Real Estate Civil Society (SCI): what you need to know

Verified 07 October 2025 - Directorate of Legal and Administrative Information (Prime Minister)

The Civil Real Estate business (CIS) is a popular legal framework for the management and acquisition of real estate. It allows several partners to pool resources to buy, manage or transmit real estate assets while benefiting from advantageous taxation.

The Civil Real Estate business (SCI) is a civil real estate management business whose purpose is toacquire or build one or more buildings, manage and to administer.

The use of an SCI is explained by the willingness of the partners to integrate their buildings into an autonomous structure, equipped with legal personality and administered by a manager. SCI may lease or make available to its members the real estate it holds.

The main activity of the SCI must be civil (e.g. leasing of bare buildings) and non-commercial (e.g. purchase of buildings for resale, rental of furnished buildings, rental of gîtes including services similar to those offered by the hotel sector).

Nevertheless, the SCI may carry on a commercial activity as an ancillary measure, like the furnished rental.

Although the civil real estate management-rental business is the most common, there are nevertheless other types of civil businesses in the real estate field, for example:

  • Construction-sale ICS : it is intended to construct one or more buildings with a view to their sale in whole or in parts.
  • Allocation ICS : it is intended to construct or acquire immovable property with a view to dividing it into fractions intended for members in ownership or enjoyment. The purpose of this business includes the management and maintenance of buildings until a different organization is established.
  • SCI of gradual home ownership (SCI APP) : it allows tenants of low-income housing to access the property of the housing they occupy.

The real estate civil business is constituted of at least 2 partners, natural persons and/or legal persons.

It may in particular be constituted between 2 spouses, irrespective of their matrimonial property regime.

Where the spouses are married under a community regime (community reduced to gainscommunity of furniture and property and universal community), the husband who wishes to bring to a civil business an immovable forming part of the community must notify your spouse.

The spouse who makes this contribution acquires the status of partner. His or her spouse may also acquire that status, in respect of half of the subscribed shares, if he or she notifies the business of his or her intention to be personally associated.

Warning  

ICS and theundivided are two options for holding a common property. On the one hand, the SCI is a legal person which allows management governed by the statutes and entrusted to a manager, while the indivision does not have legal personality and is subject to stricter management rules (unanimous agreement of the indivisaires in some cases). The system of indivision applies automatically in the context of an estate in which there are several heirs.

If you want to know how to create a business and especially an SCI, you can find the whole step-by-step creation process on our sheet.

The constitution of an SCI presents some benefits and disadvantages.

Benefits of SCI

The constitution of an SCI presents the following benefits :

  • The SCI allows several people to realize a real estate investment which would exceed the financial capacity of each individual. It can also make it easier to obtain bank financing.
  • The SCI allows to separating real estate from professional activity :
    • In the event of bankruptcy, the property used for the operating business remains the exclusive property of SCI and is thus protected from creditors operating business.
    • In the event of a sale of the operating business to a third party, the property is not included in the asset side of the balance sheet and does not increase the valuation of the company. The cost to the purchaser is therefore lower, which can simplify the disposal.
  • The SCI allows the situation to be organized more freely in the event of the death of a partner and in particular to avoid that the heirs find themselves in undivided. If one of them wishes to give up his sharesHowever, it does not force others to sell the property.
  • The SCI allows a progressive transmission and staggered over time. While maintaining the management of their assets, each parent can transfer shares to his descendants successively by taking advantage ofabatements interesting tax measures, that is to say €100,000 per child or €31,865 per grandchild, by renewable donation every 15 years. In addition, the valuation of the shares is reduced by any debts of the business (e.g. repayment of the bank loan used to acquire the property).
  • The SCI allows toadapt the operating rules (decision-making, distribution of powers, transfer of shares, etc.) according to the needs of the members, thanks to the freedom offered in the drafting of the statutes.

Please note

The Civil Real Estate business (SCI) has advantages for making a real estate investment. However, commercial activities, such as buy-resale, are prohibited. To carry out this type of activity, it is necessary to opt for a commercial structure adapted as a SAS or a LLC. We are talking about SAS immobilière and SARL immobilière.

Disadvantages of the SCI

On the other hand, the creation of an ICS presents some disadvantages :

  • The partners have a indefinite financial responsibility In respect of SCI's debts, their personal assets may be used to pay the business' creditors.
  • The partners are taxed on the share of profit or loss corresponding to their participation in the share capital, including when the SCI does not pay them this amount.
  • Managing an ICS requires compliance with certain administrative and accounting formalities : keeping of accounts, drafting of statutes, annual statement of results.
  • THEabatement of 30% on the principal residence does not apply in respect ofreal estate wealth tax (IFI) when the building is held through an SCI.
  • The abatement of 20% on the principal residence of the deceased does not apply in respect of inheritance tax when the building is held through an SCI.
  • Partners cannot benefit from theexemption from donation duties resulting from the Dutreil Pact (75% exemption on the value of the securities transferred). This system is not open to transfers of companies whose purpose is the management of movable or immovable assets.

Constitution of the share capital

The amount of the share capital is determined freely by partners (€1 minimum).

The share capital may consist of contributions in cash (money) and/or nature (property: real estate, equipment, etc.).

No time limit shall be imposed for the release of inputs in cash. The partners fix freely in the articles of association the terms of these payments. The manager may be vested by the articles of association with the power to fix the dates and amounts of the payments corresponding to the release of the contributions.

Example :

It may be agreed that the release of the contributions will be made as the repayment of the loan subscribed by the SCI to finance the acquisition of the building. The SCI therefore pays the purchase price of the property through the loan and the funds from the partial release of the shareholders' contributions.

The SCI also authorizes inputs to industry. These contributions do not form part of the composition of the share capital.

The contribution in kind consists in transferring ownership of a property to SCI in return for shares. It is therefore the opposite of a sale where ownership of property is transferred in return for a price.

As regards the transfer of immovable property to the business, it must be registered in registration tax department.

This record is free when the contribution is made pure and simple to an SCI subject to income tax (IR).

On the contrary, the registration is paying (5% the amount of the contribution) where the contribution is made to an SCI subject to thebusiness tax (IS). However, the rapporteur is exempt the right of registration if 2 following conditions the following are present:

  • The building is assigned to the professional activity of the business.
  • The transferor undertakes to retain for at least 3 years the shares received in return for his contribution.
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Financial responsibility of partners

With respect to the debts of the business, the liability of the partners of an SCI is both indefinite, non-solidarity and subsidiary :

  • Undefined liability : the personal assets of the partners may be committed if the SCI is unable to pay its debts, even if the partners have not committed any fault.
  • Non-joint and several liability : the partners are only liable for the debts in proportion to their share in the capital of the SCI. One creditor must be addressed to each partner and may not require the recovery of the entire debt from a single partner, on behalf of all the others. If a partner does not repay the part of the debt owed to him, the other partners are not required to pay in his place.
  • Subsidiary responsibility : a creditor may apply directly to a partner only if the recovery procedure against the SCI fails.

The partners of SCI also undertake to contribute to losses business. As such, the contribution to losses should not be confused with indefinite, non-joint and several liability and subsidiary to social debts. The latter implies that creditors may, under certain conditions, commit the personal assets of members, while the contribution to the losses does not in principle take place until after dissolving the business, where the assets of the bank are not sufficient to satisfy creditors.

Please note

In case of disposal of its securities, the responsibility of a former partner may be committed under debts due occurring before the sale of its shares.

The partners benefit from a great freedom in setting the rules of operation of the SCI (status and powers of the manager, role of the partners, etc.).

Governing body

The SCI is managed by one or more managers, appointed either by the statutes, by a separate act (such as a minutes of the general meeting), or by a decision of the partners. The manager does not necessarily have the status of partner, it may be a third party (natural or legal person) chosen because of its competence.

The articles of association lay down the rules for appointing the manager and the way in which the management is organized. Except as otherwise provided in the articles of association, the manager is named and revoked by a decision of the members representing more than half of the shares.

The manager can accomplish every acts of management the interest of the business (e.g. taking out professional insurance, sending invitations to meetings, paying social security contributions). Nevertheless, the statutes may limit the manager's powers and stipulate that the conclusion of such or such an act will require the prior authorization of the partners (e.g. the conclusion of a loan, the sale of immovable property of the business).

Please note

If there are several managers, they shall exercise those powers separately, but any person may oppose a transaction before it is concluded. The statutes may determine in internal reports a division of powers between the managers, or set conditions for deliberations.

In relations with third parties (external management), the manager commits the business by the acts entering into thesocial object. The only limitations of powers enforceable against third parties are those related to exceeding the corporate purpose (for example, if the manager of an SCI whose purpose is rental management decides to buy shares on the stock exchange on behalf of the company, this act is foreigner to the corporate purpose and can be contested).

It is therefore important, when drafting the articles of association, to define the corporate purpose with precision in order to better delimit the manager's powers towards third parties.

Example :

The decision of the manager of an SCI to grant a rent waiver to the tenant business, in order to allow it to remain on the premises and continue its activity until its financial situation is restored, is in accordance with the articles of association, the corporate purpose and the corporate interest.

In addition, the manager must keep an account and report of its management to the partners at least once a year. This accountability shall include a written report setting out the business' overall activity, indicating the profits made or expected and the losses incurred or anticipated.

The lack of accounting is a fault of the manager which can lead to his dismissal by a collective decision of the partners. They may also apply to the court for judicial dismissal of the manager.

Decision-making

The decision-making in ICS which exceed the powers granted to the managers are taken to unanimity associates. However, the statutes may validly provide that certain decisions shall be taken at a majority they set.

Decisions are made by the assembled partners in assembly but the articles of association may also provide that they will result from written consultation.

Any deliberation of the partners shall be recorded by a minutes indicating the names and surnames of the members who participated, the number of shares held by each of them, the documents and reports submitted to the members, the text of the resolutions put to the vote and the result of the votes.

Taxation of profits

The SCI falls, by default, under theincome tax (IR). Profits earned by the business (e.g. on the lease of a property) are taxed on behalf of each partner in proportion to its share of the share capital.

Thus, each partner must declare according to its share, the income relating to that activity on its personal income tax return.

In this respect, it does not matter whether the partners actually received the corresponding sums, or whether the profits were set aside for reinvestment in the business.

If the partners of the SCI are individual businesses or undertakings under a actual tax regime, each partner must declare the income related to this activity on its statement of results in accordance with the rules applicable to the tax regime for the taxation of its profits. These rules vary according to the nature of the partner:

  • Businesses subject tobusiness tax (IS) include their share in their taxable income at the IS;
  • Individual companies or natural persons under theincome tax (IR) declare their share according to the category corresponding to their activity:
    • BIC (industrial and commercial profits) for commercial, craft or industrial activities
    • BA (agricultural profits) for agricultural activities
    • NCB (non-commercial profits) for the liberal professions or non-commercial activities

However, the SCI falls under thebusiness tax (IS) in the following 2 situations:

  • The SCI engages in commercial activities (e.g. furnished rental) in a proportion that is not accessory to his civil activity. The tax administration considers that beyond 10% of the turnover excluding taxes, the commercial activity is no longer ancillary and that the SCI must be subject to the IS.
  • The SCI voluntarily opts for IS from its creation or during social life. The option must be notified to the company Tax Office (SIE) before the end of the 3rde month of the financial year for which the SCI wishes to be subject to business tax (IS). This option can be revoked until 5e year following the year in respect of which the option was exercised. At the end of this period, the option is irrevocable.

The amount of business tax (IS) is calculated from the last year-end. The tax rate is 25% on the amount of the tax result (rate reduced to 15% on the share of profits up to €42,500, subject to conditions).

The transition from SCI to IS normally entails the immediate taxation of profits not yet taxed and capital gains not yet taxed at the date of the change of tax regime.

The choice between business tax (IS) or income tax (IR) can be affected by many parameters, in particular:

  • Importance of rents collected by the business
  • Amount of expenses incurred
  • Assignment of results
  • Marginal tax rate for members
  • Importance of the business' real estate assets, etc.

The destination of the immovable and the nature of the works may also constitute a criterion of choice insofar as the improvement works on a commercial immovable are not not deductible in the property income system (income tax), while they are depreciable in the context of a business to business tax (IS).

Declaration of result

Each year, the SCI must file a declaration of result. The details of this formality vary according to the tax system of the business.

SCI to Income Tax (IR)

The result statement must be obligatorily remote declared via the business tax account SCI. It can be done in 2 ways depending on the case:

  • Via the Form 2072-S (simplified declaration): where all the partners of the SCI are natural persons
  • Via the Form 2072-C (full return): where SCI holds bare ownership or dwelling with depreciation deduction

This declaration must be made no later than the 2nd working day following 1er May N, for rents collected in N-1.

SCI to business tax (IS)

The result statement must be obligatorily remote declared via the business tax account SCI, using the form 2065.

The declaration must be subscribed, in principle, within 3 months of the end of the financial year. However, if the fiscal year is ended on December 31 or if no fiscal year is ended in a year, the report is filed no later than on 2e working day next to 1er May.

Taxation of capital gains

When the SCI sells a property, the capital gains realized by the business are, like its income, imposed on behalf of partners, as follows:

For the share of capital gains accruing to natural persons partners, the abatements for length of detention are applicable and calculated from the date of acquisition of the immovable by the SCI, regardless of the date of acquisition of the shares by the partner.

In addition, if the SCI has made the building available free of charge to one of its natural partners, who occupies it as principal residence, perhaps the part of the surplus-value accruing to it exempt.

ICS and VAT rules

The activities of the SCI may, as appropriate, be subject to or exempt from VAT.

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Rental of premises for residential or agricultural use

The rental of premises for residential or agricultural use is VAT exempt with no option for VAT.

Rental of bare premises for professional use

The rental of bare premises used by the lessee for the purposes of his professional activity is in principle exempt from VAT.

On the other hand, the SCI may opt to subject leases to VATin order to recover the VAT charged on the acquisition, construction and charges relating to the immovable property.

Rental of premises fitted out for professional use

The rental of converted premises for professional use is still subject to VAT.

The same applies in the case of the lease of bare premises, where the lease provides the lessor with the means of continuing to operate a commercial asset, increasing its outlets or participating in the performance of the leasing company.

A sale of shares in SCI requires theapproval of partners and a recording in the tax department.

Approval of partners

With the exception of assignments freely granted to ascendants or descendants of the transferor, the shares cannot, in principle, be transferred only with the approval of all partners.

However, the statutes may agree that such approval shall be obtained by a majority they determine, or that it may be granted by the manager. They can also dispense with approval assignments to partners or the spouse of one of them.

Registration at the tax office

The sale of shares must be registered at registration tax department.

This formality gives rise to the payment of a registration fee by the purchaser of the shares.

General case

The amount of the registration fee shall be 3% of the sale price less one abatement equal to €23,000 and brought back to percentage of the number of shares sold in social capital.

Example :

A partner owns 50 shares of a SCI whose capital is divided into 400 shares. It sells its shares for a value of €50,000.

The amount of the registration fee is calculated as follows: Transfer price - (23,000 x Number of shares sold ÷ Total number of shares in the business) x 3%.

Applied to our example, this would result in: 50,000 - (23,000 × 50 ÷ 400) = 47,125 × 3% = €1,414 of registration fee.

Predominantly real estate business

The amount of the registration fee shall be 5% the transfer price if it is a Predominantly real estate business, i.e. a business of which more than 50% of the asset is composed of immovable property not allocated to its professional operation.

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