French SCI (societe civile) and taxes

Good evening,

I was wondering whether any of you owns “shares” in a French SCI structure and could share his/her experience regarding taxation of those in Switzerland. To me it is clear how this would be handled in case the structure is tax transparent (i.e. taxes are paid by the partners directly) but the corporate tax version (i.e. taxes are paid by the structure) is not clear. Although the first case has an equivalent in CH the second one is kind of a chimera here (a person company taxed as a corporation). Does anyone have experience with that topic and be able to share his thoughts ? :slight_smile:

I’d be interested in that subject as well, although asking for tax advice on a forum it’s like asking for legal advice, use at your own risk :wink:

I ended up contacting a tax expert to answer my questions ^^ if you have questions feel free to ask maybe I can answer.

Thank you for that, my main questions revolve around taxation of the SCI itself vs taxation of the SCI shareholder.
Here is what I think, I have no legal background so it’s probably full of mistakes:

  • the SCI is only taxed in France, the same way a company would be
  • the SCI owns a property and has a mortgage on it, so any fee should be deductible from the revenue it generates
  • a Swiss shareholder is taxed on the value of the shares owned – but how do you evaluate the SCI?
  • a Swiss shareholder is taxed on the dividends if any – ideally there should be none

How far off am I? :slight_smile:

Of course we need to distinguish between the corporate tax version and the transparent one. In that case we talk about the corporate tax version aka SCI à l’IS.

  • The SCI is taxed on its fiscal revenue at 15% up to 38k ish and 30% ish above (getting lower) and indeed not taxed in CH
  • Interests are deductible from the SCI revenue as any fees (e.g. accounting, depreciations, etc.)
  • To be fair I don’t know in that case but they usually apply the practitioner method (https://www.businessbroker.ch/en/business-value/valuation-methods). In that case though the guy told me that if the company holds real estate it should not be taxed at all in CH since it can be taxed in France for the wealth part (called IFI). I will declare it in the security section and I’ll let them correct it as required I guess.
  • You are taxed on dividend distributions and if you own 10% of the shares you benefit from a reduced tax rate (depend on the canton though)

Owning real estate in France directly exposes you to a 27.5% tax rate below 20k of revenue and increases your overall tax rate in CH as you are taxed on your global revenues. There’s also an impact on deduction that are apportioned based on the location of your wealth. One of the drawback of the SCI is the liquidation that will cost you a lot more compared to owning the real estate directly.

Everyone needs to make calculations to know what scheme fits his goal best ^^.

2 Likes

Thank you for all this info, I’ll dive into the matter later this year or maybe 2021 if it ever happens :wink:

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