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Investing in Morocco

Why Invest In property in Morocco?

Morocco is a currently a unique location for property investors and offers the opportunity to purchase property early in an emerging market at prices very favourable to most other destinations.

What is unique about the property market in Morocco is the sense of security for investors: with tourism already improving at a fast rate and buy-to-let investors reporting 85% occupancy rates during the high season, Morocco offers a safe arena in which to purchase property.

Key facts about Morocco and its continued development

• Stable monarchy. Ensuring a safe long term investment

• Open sky agreements: Ryan Air, Easy Jet, Royal Air Maroc, Atlas Blue, BMI, and Thomson Airlines have regular flights into Morocco, both to Tangier and Marrakech.
  Ensuring low cost flights and more frequent usage

• Property prices up to 50% less than comparable resorts worldwide.
  More value for your investment

• Property price growth experienced of 15‐25% p.a. over the last 4 years.
  As an emerging market, achieving real capital growth

• Lower cost of living than European neighbouring countries.
  More attractive to long term investors and tourists

• Growth of Morocco reflected in stock exchange, where real estate index registered the highest growth, four times that of 2005 (Oxford Business Group)
  A real market growing to attract additional investors for a realistic growth of investment

• In June 2006, the government sold €500m in bonds on international markets. These 10‐year maturity bonds, attracting investor from Europe, the US and the Middle East were oversubscribed by more
  than three times. (Oxford Business Group)
  Indicative of a very desirable market and product

• Telecoms & IT: Roll out of 3G service (first in North Africa), Internet take‐up rates: 50k in 2003, 450k in 2007. (Oxford Business Group)
  Indicative of an expanding domestic and industrial base

Tax Incentives

•  No Property or Garbage Tax applicable for first 5 years
  Equivalent of UK rates

•  No Rental Income Tax applicable for first 3 years
  Good for a base rate tax payer but a significant plus for a higher rate
  tax payer

•  No Capital Gains tax applicable after 10 years (20% applicable 0 to 5 years, 10% applicable 6‐10 years, over 10 tax exempt) in Morocco
  A real achievement of capital growth which the investor gets to keep

•  No Inheritance Tax applicable on any Moroccan property (with a Moroccan will)

•  Double Taxation Agreement with UK.
  Tax planning within the UK will be required for worldwide assets

N.B. Actual taxation advice should always be taken from a Tax Advisor.

The Moroccan King Mohammed VI and the UAE have allocated huge investment to drastically increasing tourism further, with a goal of 10 million per year by 2010. This investment along with the creation of several tax advantages also helps investors to feel comfortable in investing in property in Morocco.

Reasons Why Morocco Is a wise Property Investment Location

• Huge project (Vision 2010) to increase tourism backed by King Mohammed and the UAE. The aims are to improve infrastructure and increase tourism by 10m visitors per year.

• Increased tourism generated by the Vision 2010 project will create huge requirement for rental accommodation.

• New roads, marinas, trains, 5 star resorts, shopping malls, beach clubs to be developed through Vision 2010 project.

• Safe investment – notary supervised property registration similar to France and Spain

• Morocco is a free market economy and allows free movement of money.

• Stunning golf courses, tennis clubs, riding clubs, water skiing, sailing, scuba diving, hunting, hiking, camel treks, culture

• Mediterranean climate – hot, dry summers and mild winters

• French, Spanish & English widely spoken as well as traditional Arabic

• Site Seeing – from bustling Medinas and ancient cities to snow capped mountains or golden beaches

• Easily accessible (Tangiers) via helicopter, ferry, fast train or regular budget flights.

• “Open Skies” policy activated on 1st Jan 2006 will allow low cost airlines to service Morocco and create competition, which will lower fares.

• Costa del Sol is just 30 minutes away by hydrofoil from Tangiers

• Experience Moorish culture at its best

Tax in Morocco

Moroccan tax is based on the French system and is quite complex. We strongly advise that all clients seek professional tax advice. This section is designed to give you a brief guideline to Moroccan property tax.

Every tax system is different and the Moroccan system is no exception. With its tax laws left as a legacy from the French colonial days, it is essential to have a professional guide you through the process. Each case is unique and there is no rule of thumb to go by.

Tax on Rental Income

Investors from the UK looking to operate a buy-to-let strategy with their investment property in Morocco will be required to pay tax on this generated income.
The first three years can be exempt of tax, but afterwards investors must pay tax on 60% of their generated income at levels between 22% and 44%.

In Tangier, for example, a buy-to-let investor would, after 3 years, be subject to a tax of 22% on 60% of the rental income from his buy-to-let investment property in Morocco.

Property Tax

In Morocco, property owners are required to pay an annual property tax. The first five years are exempt. After this, tax is due based on the annual rental value of the property. The table below gives an approximate guide to the taxes due:

Property Rental Tax

If investors do not live in the property at all, a tax of 13.50% on the rental value is levied.

Garbage Collection Tax

The owner of a property is exempt from the garbage collection tax for the first five years. After this period, tax is charged at 10% of the property's annual rental value.

Capital Gains Tax

If the property is sold within five years, capital gains tax is charged at 20% of profit with a minimum of 3% of the sale price. A property sold between six and ten years of ownership will pay 10% capital gains tax and 0% thereafter. Capital gains tax is based on the sale price less the purchase price.

Inheritance Tax

There is 0% inheritance tax for family members, but it is essential to make a legal Moroccan will and seek professional tax advice beforehand. You can ask specific questions or request a call from a tax specialist by completing the small form above.

UK-Morocco Tax Treaty

There is a double tax treaty in place between Morocco and the UK and this protects the investor from being liable for capital gains tax in both countries.

Corporate Tax

If you are considering investing in multiple property units in Morocco, it may be an idea to consider creating a Moroccan private limited company.