The purchase of a property in Morocco involves, both for residents and non-residents, a series of fiscal obligations which must be met:

TAXES ON CONVEYANCE, TRANSFER AND REGISTRATION OF ASSETS AND DOCUMENTED LEGAL PROCEDURES (Droits D'enregistrement Et De Timbre).

The Tax on Conveyance, transfer and registration of assets are imposed with a rate between 1% to 6%, depending on the good given as a gift, conveyed or given as a contribution.

In the particular case of real estate conveyancing, it was recently reduced to 3% of the property’s value and the rules were simplified by combining multiple tax regulations into one source, making compliance easier.

The taxes on documented legal procedures (Stamp Duty) are imposed on the value of the transaction at a rate of 0,5% or 1,5%, depending on the nature of the act, the carrying out and the conveyed value.

V.A.T. (Taxe Sur La Valeur Ajoutée, TVA)

In Morocco the Value Added Tax (VAT) is a non-cumulative tax levied at each stage of the production and distribution cycle. Thus, suppliers of goods and services must add VAT to their net prices. Where the purchaser is also liable for VAT, input VAT may be offset against output VAT.  In this case, a reduced rate of 20 % applies to building and construction activities.

CAPITAL GAIN TAX (T.P.T.)

In Morocco, the Capital Gains Tax is 20% of the profit with a minimum of 3% of the sale price.

The Capital Gain Tax is the difference between

1. the purchase price minus the expenses and
2. the purchase price plus the acquisition costs, investment costs and interests paid in regards to the credits related to the real estate.

In some cases, it is possible that a total exoneration of the tax is applied (if the transfer value is less than 60,000 DM, if the real estate has been the main residence for at least 8 years, etc.)

The tax need to be paid to the Tax Authorities within 30 days following the assignment.

There are no death duties as long as the property stays within the family. There are double tax treaties with some countries to ensure that Capital Gains Tax is not paid in both countries. There is a 100% repatriation of funds when you sell the property.

URBAN TAX (Tax Urbaine)

This annual tax affects real estates used as main or second residence or real estates under a professional activity, rental or any kind of exploitation.

For main and second residences, the calculation basis of urban tax is the rental value and is calculated in accordance with the following chart:

For real estate and lands having an activity professional, the tax applicable is a 13.50% of a specific percentage of the value of the land / construction /machinery (3% for lands, 4% for constructions and 4% for machinery).

There are exemptions for new premises during the first five years; additionally there is a 50% exoneration in the area of Tangiers.

LOCAL TAX (Tax d´edilité)

This annual tax affects to all types of real estates and constructions and machineries that are also subject of being applied the urban tax.

TREATIES FOR THE PREVENTION OF DOUBLE TAXATION

Since a Moroccan resident is taxed on income both in Morocco and out with Morocco, the Moroccan tax system provides relief from foreign taxes paid on such income by means of a foreign tax credit. This foreign tax credit cannot exceed the Moroccan tax otherwise payable in respect of the foreign-source income.

The Moroccan government is eager to encourage foreign investment. This is reflected by the territoriality principle for taxation applicable to corporations mentioned above. In addition, Morocco has concluded around seventeen treaties for the prevention of double taxation, mainly with developed countries. Morocco's list of treaty-partners include Belgium, Canada, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Romania, Spain, Sweden, Tunisia, the United Kingdom and the United States.

Most of the tax treaties are based on the OECD model and do not contain specific anti-abuse provisions. Reduced withholding tax rates vary from one treaty to another.