How is each type of corporate vehicle used to invest in real estate taxed?
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 at the level of its shareholders (each shareholder being taxable on its prorate 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 at the end of the SCI's financial year (ie 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 2025 Finance Law introduced an exceptional contribution to the profits of large companies with at least EUR 1 billion in turnover. Initially applicable to financial years ending on or after 31 December 2025, this contribution — calculated on the average corporate tax due — The 2026 Finance Law extended it. However, its scope is narrowed: in 2026, only companies with a turnover of at least EUR 1.5 billion will be subject to this surtax, with the threshold assessed solely on the 2026 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. However, the 2026 Social Security Financing Law increased the CSG rate applicable to dividends by 1.4%, raising the total social contributions from 17.2% to 18.6%. The flat tax is therefore now set at 31.4%.
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 booked in the parent company's balance sheet as current assets (stock).
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 corporate 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 to a non-related entity 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: Since 2026, the flat-tax rate at a 31.4% rate (12.8% of income tax and 18.6% of social contributions) is payable on 100% of the dividends received and distributed out of the tax-exempt result of the SIIC entity. In this regard, the 2026 Social Security Financing Law increased the CSG rate applicable to dividends by 1.4%, raising the total social contributions from 17.2% to 18.6%. 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
Individuals: Since 2026, the flat-tax rate at a 31.4% rate (12.8% of income tax and 18.6% of social contributions) is payable on 100% of the dividends received and distributed out of the tax-exempt result of the SIIC entity. In this regard, the 2026 Social Security Financing Law increased the CSG rate applicable to dividends by 1.4%, raising the total social contributions from 17.2% to 18.6%. Please note that if the individual opts for the progressive income tax rate, the 40% rebate is not available.
[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.
