A couple hold the usufruit (usufruct, the right to use a property and receive its income) of all the shares in an SCI (société civile immobilière, a French property-holding company) that owns a building. For wealth tax, article 885 G of the French General Tax Code requires them to declare those shares at their full ownership value, with no discount for the division of ownership. Can they rely on the clause in the articles of association requiring the approval of all the shareholders for a transfer of shares? In a decision of 15 February 2023, the Commercial Chamber of the Cour de cassation (French supreme court for civil and commercial matters) held that this loss of liquidity cannot be ruled out merely because ownership is divided or because there is no joint ownership: the taxable value remains the price on a real market, having regard to the factual and legal condition of the assets.
The facts
Two spouses held the usufruct of all the shares in an SCI. The tax authority challenged the market value they had declared for two buildings, one of which belonged to the SCI. On 9 and 11 December 2011 and 2 July 2012, it sent them two tax reassessment notices for the ISF (impôt de solidarité sur la fortune, the French wealth tax then in force) for 2008 to 2011. After the departmental conciliation commission gave its opinion, two collection notices were issued on 12 March 2013. Their complaint partly rejected, the spouses went to court.
They sought a 30 % allowance on the value of the building held through the SCI, for lack of liquidity. The Nîmes Court of Appeal refused on 25 June 2020, on three grounds. Under article 885 G, property subject to a usufruct is included in the usufructuary’s assets at its full ownership value, so no allowance or discount could apply. The method for valuing joint-ownership rights was ruled out, as there was no indivision (joint ownership). Finally, while noting that the clause requiring the approval of all the shareholders “limits the liquidity of the property”, the court held that property with divided ownership is declared “without any allowance or discount for the division of ownership” (translated from the French).
The decision
The Cour de cassation quashed the decision (Cass. com., 15 February 2023, appeal no. 20-19.451, unreported), under articles 885 E and 885 S of the General Tax Code, as then applicable, and article 761 of the same code: “It follows from these texts that the value of the assets included in the ISF base consists of the price that could be obtained for them on a real market, having regard to their factual and legal condition.”
The Court of Appeal had ruled “on grounds relating to the absence of any joint ownership and to the fact that no allowance may be claimed for the division of ownership, which are unfit to rule out that a loss of market value of the property in dispute may result from the position of the bare owners, who do not hold it directly but through company shares whose transferability is limited by a clause requiring the approval of all the shareholders contained in the SCI’s articles of association”. The decision refers here to the “bare owners” although the spouses were usufructuaries; the reasoning turns on the way the property is held.
The quashing is for défaut de base légale (lack of legal basis): the Court of Appeal had not sufficiently justified its refusal. The Court therefore does not say that the discount is due, nor that it reaches 30 %, only that the grounds based on the ban on divided-ownership discounts and on the absence of joint ownership were not enough to rule it out. The Nîmes decision was also quashed on a procedural point unrelated to valuation; only the part of that decision concerning the 2011 ISF, which used a value of €210,000 for one of the buildings, stands. The case was sent back to the Montpellier Court of Appeal.
What this changes for valuation
Full ownership sets the base, not the method. Article 885 G says who declares and on what base, not how the full ownership value is calculated: that value remains a market price. A building reached only through shares that need unanimous approval to be transferred is not in the position of a building held directly. The report therefore sets the market value of the building in full ownership (Charte de l’expertise en évaluation immobilière, French property valuation charter, 6th edition, November 2025, Title III, § 1.1), vacant or let, at 1 January of the tax year, then examines what holding it through the SCI takes away.
Three discounts not to be confused. A discount for divided ownership is excluded by law. A joint-ownership discount requires joint ownership, and even then a concrete constraint on sale, as the Court held in 2019 for the mansion jointly owned by spouses. That leaves the illiquidity discount arising from the approval clause. The Chamber’s more recent decision of 9 July 2025 fits with this one: it refused an SCI shareholder, who is not a joint owner, a third discount for joint ownership, after two 10 % discounts for illiquidity of the assets and of the shares, the approval clause being already reflected in a specific discount (SCI shares and French wealth tax: two 10 % discounts, not three). The absence of joint ownership rules out a joint-ownership discount, not the approval clause discount.
A constraint to describe, then to quantify. The report starts from the articles of association: scope of the clause, shareholders whose consent is required, arrangements in case of refusal, whether there are buyers for such shares. It quantifies the discount with references and checks, as the article on discounts on SCI shares in an inheritance explains, that it does not overlap with another.
What about IFI? The IFI (impôt sur la fortune immobilière, the current French wealth tax on property) replaced the ISF in 2018; the rule of article 885 G now appears in article 968 of the General Tax Code. The reasoning appears transferable, since the taxable value remains market value; the Court, however, ruled only on the ISF.
Partition follows other rules. Between co-heirs, the Court held in 2016 that neither joint nor divided ownership affects the market value of the buildings (French estate partition: no discount for joint or split ownership): nothing is sold to a third party, whereas the tax looks for a market price.
What the valuer takes from it
- The usufructuary of all the shares in an SCI declares them at their full ownership value; that value remains a market price, which may reflect the building being held through shares subject to approval.
- Neither the ban on discounts for divided ownership nor the absence of joint ownership is enough to rule out the illiquidity discount linked to a unanimous approval clause.
- The decision sets no rate: the report describes the clause and its effects on a sale, then supports the percentage with references.
- Divided ownership, joint ownership and illiquidity of the shares answer different questions: each allowance is named and counted only once.
Further reading
The Market value page describes the assignment, its timescale and its fee. The guide French wealth tax (IFI): what value to declare for my house and SCI? and the glossary entries usufruit, décote d’illiquidité and parts de SCI complement this article. On life annuity sales (vente en viager), where the element of chance lies in the seller’s lifespan: French life annuity sale: the risk is judged on the day of sale. On the same theme: French estate partition: no discount for joint or split ownership and The surviving spouse has a usufruct over bare-ownership assets. The decision is available on Légifrance.
What next
Usufruct of SCI shares to declare or defend before the French tax authority?
I value the building in full ownership on the date the tax falls due, then examine what the SCI's articles, approval clause included, take away from its liquidity. The report gives reasons for each discount, for the conciliation commission or the tax court.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
