Taxation of an SCI under corporate income tax: The “administration ” cannot apply the rules specific to real estate income

Following a tax audit of an SCI that believed it fell under the partnership tax regime, theadministration notified the company of a tax assessment, finding that it engaged in commercial activity and should have paid corporate income tax.

Theadministration 's case was in fact based on several documents, such as warrants and leases, which mentioned the existence of a furnished rental. The company contested this by presenting statements from its former tenant and the manager of a real estate agency; however, these did not convince the court.

In order to reconstruct the company’s profit, the taxadministration had denied the deduction of electricity and heating expenses on the grounds that it was impossible to determine whether these expenses were the responsibility of the landlord or the tenant.

It had also denied the deduction of interest on a loan on the grounds that the company had not provided evidence that the funds hadbeen “used to finance the maintenance, acquisition, construction, expansion, repair, or improvement of the furnished units owned by the company.”

The Court will, however, point out that once theadministration . determines that the company engages in a commercial activity and is subject to corporate income tax, the rules applicable to real estate income cannot be applied to it.

Consequently, the company was not required to prove, in order to reduce its heating and electricity costs, that it had been unable to recover those costs from the tenant, as provided for in Article 31 of the General Tax Code applicable to the taxation of real estate income.

Similarly, the French Tax Authority (administration ) could not deny the deduction of interest on the grounds that it might be used to finance items listed in Article 31 of the General Tax Code.

The tax assessment is therefore partially reversed.

CAA Marseille, Sept. 18, 2026, No. 25MA00367

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