Monegasque SCI vs French SCI: Which Structure is Best for Real Estate Investment?
LEGISLATION
Acquiring property on the French Riviera or in Monaco is a strategic investment that can be optimized through the use of a Société Civile Immobilière (SCI), a type of real estate holding company. Choosing the right SCI structure can ease property management and inheritance planning while offering specific legal and tax benefits depending on the SCI’s jurisdiction. But what are the differences between a Monegasque SCI and a French SCI? Here’s an overview of their characteristics and advantages to help you make the best decision.
The French SCI: Flexibility and Adapted Taxation
Creation and Functioning
The French SCI is a legal structure that allows multiple individuals to jointly own and manage real estate. It is relatively easy to set up and provides great flexibility—ideal for investments among family members or business partners. It is governed by French law and must be registered with the local commercial court registry.
Advantages
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Attractive Tax Options: Partners can choose between income tax (IR) or corporate tax (IS), allowing them to tailor taxation according to their financial situation.
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Facilitated Inheritance Planning: Ownership through shares makes it easier to pass on assets, particularly via successive donations that benefit from tax allowances.
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Access to Financing: French SCIs usually benefit from better access to bank loans from French financial institutions.
Disadvantages
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Administrative Formalities: Managing a French SCI involves accounting and reporting obligations, which can be burdensome.
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Partner Liability: Each partner is liable for the company’s debts in proportion to their shareholding, which could be risky in case of financial trouble.
The Monegasque SCI: Prestigious and Protective Structure
Creation and Functioning
A Monegasque SCI is governed by the laws of the Principality of Monaco and has unique features that distinguish it from its French counterpart. Its formation requires governmental authorization and approval from the Monaco Economic Expansion Directorate.
Advantages
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Asset Protection: A Monegasque SCI shields real estate from French fiscal and legal systems, offering greater privacy to investors.
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No Capital Gains Tax: Monaco does not levy tax on real estate capital gains, a major benefit for investors seeking high returns.
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Legal Stability: Monaco’s legal system is known for its reliability, ensuring strong protection for property assets.
Disadvantages
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Strict Entry Requirements: Setting up a Monegasque SCI is more complex and subject to approval by the Monegasque government.
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Limited Access to Bank Financing: French banks may be reluctant to finance a Monegasque SCI due to the Principality’s distinct regulatory environment.
Which Structure is Right for Your Investment?
The choice between a French SCI and a Monegasque SCI depends on your investment goals and personal situation. If you’re looking for tax efficiency and strong asset protection—particularly for high-end acquisitions in Monaco—the Monegasque SCI is a compelling option. On the other hand, if you prefer a more flexible structure with easier access to financing and streamlined estate planning within France, the French SCI may be more suitable.
Whichever path you choose, expert advice is essential to maximize your investment. At Monty + Co Real Estate, we guide you every step of the way to ensure your property strategy is perfectly aligned with your ambitions—on the French Riviera and in Monaco.
