CRA rules that a French non-trading property company (SCI) is not a corporation

A Société Civile Immobilière (SCI), which was subject to Articles 1832 and following of the French Civil Code, was formed to acquire and rent an immovable. Its capital was contributed by Partner 1 and Partner 2, both of whom resided in Canada. The immovable was managed by a manager designated by the partners, in this case, Partner 1.

For French legal purposes, the SCI was considered a legal person and had the capacity to contract with third parties. Its patrimony was liable for the debts it contracted. The responsibility of its partners for these debts was unlimited, but proportionate to the capital held by them in the SCI.

For French tax purposes, the SCI was not subject to French corporate tax. Instead, its income and losses were allocated to the two Partners in proportion to their interests.

CRA ruled that the SCI will not be considered a corporation for purposes of the Act. It did not go the next step of ruling that it would be treated as a partnership rather than a co-ownership arrangement.

Neal Armstrong. Summary of 2023 Ruling 2023-0962051R3 F under s. 248(1) – corporation.