Non-resident partner in an SCI, how are rent, capital gains and wealth tax taxed?

A company transparent for tax, even with a partner abroad

An SCI letting unfurnished falls under article 8 of the tax code. It is not taxed itself, it files every year a return 2072, simplified or complete, which splits the result between the partners, and each carries their share of property income onto their own return, the 2044 then the 2042. The partner domiciled outside France is no exception, income from buildings located in France, held directly or through shares in property companies, is taxable in France. Their share is taxed on the scale with the minimum rate of article 197 A, 20 % up to the bracket threshold and 30 % above, unless they prove that the average rate on their worldwide income would be lower.

Social levies are added, 17.2 % in the general case, reduced to the 7.5 % solidarity levy for a partner affiliated to a compulsory social security scheme of the European Economic Area, Switzerland or the United Kingdom who is not covered by a French scheme. The micro-foncier regime remains available to a partner who also holds an unfurnished let directly, otherwise the SCI share goes through the actual regime.

The sale of the building by the SCI

When the SCI sells, the gain is computed at company level then taxed in the hands of each partner according to their situation. For the non-resident partner it is the levy of article 244 bis A, 19 %, with the holding-period allowances that wipe out the tax after 22 years and the social levies after 30 years, exactly as for a directly held property. Return 2048-IMM is filed by the company, and the notaire withholds the tax on the day of the deed.

The accredited tax representative is required under the same conditions as for an individual, read partner by partner. Notaires put it this way, it applies when the fraction of the sale price corresponding to all the shares of non-resident partners exceeds 150,000 €, the property being held for less than 30 years. An SCI that opted for corporation tax follows other rules, those of companies, applied by its accountant with the notaire.

Selling the shares, real estate predominance and registration duties

The partner may also sell their shares rather than the company selling the building. If the SCI is predominantly real estate, meaning its assets are made up for more than 50 % of their value of buildings located in France, directly or indirectly, the gain on the sale of shares by a non-resident bears the same 19 % levy, declared on form 2048-M. The buyer of the shares pays the registration duties of article 726 of the tax code, 5 % of the price for shares of predominantly real estate companies.

What the SCI costs the non-resident

Impots.gouv.fr writes it about the 150,000 € exemption of article 150 U II 2°, it does not apply if the property is held through a legal entity such as an SCI. The same goes for the exemption of the former main residence sold in the year after departure, reserved to the sale of a dwelling by its direct owner. A couple who placed their former house in a family SCI before moving abroad therefore loses both exemptions, whereas they would have kept them by holding the house in their own names.

On inheritance, shares of an SCI holding a French building are assets located in France within the meaning of article 750 ter of the tax code, in proportion to that property, and French inheritance duties apply, subject to treaties, some of which treat shares as movable property taxable in the deceased's state. The notaire checks this before any reorganisation.