In France, direct investment in real estate can be carried out without ownership of a company registered in France.
Last modified 13 Mar 2025
The concept is relevant. The fee for registration in the Companies and Trade Register is approximately EUR300. Setting up a permanent establishment will also involve additional costs. Registration takes approximately three weeks from the date the “guichet unique” receives all the relevant documents. However, from a tax perspective, mere ownership of real estate in France does not constitute a permanent establishment.
In France, when a foreign company invests directly in real estate without setting up a corporate vehicle or subsidiary in the country, the foreign company concerned is obliged to register in the Companies and Trade Register and to nominate an individual who is responsible for the company's business affairs in France.
The branch office must also file the accounts, translated into French, relating to the company and complete an annual tax return.
If the branch office conducts business that is subject to VAT, a form detailing the sales/turnover must be submitted to the tax authorities every month.
Last modified 13 Mar 2025
Types of corporate vehicle are:
Last modified 13 Mar 2025
An SCI (société civile immobilière) is a real estate civil company whose purpose is to acquire and hold properties. The shareholders may be individuals or corporations. Vis-à-vis third parties, the shareholders are liable indefinitely for the debts of the company in proportion to the shares they hold in the share capital.
An SNC (société en nom collectif) is a commercial partnership. The partners, who may be individuals or corporations, shall all be deemed to be businessmen (commerçant) and are jointly and severally liable for the debts of the partnership.
An SARL (société à responsabilité limitée) is a limited liability company in which the shareholders' liability is limited to the amount of their investment in the company.
The shareholders’ may be individuals or corporations, it being specified that an SARL can have a sole shareholder.
An SA (société anonyme) is a stock corporation where the capital is divided into stock. The shareholders may be individuals or corporations. The shareholders' liability is limited to the amount of their investment in the company. The management of the company is undertaken by either a board of directors (Conseil d'Administration) and a general manager (Directeur Général) or by an executive board (Directoire) and a supervisory board (Conseil de Surveillance).
An SAS (société par actions simplifiée) is a simplified stock corporation and may be formed by a private individual or a corporation as a sole shareholder. There is freedom in relation to the adoption of by-laws since the by-laws may freely organize the way an SAS is managed or controlled. As with an SA, the liability of the shareholders is limited to the amount of their investment.
An SCPI (société civile de placement immobilier) is a real estate civil investment company, whose purpose is to acquire and hold rental property. The shareholders may be individuals or corporations. These companies are entitled to sell their shares to the public as soon as (i) the total value of the shares held by the founding shareholders is at least equal to the amount of the minimum share capital (EUR 760,000) and (ii) they provide evidence that a bank guarantee is in place as approved by the French Financial Market Authority (Autorité des Marchés Financiers) for reimbursement. At least 15% of the maximum share capital must have been issued to the public within one year of the first public offering. The public offering is subject to the visa of the French Financial Market Authority (Autorité des Marchés Financiers).
An SIIC (société d’investissement immobilier cotée) is a listed real estate investment company. Special tax-exemption arrangements are available to stock corporations listed on a regulated French stock market, with a minimum share capital of EUR 15,000,000, whose main purpose is (i) the acquisition or construction of property for rental purposes, or (ii) the direct or indirect ownership of stakes in legal entities with identical corporate purposes legally classified as partnerships or subject to corporate income tax.
The SIIC will be either a SA (société anonyme) or a limited partnership by shares (an SCA – société en commandite par actions – company mixing shareholders with a liability limited to their contributions and others with an unlimited liability).
Unless otherwise provided by law, 60% or more of the share capital or voting rights of an SIIC must not be held, directly or indirectly, by one or more persons acting in concert and 15% of the share capital and voting rights of an SIIC must be held by persons who hold each, directly or indirectly, less than 2% of the share capital or voting rights on the first day of application of the regime.
Last modified 13 Mar 2025
EUR1
EUR1
EUR1
EUR37,000
EUR1
EUR760,000
EUR15,000,000
Last modified 13 Mar 2025
Costs can vary, but approximately EUR620 provided there are no unusual aspects to the structure. Legal fees are not included in this amount.
Costs can vary, but approximately EUR620 provided there are no unusual aspects to the structure. Legal fees are not included in this amount.
Costs can vary, but approximately EUR620 provided there are no unusual aspects to the structure. Legal fees are not included in this amount.
Costs can vary, but approximately EUR620 provided there are no unusual aspects to the structure. Legal fees are not included in this amount.
Costs can vary, but approximately EUR620 provided there are no unusual aspects to the structure. Legal fees are not included in this amount.
Costs of the initial admission fee vary (between EUR6,000 and EUR2,500,000 depending on the size and the Euronext markets), plus set-up costs of around EUR620, provided there are no unusual aspects to the structure. The standard annual fee in charges per annum is EUR6,000 in Euronext Access (between EUR20,000 and EUR280,000 on other Euronext markets depending on the size). Legal fees are not included in this amount.
Last modified 13 Mar 2025
An SCI benefits from a legal personality as from its registration with the Companies and Trade Register which usually takes two days/one week as from the submission of all the required documentation.
An SNC benefits from a legal personality as from its registration with the Companies and Trade Register which usually takes two days/one week as from the submission of all the required documentation.
An SARL, an SA or an SAS benefits from a legal personality as from its registration with the Companies and Trade Register which usually takes two days/one week as from the submission of all the required documentation.
An SCPI benefits from a legal personality as from its registration with the Companies and Trade Register which usually takes two days/one week as from the submission of all the required documentation. An SCPI is subject to checks by the French Financial Market Authority (Autorité des Marchés Financiers – AMF) and the satisfaction of its requirements prior to the public offering.
An SIIC status is a special arrangement provided by a French law passed in 2002 giving tax advantages to public listed companies. Any listed company can become a SIIC if it complies with certain conditions. The duration for the registration will be the same as for the SA or the SCA (two days/one approximatively).
Last modified 13 Mar 2025
The company is managed by at least one general manager who may be an individual or a legal entity appointed in the by-laws (a statutory manager) or by the shareholders.
The general manager can be a shareholder or a third party.
No statutory auditor has to be appointed at the time of the incorporation of the SCI. The appointment of a statutory auditor may become compulsory provided that certain thresholds are reached, and the company has an economic activity.
The partnership is managed by at least one general manager who may be an individual or a legal entity appointed in the by-laws (a statutory manager) or by the shareholders.
The general manager can be a shareholder or a third party.
No statutory auditor has to be appointed at the time of the incorporation of the partnership. The appointment of a statutory auditor may become compulsory provided that certain thresholds are reached and / or depending on whether or not the partnership belongs to a wider group.
The company is managed by at least one individual general manager who can be named in the by-laws (a statutory manager) or properly appointed subsequently. Additional general managers can also be named in the by-laws (statutory managers) or appointed by a decision of the shareholders. Only individuals can be appointed as manager. The general manager can be a shareholder or a third party.
No statutory auditor has to be appointed at the time of the incorporation of the company. The appointment of a statutory auditor may become compulsory provided that certain thresholds are reached and / or depending on whether or not the SARL belongs to a wider group.
There are two possible structures:
The board of directors must be composed of between three and eighteen members appointed through the by-laws when the company is set up, and subsequently by the shareholders. The chairman of the board of directors is appointed by the board, amongst its members. The board must also appoint a general manager to lead the management of the company.
A single individual can be both chairman (président du conseil d'administration) and general manager (directeur general).
At the request of the general manager, the board of directors can appoint up to five deputy general managers to assist the general manager in the management of the company.
The chairman of the board, as well as the general manager and deputy executives must be individuals.
The executive board typically has between two and five members, all individuals. But should the company be listed on a French stock market this number may be increased to seven.
If the share capital of the company is less than EUR150,000, the executive board can be replaced by a single general manager. Members of the executive board are not required to be shareholders of the company. The members and the president of the executive board are appointed by the supervisory board. The executive board manages the company.
The supervisory board must contain at least three but no more than eighteen members. These members are not required to be shareholders of the company, and they can be employed by the company. Members of the supervisory board cannot be members of the executive board. Members of the supervisory board are appointed through the by-laws when the company is set up, and thereafter by the shareholders. The supervisory board appoints amongst its members, a chairman and a deputy chairman which must be individuals.
The supervisory board supervises the executive board.
No statutory auditor has to be appointed at the time of the incorporation of the SA. The appointment of a statutory auditor is compulsory when the company is listed on the stock market. For non-listed companies, the appointment of an auditor may become compulsory provided that certain thresholds are reached and / or depending on whether or not the company belongs to a wider group.
Considerable flexibility on corporate governance can be granted in the by-laws. The company is managed by a president, who can be either an individual or a legal entity. The by-laws can provide for the president to be assisted by one or more general manager, or by one or more deputy general manager, and can also provide for the appointment of a joint management body.
No statutory auditor has to be appointed at the time of the incorporation of the SAS. The appointment of a statutory auditor may become compulsory provided that certain thresholds are reached and / or depending on whether or not the company belongs to a wider group.
An SCPI is managed by a management company which may be incorporated in any legal form, provided its articles of association comply with applicable laws and regulations, and its accounts are subject to a statutory audit. The minimum share capital of the management company is EUR125,000.
The management company must notably:
The management company is assisted by the supervisory board of the SCPI comprised of at least seven shareholders who are appointed at a shareholders' meeting.
The shareholders of the SCPI must appoint one or more statutory auditors. A valuation of the properties must be carried out by an external valuation expert.
The governance of the SIIC will be either that of an SA or an SCA depending on the corporate form that the SIIC will have. Usual rules of listed companies will apply.
The shareholders of the SIIC must appoint one or more statutory auditors as required for an SA or SCA as the case may be.
Last modified 13 Mar 2025
EUR12,000 plus the cost of statutory auditors (EUR10,000/20,000), if applicable.
EUR12,000 plus the cost of statutory auditors (EUR10,000/20,000), if applicable.
EUR12,000 plus the cost of statutory auditors (EUR10,000/20,000), if applicable.
EUR20,000 plus the cost of statutory auditors (EUR20,000/25,000), if applicable.
EUR20,000 plus the cost of statutory auditors (EUR20,000/25,000), if applicable.
Usually around EUR20,000 per year plus the cost of statutory auditors (EUR20,000/25,000).
Last modified 13 Mar 2025
As a general rule, an SCI is not subject to tax unless it opts to be subject to corporate income tax or unless it carries out a commercial activity. An SCI remains a pass-through entity even though it carries out an ancillary commercial activity, provided that the income received pursuant to such commercial activity does not exceed 10% of the total income of the SCI, including taxes.
Nevertheless, the SCI is not fully transparent for French tax purposes since its taxable profit is computed at its level before being taxed in the hands of its shareholders (each shareholder being taxable on its prorata share in the profits derived by the SCI).
Moreover, the taxable profits of an SCI are computed in practice in accordance with the tax provisions applicable to its shareholders as they appear at the end of the SCI's financial year (i.e. 31 December of each year). For instance, the portion of the SCI's profits attributable to corporate shareholders as at 31 December of each year, is computed in accordance with the tax provisions applicable to corporate income tax.
The rules applicable to an SNC are similar to those applying to an SCI except that in contrast to an SCI, an SNC keeps its pass-through tax status even if it carries on a commercial activity.
Taxation of current income in France
Corporate income tax is payable at the standard rate of 25%. A 3.3% social contribution applies to companies with a turnover exceeding EUR7,63 million and whose corporate income tax exceeds EUR763,000 resulting in a 25.83% effective tax rate.
Below is an overview of applicable rates of corporate income tax for the coming fiscal years (excluding the 3.3% social contribution to corporate income tax).
|
Type of company |
Turnover (EUR) |
Taxable income (EUR) |
FY as from |
|
|
2022 |
2023 |
|||
|
Standard company
|
Non applicable |
Non applicable
|
25% |
25% |
|
Small or medium company(1) |
T ≤ 10 M |
0 to 38,120 |
15% |
15% |
|
38,121 to 42,500
|
25% |
|||
|
> 42,500 |
25% |
|||
|
10 M < T ≤ 50 M |
Non applicable |
25 % |
25 % |
|
(1) Provided that the conditions to benefit from the reduced rate provided for in Article 219, I-b of the French General Tax code are met.
The Finance Law for 2025 introduced an exceptional (temporary) contribution on the profits of large companies with a turnover in France of at least 1 billion euros for the financial year closed from 31 December 2025, or the previous financial year. The contribution is based on the average corporate tax due for the financial year closed from 31 December 2025, and the previous financial year. The rate is set at 20.6% for companies with a turnover between EUR 1 billion and EUR 3 billion for the financial year closed from 31 December 2025, or previous financial year, and at 41.2% for companies with a turnover of EUR 3 billion or more.
Taxation of distributions of current income to investors
Resident
Individuals: The French Finance Law for 2018 introduced a flat tax (PFU) applicable to capital gains, interests and dividends income. The rate for the PFU is set to 30% (12.8% of individual income tax and 17.2% of social contributions) and applies to dividends distributed as from 1 January 2018.
Previous to the introduction of the PFU, dividends were subject to French individual income tax at a progressive rate, after a flat-rate rebate of 40%. As from 1 January 2018, individual taxpayers may still elect for dividends to be taxed to the progressive income tax rate. However, please note that:
Companies: Dividends are subject to corporate income tax at the standard rate of 25% (or more if additional contributions apply - effective rate of 25.83% with the 3.3% social contribution).
Where a holding of at least 5% in the subsidiary has been held for at least two years or where the parent company commits to a two-year holding period, dividends benefit from the French Parent-Subsidiary regime, whereby dividends are 95% tax-exempt, resulting in a 1.25% effective tax rate (not including the 3.3% social contribution to corporate income tax which may apply).
In addition, distributions made between companies which belong to a same French tax consolidated group and distributions received by a member (French resident company or French permanent establishment) of a French tax consolidated group from EU or EEA qualifying subsidiaries held at 95% or more and fulfilling the criteria for tax consolidation (other than being a French tax resident) are 99% tax-exempt resulting in an effective 0.25% taxation (not including the 3.3% social contribution to corporate income tax which may apply).
The Parent-Subsidiary regime does not apply to dividends received from real estate companies whose shares are shown in the parent company's balance sheet as current assets (stock) as it is carrying on a real estate agency business (marchand de biens).
Dividends paid to a transparent entity by a company which is subject to corporate tax are declared at the level of the entity but taxed at the level of the shareholder.
Non-resident
Individuals: Dividend distributions to individuals who have their residence outside of France are subject to a final 12.8% withholding tax (aligned to the PFU rate), unless a lower rate is provided for by a tax treaty. The rate is 75% for dividends paid into a bank account located in a Non-Cooperative State or paid or accrued to persons established or domiciled in such a Non-Cooperative State.
Companies: Dividends arising in France distributed to non-resident shareholders are subject to a final withholding tax at the rate of 25%, unless a treaty provides for a lower rate.
The withholding tax is reduced to nil for dividends paid by a French resident company to (i) a qualifying EU parent company if the parent company has been holding at least a 5% participation in the French subsidiary for at least two years or commits to a two-year holding period (ii) or to certain qualifying foreign UCIs under certain conditions. The rate is 75% for dividends paid on a bank account located in a Non-Cooperative State or paid or accrued to persons established or domiciled in such a Non-Cooperative State.
Taxation of capital gains
Individuals: capital gain realized on the disposal of real estate assets held directly or through a pass-through entity (ie an SCI) by an individual, resident or non-resident, is subject to a 19% tax plus 17.20% social contributions (subject to the provisions of tax treaties).
Furthermore, a progressive 2% to 6% tax applies on real estate capital gains on sales of property. This tax applies indifferently on real estate rights or assets other than developable lands.
Allowances increasing with the holding period can be deducted from the taxable gain, leading to a full exemption of individual income tax after 22 years of holding and of social contributions after 30 years of holding.
Companies: capital gains realized on a disposal of real estate assets located in France are subject to corporate income tax at the standard rate (i.e. 25%).
Capital gains realized on a disposal of a qualifying participating interest, i.e. where shares represent at least a 5% interest in the subsidiary and have been held for more than two years, are exempt from corporate income tax up to 88%, resulting in a 3% maximum effective tax rate (not including the 3.3% social contribution to corporate income tax which may apply).
The participation exemption regime does not apply to gains arising from the disposal of shares in a real estate company (i.e. a company where more than 50% of the assets consist of real property or real property rights, with the exception of real property used for the operation of the company’s business). Capital gains on a disposal of shares in real estate companies are subject to corporate income tax at the standard rate, or at a reduced 19% rate where the real estate company is publicly listed.
As above for an SARL (société à responsabilité limitée) – limited liability company.
As above for an SARL (société à responsabilité limitée) – limited liability company.
Taxation of current income in France
As a transparent entity, the SCPI's profits are taxed at the level of the shareholders.
Taxation of distributions of current income to investors
Income is distributed to investors and taxed at the level of the individual investor.
Taxation of capital gains
As above for an SARL (société à responsabilité limitée) – limited liability company.
Sale of equity
As above for an SARL (société à responsabilité limitée) – limited liability company.
Taxation of current income in France: The SIIC and its nominated subsidiaries (which must have the same business purpose and be at least 95% owned, directly or indirectly) are exempt from tax on renting or subletting real estate under finance lease agreements (lease agreements including an option for the tenant to buy the property at a fixed price during, or at the end of, the term), on capital gains arising from a disposal of real estate assets and on dividends received from SIIC subsidiaries, provided that at least:
Where a company, which is subject to standard corporate income tax, elects for the SIIC regime to apply, the election entails (i) taxation of all untaxed or deferred profits at the standard 25% corporate income tax rate and (ii) taxation of latent gains on real estate assets at a reduced 19% rate (note that the 3.3% social contribution is not applicable in the latter case).
Taxation of distributions of current income to investors
Resident
Individuals: The flat-tax rate at a 30% rate (12.8% of income tax and 17.20% of social contributions) is payable on 100% of the dividends received. Please note that if the individual opts for the progressive income tax rate, the 40% rebate is not available.
Companies: Dividends are subject to corporate income tax at the rate of 25%[1] (25.83% if the 3.3% contribution applies). The Parent-Subsidiary regime is only available for distributions made by the SIIC to its corporate shareholders when they are made out of taxable profits made by the SIIC and/or capital gains taxable at the 19% rate (but the Parent-Subsidiary does not apply to the distributions made out of the SIIC's tax exempt profit).
In addition, distributions made to a corporate shareholder that holds at least 10% of the SIIC's capital (directly or indirectly) trigger a 20% withholding tax in the hands of the distributing SIIC if such dividends are not subject to corporate income tax (or any equivalent outside of France - at the rate of 8.33%) in the hands of the French corporate shareholder. This tax only applies when dividends are distributed out of the tax exempt profit of the SIIC.
Non-resident
Dividends arising in France distributed to non-resident shareholders are subject to a final withholding tax at the rate of 25% for a legal entity and at the rate of 12.8% for individuals, unless a treaty provides for a lower rate to apply.
The 20% withholding tax at the level of the SIIC is applicable if the dividends are not subject to a minimum rate of corporate income tax in the country where the foreign corporate resident which holds at least 10% of the distributing SIIC is established (8.33%). This tax only applies when dividends are distributed out of the tax-exempt profit of the SIIC.
Taxation of capital gains
Capital gains arising from the disposal of real property or shares in SIIC subsidiaries (and certain other real property rights) are normally exempt from corporate income tax, provided that the company complies with distribution requirements related to the gains.
Other gains are taxed in the same way as for an SARL (société à responsabilité limitée) – limited liability company.
[1] The corporate income tax may vary depending on the turnover of the company. Please refer to the table above which is giving an overview of the applicable rate.
Last modified 13 Mar 2025
Does the concept of a 'permanent establishment' apply when a foreign person invests in real estate and, if so, how much does it cost to set up such a permanent establishment, how long does it take and what corporate governance requirements apply?
The concept is relevant. The fee for registration in the Companies and Trade Register is approximately EUR300. Setting up a permanent establishment will also involve additional costs. Registration takes approximately three weeks from the date the “guichet unique” receives all the relevant documents. However, from a tax perspective, mere ownership of real estate in France does not constitute a permanent establishment.
In France, when a foreign company invests directly in real estate without setting up a corporate vehicle or subsidiary in the country, the foreign company concerned is obliged to register in the Companies and Trade Register and to nominate an individual who is responsible for the company's business affairs in France.
The branch office must also file the accounts, translated into French, relating to the company and complete an annual tax return.
If the branch office conducts business that is subject to VAT, a form detailing the sales/turnover must be submitted to the tax authorities every month.
Last modified 13 Mar 2025