders are not co-owners of the company's assets - the building belongs to the company, and each member holds only a « share », classified by law as movable property (C. civ. Art. 529), conferring a right to a fraction of the profits during the company's life and of the net assets on its winding-up. The company has full legal capacity - it can contract, acquire, dispose, stand surety and join another company - and it acts through its managers: it must be represented by one or more expressly appointed managers, failing which any interested person can seek its dissolution, and it sues and is sued through its manager without its members needing to appear (C. civ. Art. 1846).

One practical consequence follows from this: at the land registry, the property is recorded in the company's name, not the shareholders' - a discretion the RCS declaration of shareholders deliberately counterbalances.

Check the 10% commercial-receipts tolerance

An SCI keeps its income-tax transparency while its accessory commercial receipts stay within 10 % of total receipts (excluding VAT). Enter your figures - the check reads them against the tolerance and flags what tips the company into company tax.

Frequently asked questions about what an SCI is

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal or tax advice. Whether an SCI is the right vehicle, and how it should be structured, depends on the project, the shareholders and the tax objectives. Always seek qualified legal advice - and coordinate with the notary where a property purchase or gift is involved - before forming or using an SCI.