SCI: the pros and cons to consider before starting

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1. What is an SCI?

An SCI is a civil society whose social purpose is the acquisition and/or management of real estate assets. It consists of at least two partners, natural or legal persons.

Its management can be entrusted to one or more managers, partners or not, natural or legal persons. In general, the manager is responsible for the day-to-day management of the company's real estate. Its missions can be defined in Statutes of the SCI.

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2. What are the benefits of SCI?

The SCI presents numerous advantages of which:

• the possibility of circumventing joint ownership;

• a tax-efficient transfer of real estate assets;

• free social capital;

• flexible functioning in the statutes;

• the ability to choose your tax regime;

• the possibility of separating the real estate from the farm for professionals.

Avoid the indivision regime

Joint ownership is often not well experienced, especially when it is set up as part of a succession. Indeed, it involves taking decisions unanimously by the co-owners.

Conversely, SCI makes it possible to Define the powers of the manager and partners. In general, the manager will be responsible for ensuring the daily management of real estate assets (for example, the monitoring of a rental property). Conversely, some important decisions will fall under the jurisdiction ofGeneral meeting of partners (for example, the transfer of real estate).

Easily transfer your real estate assets without heavy taxation

This is the biggest advantage of SCI: it facilitates the constitution, management and transmission of real estate assets.

First, partners can pool their financial resources to buy larger real estate. They share the costs and get bank financing more easily.

Second, the SCI makes it possible to benefit from successive donations. In practice, you can transfer shares in the SCI tax-free every 15 years. In fact, each child can receive 100,000 euros from each of their parents without gift taxes to pay. This device is inconceivable for real estate owned directly.

To go even further in tax optimization, it is possible to Recourse to the division of ownership of shares. In practice, you give bare ownership of the shares to your children (the right to dispose of) and keep the usufruct (the right to enjoy the property and to receive income from it). This system is perfectly combined with the successive allowances for donations.

It is also possible to carry out a cross dismemberment between two concubines.

Setting the social capital of the SCI

The law does not impose no minimum share capital for SCI. It can be a symbolic euro, although this should be avoided in order to obtain financing.

It is important to provide funds to SCI for its daily management.

In addition, the SCI may have a fixed or variable capital. As a reminder, variable capital makes it possible to increase or decrease its amount, in compliance with the ceilings defined in the articles of association, without having to make a change in the articles of association.

Create a tailor-made operation

The partners of an SCI can adapt its operating rules in its statutes. For example, the conditions for voting and quorum for decision-making, the terms of a transfer of shares to a third party or the powers of the manager.

Les transfers of shares to a third party require approval from the partners. However, you have the option of deleting it for transfers between partners or to a family member by inserting a different agreement clause in the articles of association.

Choosing between income tax and corporate tax

The SCI allows you to choose your profit tax regime : income tax (IR) or corporation tax (IS).

By default, it falls under the IR. We are talking about Translucent society. Its profits are directly taxed in the hands of the partners according to their share in the share capital. They incorporate their global income. In the event of a sale, the capital gain obtained benefits from exemptions for the duration of ownership:

• total exemption from IR after 22 years of detention;

• total exemption from social security contributions after 30 years of detention.

Before these deadlines, the exemption is partial.

Good to know: The exemption for holding period also applies to the sale of shares in an SCI. The term taken into account begins on the date the shares are subscribed.

However, SCI can Opt for IS with the Corporate Tax Service (SIE). She then has the option of amortizing: each year she deducts a fraction of the amount of the building in order to reduce the tax liability to be paid. On the other hand, the capital gain on the sale will be greater since it will take into account the amortization applied during the sale of the building concerned.

To note: The SCI is automatically part of the IS when its corporate purpose is commercial.

Separating real estate from your professional activity

The creation of an SCI can also be interesting for professionals.

It allows you to protect your real estate assets the vagaries of your professional activity. Indeed, even if it is used to operate your business, it can be integrated into an SCI. It is thus protected from your professional creditors. They will not be able to seize it in case of financial difficulties.

Also, since real estate is not included in your business, it is not under your assets. It does not impact the valuation of your business.

Finally, the SCI has the right to rent the property to your company. The rents will then be deductible expenses for the company and resources for the SCI.

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3.What are the disadvantages of SCI?

Now that you have an overview of the benefits of SCI, let's take a look at its drawbacks.

The unlimited liability of the partners

The partners of an SCI have a indefinite and subsidiary responsibility.

In practice, when the SCI encounters difficulties, its creditors can request payment of social debts from the partners, but only after an action that has remained unsuccessful towards the company.

As a result, the personal assets of the partners can be committed in proportion to their participation in the share capital. However, there is no solidarity between the partners. They only have to pay their share of social debts. The creditors must therefore attack them separately in order to obtain the full amount due.

The formalities for creating a complex SCI

The creation of an SCI requires carrying out some formalities in order for it to obtain its registration.

The most complicated is usually the Drafting the statutes. These must be written carefully and include all mandatory information. In addition, remember to insert all the useful clauses.

Next, you will need:

• make capital contributions;

• publish legal announcements in a newspaper;

• gather the necessary documents and supporting documents for the registration file;

• file the application for registration of the company on the One-stop shop.

Heavy administrative, accounting and fiscal obligations

The creation of an SCI instead of directly owning a property requires more obligations to be respected. Namely:

1. Keep accounts that are more or less complex according to the tax regime (cash or commitment accounting) of the SCI.

2. Convene at least one annual general meeting to rule on the accounts and draft a minutes of the general meeting.

3. Report your profits annually to the tax authorities using a more or less lengthy income statement depending on your tax regime.

Did you know that you could switch to the dematerialization of your general meetings with Axiocap ? They will then be held online with the establishment of invitations, attendance sheets and dematerialized minutes.

The impossibility of creating a unipersonal SCI

SCI always requires the meeting of several partners.

In the event of the transfer and reunification of all the shares in one hand, the SCI will have one year to bring in a new partner. Otherwise, anyone with an interest can go to court to request its dissolution.

A complicated transfer of shares

As we have seen, transfer to a third party requires approval. Moreover, in the event of a change in the share capital, it is always necessary to amend the articles of association.

Inaccessible means of financing

Most of the systems put in place to help individuals acquire real estate are not open to SCI. This is particularly the case of the zero interest loan (PTZ) and the home savings plan (PEL).

Summary table of the advantages and disadvantages of an SCI

The creation or acquisition of a civil real estate company must be a carefully considered project in view of its advantages and disadvantages.

Are you tired of time-consuming tasks related to your shareholding? What if you switched to dematerialization? Axiocap Suggests you to manage everything online in a few clicks :

• management of shares and shares;

• maintaining legal records;

• convening and voting at general meetings.

It's quick and easy.