Most buyers purchase prestigious properties in Monaco and France through SCI. Let's take a closer look at this type of purchase and find out how a property is purchased in the name of SCI and what its advantages are.
What is SCI and what is it for?
An SCI (Société Civile Immobilière) is a legal non-profit company or a civil society specially created to own real estate. This type of company allows members of the same family or a group of people to become owners in different or equal shares and to manage one or more properties together. This form of company is perfectly adapted for those who are thinking of transferring their inheritance in a progressive way.
SCI of Monegasque origin
It is possible to buy property both in France and in Monaco in the name of an SCI company registered in Monaco. The registration procedure of Monegasque SCI company is identical to the French one. The registered office of the company must necessarily be located in Monaco. Information about the Monegasque company and its owners remains confidential and is not available to the public. It can be provided only in exceptional cases at the official request of certain public authorities (French tax administration, etc.). Whereas data on the French company SCI is available to any third party.
Another important difference from the French SCI, which may only own immovable property, the Monegasque civil society may also own movable assets (portfolio of financial instruments, shares of another company, etc.). If more than 50% of the assets of a Monegasque SCI are in movable property, the society's shares may in certain cases be subject to Monegasque inheritance tax at a rate of zero (up to 45% in France) and 16% (60% in France) for transfers from parents to third parties.
How to create an SCI company?
The procedure to create a company is relatively quick and usually takes place during the purchase of real estate, after signing a preliminary contract to buy the property and before signing the final contract of sale. In most cases, the creation is handled by an accounting company or notary, who performs the administrative and registration formalities: drafts the articles of association of the company, publishes the SCI registration notice, registers the company with the Chamber of Commerce and registers the articles of association with the Internal Revenue Service.
How does SCI company work?
Two persons are enough to create a company, they can be either individuals or legal entities. The law does not set a maximum number of owners, nor conditions of nationality, as in some other forms of companies. A minor child can become a member of the SCI company, since the company has no commercial purpose. The duration of such a company is 99 years.
A company's charter defines its functionality. It must be drawn up in writing and state:
information about the company, such as its name and legal address. The address can be at the location of the property or at the address provided by another company;
The purpose of the company, SCI activities must not be of a commercial nature;
details of the founders;
division of shares, founders' contributions. Each member of the partnership must make a contribution, the value of which does not have to be the same. Contributions can be monetary and proprietary: sums of money, furniture, materials, real estate itself (all or part of it). All these contributions constitute the social capital of the society. When making a contribution in the form of immovable property, it is necessary to know that this type of contribution is equated to a purchase, and the mechanism of capital gains taxation from the sale is triggered.
In addition to basic information, the founders indicate in the charter the necessary conditions for the further operation of the company (management, sale of shares, transfer by inheritance, etc.) due to what SCI has a flexible structure.
To ensure stability in the management, the founders appoint a manager and may authorize him to independently sign certain acts and documents. The founders may also foresee a clause which obliges to obtain the prior approval of all members of the company when selling shares to a third party. Often a clause is added stating that in the event of the death of one spouse, the shares will go to the surviving spouse. Such a provision helps to avoid the division of shares between the surviving spouse and children and to preserve the controlling interest in the property of the parents. To create the charter competently and not to forget to mention all the necessary conditions, it is preferable to ask for help from a specialist.
What taxes does SCI pay?
SCI Company is considered a "transparent" organization, so the founders themselves are subject to taxation.
How are legacies and gifts transferred through SCI?
SCI has a simplified legacy and gift form. By creating a company, it is possible to admit heirs to the company at any time, usually with a minimum number of shares.
What are the formalities for running an SCI?
Proper management of the SCI implies compliance with certain obligations, such as organizing an annual general meeting, which should result in a written record of the meeting by the manager. SCIs have an obligation to keep simplified accounting records.