France is a land of art and culture, but also of real estate. Who hasn't dreamed of investing in a beautiful stone building in the South of France, or a chic apartment on the Croisette? The problem? Financing. But there is a solution, a financial package that could well change all that: the combination of a holding company and a non-trading property company (SCI). In this article, we take a look at the definition of these two entities, their promising marriage and an example of a concrete financial package.
What is a holding company?
A holding company is not a legal form, but a function. It may be a SASU, a SARL or a EURL. The main role of the holding company is to hold shares in other companies. For example, it may control a SAS specialized in consulting, another in bakery, or a restaurant. The diversity of business sectors is limitless. And the icing on the cake? The holding company can also own SCIs.
What is an SCI?
The non-trading property company (SCI) is a structure whose corporate purpose is acquire real estate or real estate assets to manage them and generate rental or income from them. It must be owned by at least two partners, who may be natural or legal persons. An SCI can own any type of real estate: a house, an apartment, a building, or even the usufruct of a property.
A promising marriage between a holding company and an SCI
There are many advantages to combining a holding company and an SCI. The first is undoubtedly the possibility for the holding company to take a majority stake in the SCI. This enables the holding company to benefit from the tax advantages associated with holding shares in a SCI, while retaining control over the management of the real estate assets.
How does the financial package work?
Let's take the example of an SAS director who wishes to acquire a property via a SCI. To finance this purchase, he might consider setting up a holding company. The SAS could then transfer money to the holding company, which would only be taxed at 5% on these dividends, as it benefits from the parent-daughter regime. With the remaining funds, the holding company could then invest in the SCI. If the rents received by the SCI are not sufficient to repay the mortgage, the holding company could make up the difference.
The cost of this financial package
The cost of setting up a holding company and an SCI depends on the type of arrangement. To set up a simple holding company, you should expect to pay around 470 euros, including the accountant's fees. For an arrangement involving the transfer of shares, the fees increase, as do the registration fees. Lastly, for a structure involving the contribution of shares, the cost is higher, due to the need for a contribution auditor.
What do you think?
Investing in real estate via a holding company or SCI is an attractive solution for company directors. Not only does it offer financial advantages, but it also enables you to diversify your sources of income and optimize your tax situation. However, this type of set-up requires a sound knowledge of corporate and tax law. It is therefore advisable to call on the services of a chartered accountant to support you in this process.