Morocco Taxation

The Morocco tax system is modeled after the French system and is quite stright forward .  The following information is a very basic guide to the Morocco tax implications for UK investors:

BUY AND HOLD/LET STRATEGY

PERSONAL INCOME TAX ON RENTAL INCOME (IGR)

UK investors utilizing a buy let strategy will be responsible to pay tax on this income. In Tangier 60% of this income is taxable at 22% (other parts of Morocco are taxed at 44%). The city of Tangier has a 50% reduction on rental income tax adding yet one more advantage to invest in Tangier.

There is also a three year exoneration for the first three years the property is owned.

PROPERTY TAX (Taxe Urbaine) (Personal vacation home option)

Property taxes are paid annually. The first five years owners have full exoneration (Property agencies are NOT included). After 5 years the tax is based on the property's annual rental value.
This is done with a graduated tax table:

Value Tax
Less than 3,000dh 0%
between 3,001 and 6,000 dh 10%
between 6,001 and 12,000 dh 16%
between 1,201 and 24,000 dh 20%
between 2,401 and 36,000 dh 24%
between 3,6001 and 60,000 dh 28%
more than 60,000 dh 30%

There is a 75% discount if the home is your permanent or vacation home residence.

PROPERTY RENTAL TAX (Taxe Urbaine) (Investor option)

Investors pay 13.50% on the rental value of the property.

GARBAGE COLLECTION TAX (Fiscalite des collectivites locales)

There is a 5 year exoneration from the garbage collection tax. Tax is levied at 10% of the property's annual rental value.

BUY AND SELL STRATEGY

CAPITAL GAINS TAX (Taxe sur les Profits Immobiliers - TPI)

Capital gains tax is 20% of profit with a minimum of 3% of the sale price. TPI is based on the sale price less the purchase price.

Purchase price includes the following:
Credit expense
Registration cost
Notary fees and tax
Repairs
Brokerage fees
Inflation (based on a government table)

The second option in calculating the purchase price is to just add 15% to the purchase price. This option is often used in the case that invoices are not available to justify the expenses.

EXONERATION FROM CAPITAL GAINS

The property is sold after owning it for more than ten years.
The property is owned for more than 5 years but less than 10 years. In this case the TPI tax 10% of any capital gain over 1 million Dirhams.

INHERITANCE TAX

This tax is 0% for family members. Expert advice should always be obtained prior to implementing any inheritance tax planning strategies. The most important piece of advice we can offer on this subject is - make a Moroccan will!

UK-MOROCCO TREATY

There is a double tax treaty between the UK and Morocco that ensures investors do not suffer Capital Gains tax in both countries.

CORPORATE TAX

If you intend to purchase a number of Moroccan properties it may well be worth considering establishing a Moroccan Private Limited Company -The private limited company (SARL) (Setup time is about 3 weeks).

The SARL is an intermediate type between associations of persons and of capital, bearing resemblance to both partnerships and share companies. It is always a trading company, regardless of its corporate name and its minimum equity capital is 100,000 dh. It may be formed by two or more members who are only liable to the amount of their share of the equity capital in the company. Unlike a general partnership, members of a private limited company do not need to be registered merchants.

The private limited company must file a memorandum of association as part of its incorporation process. The capital stock has to be fully described and paid up as the company is formed. Stocks shall have the same face value and are not negotiable; they may be transferred only through contracts. "Parts Sociales" may be transferred to third parties outside the company only with the co-associates' consent.

Tangier is 50% of the tax rate in the rest of the country.
8.75% for the first 5 years
17% after 5 years

Again remember that the Moroccan tax system is quite complex so always get expert tax advice before making an investment.

Terms & Conditions

UK 2 Morocco are Morocco property agents. Morocco Properties for sale