The profits on development or purchase / resale operations, with or without works, are determined on the basis of the result for accounting purposes and subject to tax under the corporate form selected:
- Corporation Tax (CT) if the company is subject to such tax; or
- Not taxed at the level of the company itself, if the company is transparent for tax purposes, in which case the profit is taxed at the level of the shareholders according to their share in the company’s results. In general, this scenario covers cases of partnerships engaged in construction and sales (sociétés civiles de construction vente – SCCV) for construction-sale operations, as well as general partnerships (sociétés en nom collectif – SNC).
focus // pARTNERSHIPS ENGAGED IN CONSTRUCTION AND SALES OPERATIONS (SCCV)
The SCCV is a type of company frequently used for development operations because of the specific tax regime applicable.
In legal terms it is a partnership whose sole purpose is the construction of buildings for resale.
In tax terms, pursuant to Article 239 ter of the FTC, such companies benefit from a special tax regime.
As a reminder, partnerships are generally not subject to CT unless they opt for this regime (Structuration > Unregulated structures > Companies not liable to pay corporation tax). However, if they engage in commercial activities they lose their tax transparency and are automatically subject to CT.
ð Each partner is thus subject to tax in proportion to its share in the results of the SCCV.
This type of structure allows various operators to become involved in the same operation:
Obviously, for sole shareholders, the SCCV holds little interest, as the SNC regime is just as advantageous.
N.B. if a SCCV has acquired land but does not build on it and resells it “as is” (e.g. on account of a change of strategy), it would in this case be carrying on a commercial purchase / resale operation that would attract CT.