Ask Miranda: What kind of corporation is an SCI?

Question:

From the point of view of US IRS reporting, what kind of “Company” is an SCI? A Partnership? A Corporation? OR?

Answer:

A Societe Civile Immobiliere, or SCI, is a real estate holding company formed under French law. The organization is similar to a corporation since it is under shareholder ownership and control, but it is treated like a partnership for U.S. tax purposes.

An SCI requires a minimum of two shareholders, individuals or entities. SCIs are considered civil in nature and their primary purpose is related to real estate; ordinarily, they do not have a commercial or trading purpose and are not subject to corporate taxes.

I say ordinarily because, if the SCI rents out its property or properties furnished, it loses its civil status and is then considered a commercial structure subject to the more onerous filings and tax requirements required of all French companies. I cannot say for sure how or if this would also change the designation of the SCI for US tax purposes. If this is your situation, please let me know and I am glad to find out what I can.

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