1. What is a Société Civile Immobilière (SCI)?

Société Civile Immobilière, or “SCI,” refers to a group of people (natural or legal) who have partnered up to purchase and manage one or more real estate together. The goal is to invest together in order to share the profits

However, even if it is joint management, one of the partners must be appointed as the manager. They're chosen either directly by articles of association of the SCI or by unanimous vote at a General Assembly.

The SCI is considered the best solution to manage family-owned or professional real estate because of the security and tax flexibility enjoyed by associate members.

2. Are SCI and furnished rentals compatible?

The SCI mainly works with unfurnished rentals. It carries out civil activity while furnished rentals carry out commercial activity. Thus, by definition, SCI and furnished rentals are not compatible

For an SCI to be able to rent furnished, one of the following situations must apply:
  • Be an SCI at the IS for furnished rentals.
  • In the case of furnished rentals, the SCI at the IS sees all its profits taxed under the corporate tax. There is no distinction between rental income from an empty property and from a furnished property.
  • Limit rental income from furnished rentals 
  • The amount of income from furnished rentals must not exceed 10% of the total amount of income generated by the SCI.

3. How to create an SCI for furnished rentals?

In order to create an SCI for furnished rentals, you must:
  • Draft the statutes of the SCI 
  • Deposit the share capital
  • Publish a notice of incorporation in an announcement journal
  • Carry out the business creation procedures

4. Which tax regime? 

Income from furnished rentals is taxed as Industrial and Commercial Profits (BIC), and not as property income.

The real estate company that rents furnished will be liable for corporation tax (IS). The SCI will be able to deduct its expenses from its revenues and only be taxed on profits. The latter will also be able to amortize the purchase of real estate.

If an SCI makes furnished rentals on an occasional basis, may be taxed as an IR if the amount (excluding tax) of the revenues related to the rental activity does not exceed 10% of the total amount of revenue (excluding taxes).

5. Is the furnished rental in SCI subject to VAT? 

The SCI is obligatorily subject to VAT when the converted real estate is rented for professional use. If the company rents furnished or unfurnished properties for residential use, it is not subject to VAT.

Important Link: Can A Commercial Space Transform Into A Residence?

  • Depreciation of the property makes it possible to reduce the taxes due by the SCI
  • Deduction of expenses only in case of taxation to the IR which includes the remuneration of the manager
  • The tax rate is reduced to 15% when taxable profits are less than €42,500.00, or a fixed rate of 25% when they are higher

  • Keeping business accounts
  • File the annual accounts with the registry of the Commercial Court at the end of each financial year
  • Double taxation of profits in the event of payment of dividends to partners, subject to a single flat-rate levy, the rate of which is 30%
  • Application of the regime of professional capital gains (more unfavorable than that of capital gains of individuals)

7. What depreciation for furnished accommodation rented by an SCI?

The SCI can opt for straight-line depreciation or the micro-land tenure regime: 
  • Linear
  • This makes it possible to deduct the costs of acquiring or building a property over a specified period of time (usually 27.5 years). It also allows the SCI to deduct part of the value of the property on the tax return every year.
  • Micro-Land
  • This makes it possible to deduct rental income on a flat-rate basis, without taking into account actual expenses. SCIs can benefit from the micro-land regime if their rental income does not exceed €23,000.00 for SCIs subject to income tax or €70,000.00 for SCIs subject to corporate tax.

To be able to benefit from these tax advantages, the SCI should: 
  • Have an occupancy rate greater than 90% 
  • Not exceed certain income limits. 

8. Can the SCI regime be combined with the LMNP status?

Non-Professional Furnished Rentals (LMNP) consist of renting furnished properties on an occasional basis.

The LMNP offers certain advantages to the SCI, such as:
  • Depreciation of work 
  • No deduction of the depreciation of the property when calculating the capital gain realized in case of a real estate sale (this makes it possible to reduce the amount of capital gains tax)
  • Application of the capital gains regime for individuals
  • Application of the micro-BIC regime
  • Maintaining taxation at income tax (income tax)

Obtaining this status by the SCI requires two (2) conditions:
  • Revenues from the LMNP correspond to less than 10% of the total annual turnover achieved by the SCI
  • The activity of LMNP is carried out by the SCI only on an occasional basis


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