Family SARL or SCI: Which Is Right for Your Family Assets?

Managing and passing on family wealth are major concerns for many households. Two legal structures often considered to meet these needs are the family SARL (SARL de famille, a family limited liability company) and the SCI (société civile immobilière, a property holding company). Each has specific advantages suited to different wealth and tax objectives. This article explores both options in depth to help you make the best choice.

The Family SARL

 

Definition and formation of a family SARL

The family SARL is a variant of the standard SARL, reserved for members of the same family up to the fourth degree (parents, children, brothers and sisters, uncles, aunts, nephews, nieces, etc.). It is mainly used for commercial, craft, industrial or professional activities.

Tax advantages of the family SARL

One of the main attractions of the family SARL is its advantageous tax regime. Unlike standard SARLs, which are subject to corporation tax (IS), a family SARL can opt for income tax (IR). The company's profits are then taxed directly in the hands of the partners, according to their share in the company, which is often advantageous for tax households where the partners have little or no income.

Easier transfer to descendants

The family SARL also makes it easier to pass business assets on to descendants. Shares can be transferred or passed on through a gift-sharing arrangement (donation-partage) with tax advantages, including specific allowances.

Simplified management of the family SARL

Managing a family SARL is often simpler than other structures, with some flexibility in how powers are organised and shared between family members. This allows smoother, more harmonious management while preserving family unity.

The Property Holding Company (SCI)

Definition and formation of the SCI

The SCI is a non-trading company whose purpose is to hold and manage real estate. It allows several people (individuals or legal entities) to join together to buy, manage and pass on property. Forming an SCI requires at least two partners and a contribution in cash or in kind.

Managing real estate through an SCI

The SCI is particularly well suited to managing a property portfolio. It allows property to be held and managed jointly, with the shares divided among the partners. This makes collective management of the property easier and allows better organisation of the family's assets.

Tax and wealth advantages of the SCI

The SCI offers several tax advantages. As with the family SARL, the SCI can opt for income tax (IR) or corporation tax (IS). If it chooses IR, rental income is taxed directly in the hands of the partners, in proportion to their shares. This structure also offers tax advantages when passing on assets, in particular through gifts of shares with specific allowances.

Passing on assets with an SCI

The SCI is an effective tool for preparing the transfer of a property portfolio. Shares can be passed on gradually to heirs, reducing the tax impact of the inheritance. In addition, gifting shares makes it possible to keep control of how the property is managed while preparing the next generation.

Protecting assets with an SCI

By separating ownership from management of the property, the SCI protects the real estate from the partners' personal creditors. Property held by the SCI cannot be seized for the partners' personal debts, unless they have personally guaranteed a loan.

Comparison and Choice

Wealth and Tax Objectives

The choice between a family SARL and an SCI depends above all on the family's wealth and tax objectives. The family SARL is better suited to commercial activities and offers attractive tax advantages for business income. The SCI, on the other hand, is ideal for managing and passing on a property portfolio, offering flexible management tools and specific tax advantages for rental income and inheritance.

Management and Flexibility

The family SARL offers simplified management and greater flexibility in internal organisation, which can be an advantage in a family context. The SCI, although sometimes seen as more complex to manage because of the nature of real estate, allows effective collective management and protects the property portfolio.

Passing On Assets

When it comes to passing on assets, both structures offer notable advantages. The family SARL makes it easier to transfer shares and gives access to advantageous tax regimes. The SCI, for its part, is an excellent tool for gradually passing on a property portfolio, with specific tax allowances and the possibility of keeping control of management.

Conclusion

The decision between a family SARL and an SCI should be made according to the family's specific needs, long-term objectives and tax and wealth constraints. Each structure has distinct advantages that can suit different situations. We strongly recommend consulting a chartered accountant or wealth management adviser to assess the solution best suited to your family and financial situation. Ultimately, choosing the right structure can maximise tax advantages, simplify management and secure the transfer of family wealth.