Shall I keep accounting books for my Real Estate Company (SCI)?
Frequently, owners of a French or Monegasque real estate company (“SCI”: Société Civile Immobilière) hesitate whereas they need to keep accounting books, or not.
In general terms, SCI owning a property in France are entitled to give the right of use of the property to its partners. In this case, there is no tax neither civil nor commercial provision requiring to keep accounting books, only the named tax return n°2072 shall be submitted (at the latest the 3 May, 2018).
In which case do I have the obligation of having accounting books for my SCI?
- Corporate Income Tax (CIT) liability: due to the fact that the real estate company has expressly opted for this regime, or in the case that the nature of the commercial activity carried out falls within the scope of the Corporate Income Tax regime. Furnished rentals (even for one night) fall within the scope of commercial activities, requiring in this way the payment of Corporate Income Tax to French or Monegasque Real Estate Companies. Falling within this provision can have burdensome consequences, due to the change of the tax regime.
- The legal status of the stakeholders: if at least one stakeholder is subject to Corporate Income Tax (CIT).
- An activity subject to Value Added Tax (VAT)
- Company by-laws: normally it is stated that «accounting books shall be kept in a permanent manner at the headquarters of the company» which obliges partners to comply with it.
- Other cases:
- In case of transfer of shares to assess the capital gains and the current account amount of each shareholder.
- In order to value the shares for the Real Estate Wealth Tax Return
- In case of donation or inheritance.
- When divorcing for assessing the contributions of each member.
In case that tax authorities perform an accounting audit to a SCI, they might require the company to provide with all the accounting records files. Otherwise, as provided by law, in case of omission they will be subject to an applicable fine of 5,000€. French tax authorities are tolerant regarding SCI that provide unfurnished rentals, registered under the rental income tax regime.
For any queries, please do not hesitate to contact our International Tax and Real Estate Investment Team by e-mail firstname.lastname@example.org or by phone +33 (0)4 93 87 01 08. Our services are delivered in French, English, Italian and Russian.
This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Ruff et Associés would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Ruff et Associés accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
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