French SCIs Held by Belgian Residents: Bercy Hides Behind “Legal” Double Taxation and Abandons Taxpayers
Ministerial Response from Anglade, No. 5948, Official Journal of the National Assembly, April 21, 2026, p. 3390
The response provided by the Minister of the Economy on April 21, 2026, to the written question from Member of Parliament Pieyre-Alexandre Anglade regarding the double taxation of income from French SCIs held by Belgian residents illustrates, once again, the tendency of the French tax authorities to favor a narrowly formalistic interpretation of their treaty obligations, to the detriment of the economic coherence sought by taxpayers and their advisors.
The Situation: A Textbook Case of Treaty Friction
The mechanism is familiar to any practitioner working in the Franco-Belgian tax corridor. A French SCI—transparent within the meaning of Article 8 of the French General Tax Code—receives rental income from French sources. These revenues are taxed in France in the hands of the Belgian resident partners, according to their share, and retain their tax classification as property income. When the SCI (Société Civile Immobilière) then distributes the corresponding amounts to its partners, no withholding tax is applied in France, since the company is not subject to corporate income tax.
On the Belgian side, however, the classification differs radically. The Belgian tax authorities—supported by the case law of the Belgian Court of Cassation—analyze the SCI as an entity with a separate legal personality, whose distributions constitute dividends under Belgian domestic law. These dividends are then subject to withholding tax at a rate of 30%.
The Belgian taxpayer thus incurs two successive levies on the same economic flow: French tax on property income, then Belgian tax on the dividend. The Franco-Belgian convention of June 9, 2023—which replaced the 1964 convention—did not resolve this issue.
The Minister’s Reasoning: A Technically Accurate but Economically Unsound Interpretation
The minister’s response rests on a distinction that must be taken seriously: there is, in this case, no “legal” double taxation. The reasoning unfolds in two stages.
First, the SCI’s rental profits are taxed in France in the hands of the partners; these same profits are not taxed in Belgium. Second, the distributions made by the SCI are not subject to withholding tax in France and are taxed only in Belgium, as dividends. Two tax bases, two levies, two states: no legal double taxation in the strict sense, since neither state taxes the same income twice under the same classification.
The reasoning is technically defensible. However, it is economically untenable.
Ultimately, the Belgian taxpayer experiences a single economic flow—the enjoyment of rental income generated by the French property—which is successively subject to French property income tax (at the progressive rate, including social security contributions where applicable) and Belgian withholding tax of 30%. Whether this situation is described as legal double taxation, economic double taxation, or simply “overtaxation,” it results in a prohibitive overall tax burden, structurally unfavorable to French real estate investment by Belgian residents.
The blind spot in the response: silence on the cited precedents
MP Anglade had, however, taken care to cite two particularly illuminating treaty references, which the ministerial response completely omits.
The Luxembourg precedent. The Franco-Luxembourg treaty of March 20, 2018, expressly addressed the issue of fiscally transparent or semi-transparent entities. Its protocol recognizes the possibility for partners of a partnership considered fiscally transparent in France to invoke the treaty provisions to neutralize double taxation. This solution demonstrates that appropriate treaty drafting can resolve the classification conflict.
The Swiss precedent. In a recent decision, the Swiss Federal Supreme Court held that French SCIs (French real estate investment companies) could not be classified as fiscally transparent under Swiss law, but nevertheless applied the Franco-Swiss treaty in such a way as to neutralize the risk of double taxation. Swiss case law thus provides an illustration of what a teleological interpretation of the convention can achieve, even in the absence of an express provision.
On these two points, the ministerial response is silent. The minister merely notes the absence of double taxation in the strict sense and concludes, without any real justification, that “it does not appear that a treaty solution is under consideration.” The rejection is terse, and the refusal to engage in a treaty revision is striking in its nonchalance, especially since the member of parliament proposed a pragmatic approach: linking this negotiation to those already announced regarding the introduction of a teleworking quota in the convention.
A missed opportunity, in a context of redefining bilateral relations
The argument of expediency should nevertheless have carried weight. The Franco-Belgian convention, which entered into force on January 1, 2025, remains a recent text, and not all the difficulties of its application were anticipated. The upcoming negotiations on cross-border teleworking—a major issue for tens of thousands of workers—offered a natural opportunity to address the issue of French real estate investment companies (SCIs) without incurring additional diplomatic costs.
Added to this is an economic context that makes the issue all the more sensitive. The French community residing in Belgium—whether family, entrepreneurial, or focused on wealth management—holds a significant portion of the rental property stock in France through SCI-type structures. The same observation applies, in reverse, to Belgian investors in France. Maintaining a tax environment that discourages this category of investors is, at the very least, a questionable political choice.
What are the prospects for practitioners?
With current legislation, several avenues deserve consideration on a case-by-case basis, although none is entirely satisfactory:
The option for corporate income tax (IS), available to SCIs under Article 206, 3 of the French General Tax Code (CGI), transforms the SCI into a tax-opaque entity. It eliminates the classification discrepancy—the SCI then clearly becomes a dividend issuer on both sides of the border—and allows for the application of the convention under more transparent conditions. However, it has the effect of subjecting real estate capital gains to the business capital gains tax regime, which often represents a prohibitive initial cost when the property has been held for a long time and is highly valued.
Direct ownership, without the intermediary of an SCI, inherently avoids the classification friction. However, it requires weighing the tax simplicity against the structure’s civil utility (transfer of ownership, organization of family co-ownership, division of ownership rights, etc.).
The use of alternative structures—family SARL, SCPI, OPCI—can, in certain scenarios, offer more effective cross-border solutions, but at the cost of greater complexity and implementation costs.
None of these approaches eliminates the need for a thorough analysis, to be conducted in consultation with a Belgian advisor who understands the interplay between withholding tax on movable property and the tax treaty.
Conclusion
From a strictly legal standpoint, Anglade’s response is defensible. However, from a treaty policy perspective, it is disappointing. It illustrates a minimalist approach to bilateral tax relations, where the absence of double taxation in the narrow sense is sufficient to close the debate, without considering the economic realities faced by taxpayers.
For Belgian residents who own—or plan to own—French real estate assets through a French SCI (Société Civile Immobilière), tax security will not, in the short term, come from renegotiating the tax treaty. It will depend on rigorous estate planning, conducted beforehand, that takes into account all the consequences—tax, civil, and inheritance-related—of the chosen structure.