PROPERTY INVESTMENT COMPANY IN LUXEMBOURG (LUXEMBOURG SCI)
A Société Civile Immobilière (SCI) in Luxembourg is a civil company designed for holding and managing real estate assets. It is a favored vehicle for estate planning, property management, and collective ownership. The SCI’s relatively straightforward formation process and its flexible structure make it an appealing choice for local and international investors alike.
Establishing a Luxembourg SCI
An SCI can be established through:
- A private Deed: contract signed privately between the partners without the involvement of a notary.
- A notarial Deed: formal act executed before a notary, providing additional legal security.
After formation, the SCI must be:
- Registered with the Luxembourg Business Register (LBR).
- Published in the Recueil Électronique des Sociétés et Associations (RESA).
Upon registration, the SCI acquires legal personality, distinct from its associates.
Share capital and partners
In a Luxembourg SCI, there is no statutory minimum share capital. Partners can contribute cash, assets in kind (including real estate).
An SCI requires a minimum of two partners, who can be individuals or legal entities, regardless of nationality or residence. It is important to be aware that, in an SCI, partners are jointly and severally liable for any debts, meaning each individual can be held responsible for the entirety of the company’s obligations.
Company management
Management of an SCI is entrusted to one or more administrators. This term is critical because calling the manager a “gérant” is not accurate in the context of a civil company. The administrators’ powers and responsibilities should be set out clearly in the company’s incorporation deed.
Taxation
Under Luxembourg law, an SCI is deemed fiscally transparent. It does not pay corporate income tax itself; instead, income is determined at the company level and subsequently allocated to the partners, who then declare it on their personal tax returns. If, however, an SCI engages in commercial activities beyond pure real estate holding, it can lose its civil status and become subject to taxation.
Summary
A Luxembourg SCI offers a flexible structure for real estate ownership and management, with benefits such as the absence of a minimum capital requirement and fiscal transparency.
However, partners should be informed of their unlimited liability and ensure the company's activities remain civil in nature to maintain its favorable tax status. For international real estate investments, particularly in jurisdictions like France, investors might consider other structures that offer limited liability.
