Can I buy an Israeli property through a French SCI?

French buyers reach for the SCI almost by reflex, because at home the société civile immobilière is the standard way to hold real estate, pass it to children, and smooth the succession. Applied to an apartment in Tel Aviv or Netanya, that reflex can backfire. Israel can hold the property through the SCI, but it taxes the arrangement in a way that strips out most of the advantages a French owner is expecting.

---

Detailed Explanation

Start with what is allowed. A foreign company, including a French SCI, can own Israeli real estate, and buying property through a company is a recognised route, examined in the note on buying Israeli property through a company as a non-resident. The problem is not permission. It is characterisation. Under the Real Estate Taxation Law 1963, a company whose main asset is Israeli real estate is a real estate association, an igud mekarkein. That single classification changes the tax treatment of the whole structure.

The consequences run in two directions. When you later transfer the SCI's shares, Israel does not treat it as an ordinary sale of securities. Because the SCI is an igud mekarkein, the share transfer is taxed as if you had transferred the underlying property, so purchase tax and land appreciation tax apply, and the ordinary securities exemption does not rescue it. This is the same trap analysed for company shares generally in the note on the tax on selling shares of a company holding Israeli real estate. On the way in, an SCI buying a home does not get the reduced purchase-tax rates or the single-residence reliefs an individual buyer can access, and on a later direct sale it cannot use the individual residence exemption from land appreciation tax either. The French transparency you rely on does not carry across.

There is also the mismatch between the two systems. A French SCI is typically tax-transparent in France, with the partners taxed on their shares, and it is chosen partly to sidestep French forced-heirship friction. Israel looks through none of that; it sees a foreign company holding Israeli land and taxes accordingly, and Israeli succession over the apartment is decided by Israeli law on the property, not by the SCI's French statutes. For most French families buying a single home in Israel, direct personal ownership, sometimes with a properly drafted Israeli will, is simpler and cheaper than an SCI, a comparison drawn out in the guide to buying property in Israel for French residents. The SCI can make sense for a genuine multi-property investment, but that is a deliberate decision, not a default.

In Practice: Under the Real Estate Taxation Law 1963 a French SCI holding an Israeli apartment is a real estate association (igud mekarkein), so a transfer of its shares is taxed by the Israel Tax Authority as a transfer of the property, at purchase tax and land appreciation tax rates rather than under the securities regime. An SCI buying a residence also pays purchase tax without the individual reduced brackets, so on a NIS 3M home the purchase tax runs at the higher non-individual rate rather than the graduated rate a person might use. Structuring and registering such a purchase, and reporting to the Tax Authority within the standard filing window, typically adds several weeks over a direct personal purchase.

Key Considerations

• A French SCI can legally hold Israeli property, but Israel taxes it as a real estate association (igud mekarkein).
• Transfers of SCI shares are taxed like transfers of the property, without the securities exemption.
• The SCI cannot use the individual reduced purchase-tax rates or the single-residence exemptions.
• French tax transparency and succession planning do not carry across into Israeli law.
• For a single home, direct personal ownership with an Israeli will is usually simpler and cheaper.

When to Consult a Lawyer

This question typically requires professional legal advice when:

• You already own or plan to hold Israeli property through an SCI and need the Israeli tax exposure modelled.
• You are weighing direct ownership against a company structure for succession and want both country's rules aligned.
• You hold several Israeli properties where an association structure might genuinely pay, and want it done deliberately.

A qualified Israeli attorney should model the Israeli tax on both purchase and eventual transfer before you decide how to hold the property.

---

Speak With an Israeli Attorney

We advise French buyers on whether to hold Israeli property directly or through a company, model the igud mekarkein tax consequences before you commit, and align the Israeli succession position with your French planning.

Contact us for a confidential initial consultation.