Owning Your Business Premises: SCI, Direct Ownership or Operating Company?

Quick answer. Three structures exist to hold your business premises: ownership by the operating company (simple, but heavy taxation on resale and real estate exposed to creditors); direct ownership by the manager (assets ring-fenced, capital-gains relief, but personal financing); or a dedicated SCI (civil property company) that leases the premises to the business under a commercial lease (protection and easier transmission, at the cost of extra management). The choice depends on three criteria: shielding the real estate from operational risk, the transmission horizon, and the group's tax regime.

For a manager, the operating premises quickly becomes a major asset. Three reasons make the choice decisive:

1. Appreciation. After a few years, many premises carry a latent capital gain, taxable on resale under rules that depend entirely on the structure chosen at the outset.
2. Transmission. Separating real estate from operations eases the sale of the business and the gradual gifting of the premises.
3. Protection. If the business runs into difficulty, real estate held within the operating company can be seized; held elsewhere, it is protected.

This choice is part of a broader wealth optimisation approach.

Structure 1 — Ownership by the operating company#

The company (SARL, SAS…) buys the premises and records them as a fixed asset.

• Strengths: simplicity (single set of accounts), no internal rent flows, financing eased by the asset.
• Weaknesses: the real estate is exposed to the company's creditors; on resale, the capital gain of a corporate-taxed company is taxed at the corporate rate without indexation relief, after depreciation is added back; selling the business carries the premises with it.

Structure 2 — Direct ownership by the manager#

The manager buys the premises personally and leases them to the company under a commercial lease.

• Strengths: the real estate is off the company's balance sheet, hence protected; the gain falls under the individuals' regime, with relief for holding period (see below); rent is deductible for the operator.
• Weaknesses: personal financing is often less favourable; on death, the premises fall into co-ownership among heirs; two tax streams to manage (rental income and operating profit).

Structure 3 — Ownership via a dedicated SCI#

An SCI holds the premises and leases them to the operating company. The SCI partners are often those of the business, or the manager.

• Strengths: real estate ring-fenced from risk; easier transmission (gifting of shares with a €100,000 allowance per parent per child every 15 years, possible discounts on shares); financing by the SCI repaid through rent; flexible tax regime (SCI under IS or IR); continuity on death.
• Weaknesses: setup and management costs (accounting, filings); reclassification risk if commercial activity; under IS, depreciation is added back, increasing the gain on sale.

Table 1 — Protection, taxation, transmission, costs#

Table 2 — Individuals' real-estate capital-gains relief (SCI under IR or direct ownership)#

In short, the gain is exempt from income tax after 22 years and from social contributions after 30 years. An SCI or company under IS gets none of this relief: the gain is taxed at the corporate rate, with depreciation added back.

1. Transmission horizon. Family transmission in 10-15 years → SCI (gifting shares, discounts). Sale to a third party in the medium term → SCI under IR or direct ownership (relief).
2. Tax regime of the business. IR activity → direct ownership is consistent. IS group seeking depreciation → SCI under IS (but a less favourable gain).
3. Risk profile. Debt or volatile activity → SCI (protection). Stable activity → direct ownership (lower costs).
4. Financing. Acceptable personal loan → direct ownership. Preference for borrowing carried by the structure → SCI.
5. Overall wealth. Significant personal wealth → SCI (clean separation, simpler succession).

Young business. The premises are not yet appreciated: lighter direct ownership keeps options open. A property SAS or an SCI is justified later.

Established latent gain (5-10 years). The SCI under IR becomes attractive to lock in relief eligibility and prepare transmission.

Family transmission. The SCI stands out: gradual gifting of shares, discounts, business continuity if a child takes over.

• Reclassification of the SCI as a trading company (hence under IS) if it carries on commercial activity (notably furnished rental): the IS election is in principle irrevocable.
• Latent gain in an SCI under IS: deducted depreciation is added back on resale, increasing the tax.
• Rent between SCI and business: it must be market-consistent and documented by a written lease, on pain of reassessment (abnormal rent). This is the most frequently audited point.
• Commercial lease: minimum 9-year term (3-6-9), triennial termination by the tenant, renewal right and eviction indemnity if refused. Careful drafting is essential.

As a chartered accountant registered with the Ordre des experts-comptables, we regularly advise managers on this choice. Recently, a construction manager had bought his premises directly within his IS-taxed SARL. After seven years, a sale arose: the building's latent gain, taxed at the corporate rate with no relief and depreciation added back, made the deal costlier, and the buyer inherited the premises with the business. Held from the start in an SCI under IR, the same building would have benefited from substantial holding-period relief, and the business could have been sold alone, the buyer leasing the premises.

The conclusion is consistent: the choice is never tax-neutral and is part of a 5-10 year strategy. A hasty initial orientation is expensive at the exit.

Hayot Expertise advice. If you have run a business for more than three years with premises, first quantify the latent gain, then model its taxation under the three structures. You will often find that an SCI creates an immediate transition cost but a real future saving where the horizon is transmission or resale. Our manager's real-estate taxation offering, led by a chartered accountant specialised in real estate, drives this analysis, alongside the firm's accountancy support.