The buying process in Morocco is surprisingly straightforward and there are no restrictions on foreign ownership. Once you have found the property in which you want to invest, it is usual to make a verbal offer and then negotiate the price. Upon this offer being accepted, a preliminary agreement (Compromis de Vente) will need to be drafted by a notary (notaire). This will be legally binding upon both parties and you will have two weeks in which to decide whether or not you wish to purchase the property. Upon signing the Compromis de Vente you will be required to pay a deposit of 10% of the purchase price.
Next, the notaire will obtain the title deeds for the property and the length of time this takes will vary considerably depending on the property’s individual circumstances. Once the final contract (Acte de Vente) is signed in the presence of the notaire, the title deeds will be transferred from the seller to the buyer.
For off-plan property the process is slightly different. Once you have selected the property in which you wish to invest, you will need to secure it with a refundable deposit of around £2-3,000. Developers will then ask for the payment in two stages. The initial deposit of 40% will be required when planning permission has been granted and the Compromis de Vente has been signed. This is often paid in stages and the remaining 60% paid upon signing the final contract. The rationale behind insisting upon such a high deposit is that Moroccan banks won’t lend foreign nationals more than 60% of the property value.
Additional costs for your purchase will run to between 5% and 7% and will include; 2.5% Registration Tax (stamp duty), 0.5% Notary Tax, 1% notary’s fees, 1.5%-2.5% to obtain title deeds if the property is not already titled, and lawyers fees. You will also have to pay 150 Dirham (approximately £9) for your certificate of property and 3,520 Dirham (approximately £220) for administrative expenses.
Residents and non-residents alike will be required to pay income tax on rental income in Morocco.
The first three years can be exempt from tax, but thereafter investors are taxed on 60% of their generated income at levels between 22% and 44%. In Tangier, for example, a buy-to-let investor would be subject to a tax of 22% on 60% of the rental income after 3 years. In Morocco, property owners are also required to pay Property Tax after an exemption period of the first five years. Property tax varies depending upon the value of the property and a summary of the approximate rates is given below:
Value Tax
Less than 3,000dh 0%
Between 3,001 and 6,000dh 10%
Between 6,001 and 12,000dh 16%
Between 12,001 and 24,000dh 20%
Between 24,001 and 36,000dh 24%
Between 36,001 and 60,000dh 28%
More than 60,000 dh 30%
Capital Gains Tax is levied at 20% if the property is sold within the first five years (but with a minimum of 3% of the sale price), 10% between 6-10 years, and 0% thereafter. There is no inheritance tax for family members provided you have drafted a legally binding Moroccan will and it is recommended than you seek the advice of a tax professional. There will be a fee, however, of 1% of the property value to add the name of your successors onto the title deed. One further tax of which you should be aware is Garbage Tax which is charged at 10% of the property’s annual rental value following an initial five year exemption period.
Morocco is a parliamentary constitutional monarchy where the King is head of state and executive power is vested in the Prime Minister who is head of government in a multi-party system. The King, however, has extensive powers and is responsible for appointing members of the government upon the recommendation of the prime minister. Legislative power is assumed by both the government and the two chambers of parliament: the Assembly of Representatives of Morocco and the Assembly of Councillors. Morocco is currently spending billions of dollars on improving its infrastructure in a bid to increase tourism. His Royal Highness King Mohammed VI is determined to put Morocco ‘on the map’ for tourists. With his ministers and advisors he has developed the ‘Vision 2010’ project which aims to increase tourism to 10 million by the year 2010.
Morocco has a stable economy which is marked by its openness and the country has free trade agreements with both the EU and the US. Recent policies initiated by King Mohammed VI and his government have sought to attract greater foreign direct investment. The Moroccan Dirham has continued to perform increasingly consistently against the US dollar in recent years.
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