French real estate company and Paraguay: what to do with your real estate assets when you expatriate in 2026?
You own one or more SCIs (Sociétés Civiles Immobilières - French real estate investment companies) in France. You hold rental properties, family assets, commercial premises, or a second home through this structure. And you are considering becoming a Paraguayan tax resident. The crucial question: what happens to your French SCI when you move to Paraguay?
This is one of the most frequent and misunderstood situations for French-speaking entrepreneurs moving abroad. The SCI is the preferred asset holding structure for French people (over 1.5 million active SCIs in France), and its post-departure management requires a thorough understanding of cross-tax implications. This guide details everything you need to know to optimize your situation in 2026.
Reminder: The French SCI and its taxation for a French resident
The two SCI regimes
A French SCI can be subject to two distinct tax regimes:
- SCI under Income Tax (IR - translucent): The SCI's income is taxed directly in the hands of the partners, at the progressive income tax scale (0-45%) + social contributions (17.2%). No corporate tax at the company level. This is the default regime.
- SCI under Corporate Tax (IS): Income is taxed at the company level (corporate tax 15% up to €42,500 in profit, 25% beyond). Distributions to partners are then subject to the PFU (30%) or the progressive income tax scale. Advantage: property depreciation is possible, but there is double taxation (corporate tax + dividends).
What a French resident SCI partner pays
For a French tax resident holding 100% of an SCI under IR that generates €30,000/year in net rental income:
- Income tax at the progressive scale: ~€8,500-€13,500 depending on the marginal tax bracket (30-45%)
- Social contributions (CSG/CRDS): ~€5,160 (17.2%)
- Total: ~€13,660-€18,660/year or 45-62% of rental income
For an SCI under IS that distributes €25,000 in dividends (after corporate tax paid by the SCI):
- PFU (flat tax 30%): €7,500
- Or progressive scale + 17.2% social contributions (often more expensive)
- Including corporate tax paid upstream: combined rate ~40-55%
What happens when you become a Paraguayan tax resident?
The SCI remains French
First essential point: your SCI remains a French entity, subject to French law, regardless of your personal place of residence. Your expatriation to Paraguay does not change the nationality of your SCI.
SCI under IR: transition to the non-resident regime
If your SCI is under IR (translucent), your rental income continues to be taxed in France, but under the regime applicable to non-residents:
- Minimum tax rate: 20% on net rental income up to €27,795/year (30% beyond). This rate is often lower than the progressive scale you paid as a resident.
- Social contributions: 17.2% — and here's the problem. In principle, non-residents outside the EEA/Switzerland continue to pay social contributions on their French rental income. Paraguay not being in the EEA, the 17.2% applies.
- Total effective rate: 37.2% (20% + 17.2%) on the first €27,795 net, 47.2% (30% + 17.2%) beyond.
This is an effective rate that remains heavy — certainly often lower than what you paid as a resident (if you were in the 41-45% bracket), but significantly higher than 0%.
SCI under IS: two levels of taxation
If your SCI is under IS:
- Level 1 - Corporate tax on profits: French corporate tax (15-25%) paid by the SCI. Unchanged by your expatriation.
- Level 2 - Dividend distribution: non-resident withholding tax on dividends. Without a France-Paraguay tax treaty: 30% withholding. If there is a treaty (not currently the case): reduced rate possible.
- Combined rate: Corporate tax 25% + 30% withholding on net distributed = effective rate ~47.5% on initial profit.
The comparative table
| Item | French Resident (SCI IR) | Paraguayan Resident (SCI IR) | Paraguayan Resident (SCI IS) |
|---|---|---|---|
| Net rental income (€30,000/year) | €30,000 | €30,000 | €30,000 (SCI profit) |
| Income Tax / Non-resident rate | ~€9,000-€13,500 (progressive scale 30-45%) | €6,000 (20% minimum) | Corporate Tax: €4,500-€7,500 (15-25%) |
| Social Contributions | €5,160 (17.2%) | €5,160 (17.2%) | €0 (Corporate Tax = no social contributions) |
| Non-resident dividend withholding tax | N/A | N/A | ~€6,750 (30% on €22,500 distributed) |
| Total French taxes | €14,160-€18,660 | €11,160 | €11,250-€14,250 |
| Effective rate | 47-62% | 37.2% | 37.5-47.5% |
Observation: Becoming a Paraguayan resident reduces the tax on your French rental income (transition from progressive scale to minimum 20% rate), but does not eliminate it. Your SCI income remains taxable in France — between 37% and 47% depending on the regime. This is better than as a resident, but far from the 0% territoriality on your truly foreign income.
The 4 strategies to optimize your SCI from Paraguay
Strategy 1: Keep the SCI and accept residual taxation
You keep your SCI and your French properties. You agree to pay 37-47% on French rental income. This strategy makes sense if:
- Your properties have strong capital gain potential (prime neighborhoods, urban development)
- Your rental income is modest compared to your total income (5-15% of turnover)
- You want to keep assets in France for family or sentimental reasons
- Your properties are in the process of mortgage repayment (bank leverage remains advantageous even with taxation)
Optimization within this strategy:
- Switch to SCI under IS if the 30% non-resident bracket applies (profits > €27,795)
- Maximize deductible expenses (works, loan interest, management fees)
- Accumulate profits in the SCI under IS without distributing (indefinite deferral of dividend taxation)
- Use profits to repay the mortgage or reinvest in new properties
Strategy 2: Sell properties and dissolve the SCI before departure
You sell your properties and liquidate the SCI before leaving. The proceeds of sale are reinvested in Paraguay (local real estate, Paraguayan real estate investment) or elsewhere.
Tax implications of the sale:
- SCI under IR: real estate capital gain taxed at 19% + social contributions 17.2% = 36.2%. Allowance for length of ownership: full income tax exemption after 22 years, social contributions after 30 years.
- SCI under IS: capital gain taxed under corporate tax (25%) without length of ownership allowance (capital gain calculated on net book value after depreciation = broader base).
- Liquidation bonus SCI: taxed as a dividend distribution (PFU 30% or progressive scale + social contributions)
This strategy is recommended if:
- Your properties have been held for > 22 years (quasi-total exemption for SCI IR)
- You want to radically simplify your tax situation post-departure
- You want to reinvest funds in Paraguayan real estate (potentially higher yields at lower taxation)
- Rental income represents a significant portion of your income and residual taxation weighs heavily on you
Strategy 3: Donate SCI shares before departure
You transfer SCI shares to your children or heirs before leaving. The donation of SCI shares benefits from:
- Classic allowances: €100,000 per parent per child (renewable every 15 years)
- A discount on the value of shares (15-25% SCI discount generally accepted by the administration)
- A purge of capital gains (donates receive shares at the donation value = new acquisition basis)
This strategy is relevant if:
- You have adult children who remain in France
- Your SCI assets are < €400,000 (2 parents × 2 children × €100,000 = €400,000 tax-free)
- You want to transfer before expatriation to purge capital gains and simplify your situation
- Your children want to keep the family real estate assets
See our dedicated article (coming soon in block C) on international donation and transmission.
Strategy 4: Transform the SCI into an international holding company
Advanced strategy for large estates: you transform or restructure your SCI so that it becomes part of an international setup:
- Contribution of SCI shares to a Luxembourg, Irish, or Paraguayan holding company
- The holding company owns the French SCI
- Dividends go up to the holding company (EU parent-subsidiary directive if EU holding company: exemption from withholding tax)
- You receive income via the holding company, optimizing the tax chain
This strategy is complex, costly (international tax lawyers: €15,000-€50,000 for setup), and only justified for SCI assets > €1-2 million. For most profiles, strategies 1, 2, or 3 are more suitable.
The key question: should you keep or sell before leaving?
Keep if:
- Your properties are in the full mortgage repayment phase (bank leverage still advantageous)
- Rental income is a supplement and not your main income
- You have a trusted manager in France (agency, syndicate, family)
- The asset value of the properties is increasing strongly
- You are considering a return to France in the medium term (10-15 years)
- Your properties are located in areas with very high rental demand (Paris, Lyon, Bordeaux)
Sell if:
- Your properties have been held for > 22 years (capital gain exemption for SCI under IR)
- Net rental income is low after expenses and residual taxes
- You want to simplify your situation (no more French declarations, no more remote management)
- You want to reinvest in Paraguay or elsewhere with better net returns
- Remote management is a source of stress and indirect costs
- You are not considering a return to France
Net yield comparison: French SCI vs. Paraguayan real estate
| Criterion | French SCI (non-resident PY) | Direct Real Estate Paraguay |
|---|---|---|
| Typical gross yield | 4-6% (major French cities) | 6-12% (Asunción premium neighborhoods) |
| Taxation on rents | 37.2-47.2% | 10% IRACIS (if local company) or 0% (if US LLC + certain setups) |
| Net yield after tax | 2.1-3.8% | 5.4-10.8% |
| Management | Remote (French agency, 6-8% of rents) | Local (direct management or local agency) |
| Potential capital gain | Variable (mature markets, 2-5%/year growth) | Strong (emerging markets, 5-15%/year growth) |
| Liquidity | Good (liquid French real estate market) | Decent (developing market) |
The net yield of Paraguayan real estate is 2-3x higher than that of a French SCI held by a non-resident. For every euro invested, your capital works 2-3 times harder in Paraguay than in France — a strong argument in favor of selling and reinvesting.
Practical management of the SCI from Paraguay
If you keep your SCI
- Rental management: entrust to a trusted real estate agency in France (fees 6-8% of rents including VAT)
- SCI accounting: French chartered accountant (€1,000-€3,000/year depending on complexity)
- Tax declarations: annual 2072 declaration (SCI) + 2042-NR (non-resident). Your chartered accountant manages this.
- General meeting: annual SCI general meeting. Can be done by proxy or video conference.
- Tax representative: if your SCI under IR exceeds certain thresholds, designation of a tax representative in France is possible (but not always mandatory for SCIs)
- Works management: local companies coordinated by your agency or a trusted project manager
- Insurance: maintenance of non-occupant owner insurance (PNO), multi-risk rental insurance
Remote management tools
- Rental management platforms: Rentila, ImmoFacile, Zelok for remote monitoring
- Agency communication: email, Zoom, WhatsApp
- Electronic signatures: for leases, quotes for works, contracts — DocuSign, Yousign
- Impots.gouv.fr: functional non-resident area for declarations and monitoring
- SCI bank account: maintenance of the account in France in the name of the SCI (no change, the SCI is French)
Specific pitfalls
The pitfall of available residence
If your SCI owns a property in France that you can use freely (even if you don't use it), the French tax authorities may consider that you have an "available residence" in France — a criterion for French tax residence (article 4 B CGI). Solutions:
- Put the property up for permanent rental (standard lease or furnished tourist rental)
- Sell the property before leaving
- Ensure the property is occupied by a third party and not "at your disposal"
- If occasional personal use: document the length of stay (< a few weeks/year)
The pitfall of the "shell" SCI
If you sell all the SCI's properties but keep the company active without dissolving it, declarative obligations persist (annual 2072 declaration, annual general meeting). Remember to properly dissolve the SCI if it no longer has an object. Dissolution cost: €1,000-€3,000 (legal formalities + legal publication).
The pitfall of works and charges
As a non-resident with SCI under IR, your deductible expenses remain the same: loan interest, maintenance and improvement works, management fees, insurance. But beware: enlargement or construction works are NOT deductible from rental income. Structure your works with your accountant to maximize deductions.
The pitfall of the tax on fair market value (3%)
Legal entities (including SCIs) that own real estate in France are subject to an annual tax of 3% on the fair market value of the properties. French SCIs are generally exempt if they are under IR and their partners are identified. But check with your accountant if your change of residence does not alter this exemption.
The pitfall of the mortgage
If your SCI has an ongoing mortgage, your French bank may consider your expatriation a reason for renegotiation or even early repayment. Before leaving:
- Check the clauses of your loan agreement (some loans require residence in France)
- Inform your bank (or not, depending on the clauses) and negotiate continuity
- If the loan requires a French domicile: evaluate the option of early repayment
The SCI and Paraguay: what are the tax interactions?
No France-Paraguay tax treaty
In the absence of a double taxation treaty between France and Paraguay:
- Your SCI income is taxed in France (French source): non-resident rate 20-30% + social contributions 17.2%
- This income is NOT taxed in Paraguay (foreign source = 0% by territoriality)
- No tax credit, no deduction — but no double taxation because Paraguay does not tax
If you reinvest in Paraguay
If you sell your SCI assets and reinvest in Paraguay:
- Paraguayan rental income is from a Paraguayan source → taxable in Paraguay at 10% IRACIS if via a local company
- Or can be structured via a US LLC depending on the setup
- Net return significantly higher than the net return of a French SCI after tax
Case studies
Case 1: SCI under IR with 2 rental apartments (net income €25,000/year)
| Item | French resident | Paraguayan resident (SCI retained) | Paraguayan resident (SCI sold, reinvested in PY) |
|---|---|---|---|
| Net rental income | €25,000 | €25,000 | €25,000 (PY rents, equivalent investment) |
| Income tax | ~€7,500-11,250 (30-45%) | €5,000 (20% non-resident) | €2,500 (10% IRACIS PY) |
| Social security contributions | €4,300 (17.2%) | €4,300 (17.2%) | €0 |
| Agency management fees | ~€2,000 | ~€2,000 | ~€1,500 (local PY agency) |
| Net remaining | ~€5,450-11,200 | ~€13,700 | ~€21,000 |
Reinvestment in Paraguay generates a net return 2-4x higher than a French SCI retained by a non-resident.
Case 2: SCI under IS with commercial premises (profit €60,000/year)
| Item | French resident | Paraguayan resident (SCI retained) |
|---|---|---|
| SCI corporate tax | ~€12,750 (15% + 25%) | ~€12,750 (unchanged) |
| Dividend distribution (€47,250 net of corporate tax) | PFU 30% = €14,175 | Non-resident withholding tax 30% = €14,175 |
| Total taxes | €26,925 (44.9%) | €26,925 (44.9%) |
For an SCI under IS, taxation is almost identical whether you are a French or Paraguayan resident (the 30% PFU is replaced by the 30% non-resident withholding tax). The advantage of expatriation is almost nil for this type of specific income. The strategy here: NOT to distribute dividends and accumulate profits in the SCI (indefinite tax deferral). Or sell and reinvest in Paraguay.
The optimal strategy according to your profile
| Profile | Recommended strategy |
|---|---|
| SCI IR, assets < 22 years old, rental income < €30,000 | Retain and manage remotely (acceptable residual taxation, credit leverage) |
| SCI IR, assets > 22 years old | Sell (capital gains tax exemption), reinvest in Paraguay |
| SCI IS, high-yield commercial premises | Retain without distributing, accumulate within the SCI |
| Family heritage SCI (second home) | Give to children or sell depending on family project |
| SCI > €1-2 million assets, succession issues | Restructure via holding + gift + complete inheritance strategy |
| SCI with ongoing loan < 10 years remaining | Retain until end of loan, then re-evaluate |
| SCI causing stress and complexity remotely | Sell, simplify, reinvest in Paraguay or diversified assets |
The SCI management ecosystem from Paraguay
- Paraguayan tax residency (from €1,400)
- French chartered accountant specialized in non-resident SCIs (2072, 2042-NR declarations)
- Trusted real estate agency in France (remote rental management)
- International mobility tax specialist (optimal structuring before and after departure)
- French notary (if selling or gifting)
- French bank (maintaining SCI account)
- Paraguayan real estate advisor (if reinvesting in Paraguay)
Conclusion
The French SCI is the most frequent and most poorly managed asset for Francophone entrepreneurs who expatriate. Unlike your business income (consulting, freelance, SaaS) which becomes 0% in Paraguay, your SCI income remains taxable in France at 37-47%. This is not prohibitive — it is often better than the resident rate — but it is a deduction that remains.
The key is to choose the right strategy before leaving: retain and manage remotely (acceptable if modest income), sell and reinvest in Paraguay (optimal if assets > 22 years old or low return), give to children (if family assets and transmission issues), or restructure via a holding company (if large assets).
The absolute trap to avoid: leaving a property "at your disposal" in France which could reclassify your tax residency. And the calculation to make: compare the net return of your French SCI (2-4% after non-resident taxes) with the net return of Paraguayan real estate (5-11%). The arbitration is often in favor of selling and reinvesting.
In all cases, anticipation and structuring are essential. Consult an international mobility tax specialist 12-18 months before your departure to optimize your SCI situation.
Do you have a French SCI and are you considering Paraguay? Contact our team for a personalized analysis of your asset situation: retention vs. sale, non-resident tax optimization, Paraguayan real estate reinvestment, coordination with your French accountant and notary. Your assets deserve the right strategy.