# SCI Question - What contracts, if any, should be in the SCI's name?



## JapanAmerica (Jul 27, 2021)

We will be closing on a house in France next month and are forming an SCI to hold it. We are coming from Japan, which does not recognize joint property, so we hold everything separately and the SCI is a good way of dealing with our particular situation. I wish we didn't need it because - who needs more paperwork? But, in any event, one question I have is whether things like the utilities contracts, contracts for some renovation work we are doing, etc. should be in the SCI's name rather than our individual names. I haven't got a good answer from the lawyer we are working with, so I thought I would ask the folks here - I've seen other very helpful threads regarding SCIs, but not this particular question. We do not plan to rent the house, we are just going to live in it.

I'm sure I'll be back with other questions as the move date comes closer - this forum is an amazing resource.


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## Lalla (May 12, 2021)

Hi, I looked into setting up an SCI a while back and I think this article gives the answer - it says any income or expense must be managed through a bank account in the name of the company, I assume that includes utility bills.



https://www.angloinfo.com/how-to/france/housing/buying-property/soci-t-civile-immobili-re


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## dpdapper (Apr 18, 2013)

Lalla said:


> Hi, I looked into setting up an SCI a while back and I think this article gives the answer - it says any income or expense must be managed through a bank account in the name of the company, I assume that includes utility bills.
> 
> 
> 
> https://www.angloinfo.com/how-to/france/housing/buying-property/soci-t-civile-immobili-re


I think the need to have utility bills and the like in the name of the SCI really only matters if there is also income to the SCI, e.g., if you are renting it. Then you would need to run all the expenses through the SCI to figure out your net income. But if you are merely holding your residence in the SCI to deal with inheritance issues, or in the OP’s case to divide ownership, I’m not sure it matters.


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## BackinFrance (Nov 26, 2020)

dpdapper said:


> I think the need to have utility bills and the like in the name of the SCI really only matters if there is also income to the SCI, e.g., if you are renting it. Then you would need to run all the expenses through the SCI to figure out your net income. But if you are merely holding your residence in the SCI to deal with inheritance issues, or in the OP’s case to divide ownership, I’m not sure it matters.


Well perhaps you can find a link to support that view, which I suspect is just a view and incorrect. People I know who do this (they are French) have opted to have all their bills in the name of the SCI, which does deprive them of some potential advantages but their view is that it is the only way to comply with all SCI requirements.


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## Lalla (May 12, 2021)

BackinFrance said:


> Well perhaps you can find a link to support that view, which I suspect is just a view and incorrect. People I know who do this (they are French) have opted to have all their bills in the name of the SCI, which does deprive them of some potential advantages but their view is that it is the only way to comply with all SCI requirements.


My understanding is that an SCI is not intended as a vehicle to dodge inheritance, even though it's used for that purpose, it's a business entity, and subject to relevant tax laws. So it matters who is identified as the bill payer and is a factor in auditing annual accounts. For me, all of that was too much of a faff in order to save a niece and nephew the 55% inheritance tax they'd have to pay if they wanted the house after I pop my clogs. (I understand there was a proposal to change inheritance tax rates at the elections, but have heard nothing since as to it being actioned).


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## JapanAmerica (Jul 27, 2021)

Thanks to all for your comments. I finally did get an answer from the lawyer as well, and he advised that contracts should be in the name of the SCI whenever possible.


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