Buying french property through a company: guide & tax benefits

Purchasing a property in the French Alps or across our beautiful regions is often the culmination of a significant life project. For many international investors and residents alike, a recurring question arises: should you hold the property in your own name or consider buying french property through a company? While individual ownership is the traditional route, the use of a dedicated legal structure may offer significant advantages depending on your long-term objectives.

1. Introduction to buying property in France through a company

Investors often choose corporate structures to navigate the specificities of French law, particularly regarding taxation and inheritance. Unlike some jurisdictions where “trusts” are common, France relies on corporate vehicles to manage and transmit real estate.

Buying as an individual is straightforward but links the property directly to your personal estate, making it subject to standard French succession rules and potentially higher wealth tax exposure. In contrast, a company acts as a separate legal entity. This distinction may provide a protective barrier between your personal assets and your real estate investments, while offering a more flexible framework for managing co-ownership or rental activities.

Actes Alliances Notaire has offices in the heart of the French Alps including Salins-Fontaine, Segny, Val Thorens, Alpe d’Huez, and Grenoble.

2. Types of companies used for buying property in France

Société Civile Immobilière (SCI) The SCI is the most frequent choice for holding family or residential property. It is a non-trading company specifically designed for real estate. Its primary benefit lies in its flexibility: it allows multiple people to own “shares” of a property rather than the property itself. This is particularly useful for avoiding the constraints of “indivision” (joint ownership), where a single person could otherwise block a sale or management decision.

Société par Actions Simplifiée (SAS) and other corporate structures For those focusing on furnished rentals or commercial activities, structures like the SAS or SARL might be more appropriate. These are commercial companies. While more complex to manage, they allow for the deduction of various expenses and depreciation, which may significantly reduce the taxable base of your rental income.

Foreign companies It is possible for a foreign-based company to purchase French real estate. However, this path requires careful consideration. France imposes a specific 3% annual tax on the market value of properties owned by certain foreign entities unless they disclose the ultimate beneficial owners. Navigating these transparency requirements is a delicate process where professional oversight ensures that you do not inadvertently trigger unnecessary tax penalties.

3. Legal and financial benefits of buying through a company

Asset protection Using a company can help ring-fence the property. In the event of personal financial difficulties, your real estate held within a structure is generally better protected from personal creditors. This separation of estates is a key factor for entrepreneurs and high-net-worth individuals seeking to secure their family’s primary or secondary residence.

Estate planning and succession

French inheritance law is known for its legal “reserved heir” provisions, which can be surprising for non-French residents. Holding property through a company is simplifying this legal side (providing various company law mechanisms). It allows you to transmit shares of the company rather than the real estate itself. This can be done gradually, working with “net value” figures, potentially utilizing tax-free gift allowances every 15 years, thereby reducing the eventual gift or inheritance tax burden for your heirs.

4. Taxation and costs of buying property through a company

VAT on property purchases

VAT (at 20%) typically applies to the purchase of new-build properties. However, if your company intends to use the property for commercial purposes—such as a “para-hotelier” rental service in a ski resort like Val Thorens or Alpe d’Huez—you may be eligible to reclaim the VAT on the purchase price. This represents a significant saving, provided specific service criteria are met.

Property taxes

Regardless of the structure, owners must pay “taxe foncière” (property tax). If the property is held by a company and rented out, the income will be subject to either personal income tax or corporate tax. It is also important to monitor the Impôt sur la Fortune Immobilière (IFI), as the value of the shares representing the real estate remains taxable if your total French real estate net assets exceed €1.3 million.

Transfer taxes

When a company buys a property, it pays standard registration duties (around 5.8% for older properties). However, if you are buying the shares of an existing company that owns property, the transfer duties are often lower, which can make purchasing a company-held property a more complicated but also more attractive alternative.

5. The role of a notaire in buying property through a company

Our role as notaries is to ensure the absolute legal validity of your investment. When a company is involved, we do not simply draft a deed of sale; we verify the company’s capacity to act and ensure its bylaws are perfectly aligned with your purchase goals.

If you were to proceed without this specialized guidance, you might find that the company’s “social object” does not allow for property investment, or that the manager lacks the power to sign the mortgage. We perform rigorous due diligence, checking for encumbrances, securing your interests versus unknown debt and ensuring the proper registration of the property with the French Land Registry. This intervention provides the legal certainty that your ownership is unassailable and that the funds are transferred securely.

6. Risks and challenges of buying property through a company

Complexity and administration

Owning a company involves more than just holding a deed. You must maintain annual accounts, hold general meetings, and file specific tax returns (such as the “déclaration n°2072” for SCIs). Neglecting these duties may lead to the loss of the company’s tax benefits or even its legal transparency, resulting in unexpected tax assessments.

Costs of setting up and running

There are initial costs for drafting statutes and registering the company. While these are an investment in your future tax savings, they should be factored into your budget. Ongoing costs for accounting and administrative management are also necessary to ensure the structure remains compliant with French regulations.

Risk of double taxation

For non-residents, it is crucial to consider the tax treaty between France and your home country. Without a properly structured setup, there is a potential risk of being taxed on the same income in two different jurisdictions. The exact tax regime of a company may be wrongly understood with significant consequences abroad.

7. When to consider buying through a company

Investment property

If your goal is a long-term rental investment, the corporate route often provides better tools for managing expenses and debt. It allows for a clear separation between the investment’s finances and your personal bank account.

Family and estate planning

For families wishing to keep a mountain chalet or a prestige apartment within the family for generations, the SCI is often not the best vehicle, but another form of company may be. It allows for the smooth transition of management from parents to children, avoiding the need to sell the property to pay for inheritance taxes.

8. Steps to buy property through a company in france

The process typically follows these stages:

• Definition of the strategy: Choosing between SCI, SARL SAS, or another structure based on your tax profile.
• The sales agreement: Signing the “compromis de vente” on your personal name to keep the benefits of the 10 days cooling off period.
• Drafting the statutes: Tailoring the rules of the company to your specific needs.
• Registration: Obtaining the “Kbis” (the company’s identity card) from the Commercial Registry.
• Final deed: The notary finalizes the transfer of ownership once all administrative checks are complete.

9. The future of buying property through a company in france

The french real estate market, particularly in the Alps and major cities, continues to attract international capital. While tax laws evolve, the fundamental benefits of using a company for asset protection and transmission remain consistent. Current trends show an increase in “green” regulations; companies that invest in energy-efficient renovations may find themselves better positioned for future tax incentives and market value retention.

10. Conclusion

Buying French property through a company is a sophisticated strategy that can yield significant benefits in terms of tax optimization and family harmony. However, the choice of structure must be bespoke, reflecting your unique financial and family situation.

As your notaries in the Alps and beyond, we are here to provide the clarity and security needed to transform a complex legal process into a seamless experience. We encourage you to contact our office to discuss how a tailored corporate structure can protect your french real estate legacy and meet your investment goals.

Contact our international team now to secure and optimize your transaction.

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📞+33 (0)4 7924 6222