The SCI, as part of property investment companies, is a legal form offering several benefits. In France and in French over-seas departments it is created by a natural and legal entity regardless of nationality.
However there are notable differences between investment companies in Monaco and in France. This article aims to show how they differ in Monaco and France.
What is a SCI?
An SCI, (Société Civile Immobilière) in French law is a non-trading company with the right to own investment property. It allows several people to own a property and it simplifies transmission between them. The legal form is souple in terms of creation.
Certain formalities must be completed to create this type of business. They are grouped in stages.
First of all, the articles covering all management regulations of the SCI must be written up. They must be edited and signed by all the associates (minimum 2 people). Once written, with strict respect for current legislation, they must be deposited at the Taxation Centre where the headquarters of the company is located. There is no charge for this procedure.
Next comes the stage of publication of the SCI in a legal announcement paper. The principle information concerning the SCI must be made available in the publication notice. The identity of the Manager, the Capital Share and the Company Name can be listed.
Finally, the last stage in creating this entity which allows better management of an inheritance property among several individuals is it’s listing in the Companies Register. So, all documents related to the SCI are deposited with the Commercial Court.
The Investment Property Company offers many benefits. For example, with regard to selling property, through trading SCI shares, there is no need for legal intervention. This is not the case in a conventional sale. Also, this legal form prevents joint ownership, which can be a possible source of difficulty between different associates. As a consequence of this, the Manager of a SCI can make his own decisions regardless of vetoes linked to disagreements among the associates. Quite a significant benefit during transmission is available at the level of taxation. So, it is not surprising that the SCI is a growing success.
The differences between a SCI in Monaco and a SCI in France
There are some differences when it comes to taxation.
Firstly, the French taxation policy relating to property is less souple than the policy in Monaco. Since 2011, regulations relating to settlement and inheritance tax have increased. Obviously, a property investment company in Monaco is subject to a more souple and simple taxation than in France.
A SCI based in Monaco allows more confidentiality to its associates than a SCI located in France. The Principality of Monaco does not have a public register always available for consultation as does France. This means that information concerning the identities of the associates cannot be revealed. In Monaco, the public only has access to limited information, the name of the SCI, the address and the headquarters.
The associates of a SCI are less taxed in Monaco than in France. They are not subject to payment of inheritance rights between parents and children, which is a significant tax benefit.
The associates draw this advantage from an agreement between France and the Principality of Monaco regarding inheritance regulations signed on April 1st 1950. The purpose was to prevent double taxation between the two States. So, for example, the shares of a SCI in Monaco, with property in France and belonging to a resident of Monaco deceased in France, are subject to inheritance tax in Monaco. This was decided at the Court of Appeal on October 2nd 2015.