Why Invest in Morocco
Morocco is cheaper than neighbouring Spain – property prices are currently very competitive
Rental occupancy reaches around 85% during high season and is expected to increase as the Vision 2010 tourism drive continues
Plan Azure Vision 2010 boosts investment potential
With the low cost of living, it is possible to experience a luxury lifestyle at relatively small expense
Budget Airlines bring in more paying tourists
The Moroccan Economy is healthy and stable
The perfect holiday destination
Property Tax is not charged for the first 5 years
The property market in Morocco is currently booming and looks set to continue to do so for a considerable time
Attractive Taxes for investment property owners
Capital Gains Tax stands at between only 0% and 20% (after 5 years it reduces to 10% and after 10 years it is 0%)
Capital Growth is estimated at around 15% - 30%
Inheritance Tax is not charged if passed directly to a family member
Morocco is easily accessed through Tangiers
The Costa de la Luz is only 30 minutes away by hydrofoil from Tangiers
Spanish, English and French is widely spoken as well as traditional Arabic
Beautiful sandy beaches with crystal clear water
The Open Skies policy allows competition for Moroccan air routes
The Mediterranean climate gives hot summers and mild winters, encouraging year round tourism
Mooring and Yacht Club fees are under €35 per month – far less than other less well equipped marinas in Spain and Mallorca
Stunning golf courses, tennis clubs, riding clubs, sailing and scuba diving clubs attract all types of tourists and investors
70% Mortgages are currently available
Vision 2010 will see more infrastructure, new roads, new marinas, better railway services,more 5 star resorts, shopping mails, beach clubs
Double tax treaty between UK and Morocco
Only 3 hours flying time from the UK and Ireland
General
Morocco is bordered by the Mediterranean Sea (N), the Atlantic Ocean (W), Western Sahara (S), and Algeria (S and E). It is officially known as the Kingdom of Morocco, it covers 171,834 sq miles and has an estimated population of 33,000,000. (2006)
Two cities, Ceuta and Melilla, and several small islands off the Mediterranean coast remain part of Spain; at various times Morocco has sought to gain control of these enclaves.
Most recently in the “Parsley Island War” in 2002 when a small group of Moroccan soldiers occupied an uninhabited (apart from the goats who had eaten all the parsley!) rock. The “conflict” developed into a farce that would not have embarrassed an Ealing comedy and eventually the small band of Moroccans were forced to evacuate.
Economy
Even today, about half of Morocco's workforce is employed in agriculture, which suffers from a high (more than 20%) unemployment rate. In the rainy sections of the northeast Morocco wheat and other cereals can be raised without irrigation. On the Atlantic coast, where there are extensive plains, olives, citrus fruits, and wine grapes are grown, largely with water supplied by artesian wells.
Forests yield cork, cabinet wood, and building materials. Agadir, Essaouira, El Jadida, and Larache are the important fishing harbours, where most of the inhabitants rely on fishing for their income.
Casablanca is the largest port and an important industrial centre. The significant industries include textile and leather goods manufacturing, food processing, and oil refining.
In the northern foothills of the Atlas Mountains there are large mineral deposits; phosphates are the most important, but iron ore, silver, zinc, copper, lead, manganese, gold, and coal (the only sizable coal deposits in North Africa) are also found. Marrakech, Meknès, and Fès are the most important centres in the mineral trade. A few oases in southern Morocco, notably Tafilalt, are all that relieve the desert wastes.
Morocco's coastal areas and the mineral-producing interior are linked by an expanding road and rail network, and port facilities are being further developed. Tourism is important economically, as are cash remittances from Moroccans working in France.
The main exports are phosphates, clothing, shellfish, citrus fruits, and vegetables. The chief imports are petroleum, chemicals, machinery, and plastics.
France and Spain are the leading trading partners.
Government
Morocco is a constitutional monarchy and is governed under the 1972 constitution (revised in 1992). The king holds effective power and appoints the prime minister. The parliament consists of two houses; a 270 seat chamber of councillors and 325 seat chamber of representatives. Administratively, the country is divided into 37 provinces and two municipalities.
A Guide to the legalities when buying property in Morocco
The first step to buying property in Morocco is to choose your property and then secure it by paying the “holding deposit”.
At this stage, it is wise to appoint a lawyer who is fluent in your language so you fully understand all the legalities and exactly what is happening. We can recommend a good lawyer who can carry out the necessary checks on the property in Morocco and complete the legal requirements of the sale.
Alternatively you may have been recommended another lawyer you wish to instruct.
You will then be expected to sign a 'Sale contract' in the presence of a notary.
You will then be required to pay the full amount due before completion (usually 40% but changes from one development to another – look out for low entry deposit deals offered by developers).
Please ensure you fully understand the exactly what payment structure is in place before committing to a property purchase in Morocco.
When the property is ready for occupation, you and the developer will sign the transfer of property and you will then be required to pay the remainder of the price, stamp duty and other fees, including notary fees.
At this stage temporary certificate of ownership will be issued by the notary and when all the paperwork and legal requirements are completed, the title deeds will be issued, (this normally takes a couple of months).
Taxes & Fees Payable on a property purchase *
Land registry fees: 1%
Registration fees: 5% if property is sold within 5 years, 3% after that period
Notary fees: 1% to 2% (based on the purchase price and set on a sliding scale, these fees are levied at the Notary and paid to the relevant Government department or Local Authority)
Notary tax: 0.5%
Please note: Several tax exemptions are applicable to new property purchasers
A GUIDE TO THE TAXES APPLICABLE IN MOROCCO
The Morocco tax system is modelled on the French system and is quite complex.
The following information is a very basic guide to the Moroccan tax system as it applies to UK investors:
This applies to the incomes of both individuals and partnerships. UK investors utilizing a "buy to let" strategy will be responsible for tax on this income. In Tangiers, which has its own tax system, 60% of this income is taxable at 22% (in other parts of Morocco this income is taxed at 44%) the city of Tangiers having a 50% reduction on the taxation of rental income, important to note that there is an exemption from payment of taxes during the first five years of property ownership.
Taxe Urbaine (Property Tax)
This applies to -
Buildings built and being built, of all kinds, which are totally or partially occupied by their owners as a main home or second home, or put at the disposal of their spouse, ascendants or descendants as a dwelling place free of charge;
Buildings, which are put at the disposal of a professional activity or any kind of business by their owners;
Machines and devices, which are in establishments, which produce goods of services; put at the disposal of any kind of business by their owners
The "Tax Urbaine" applies to those businesses within urban administrative districts and their outlying zones, those within delimited zones and those within summer and winter resorts and spas.
Plots of land: 3%
Buildings, layouts, materials and equipment (mechanized, technical and computer equipment): 4%
Property Tax in Morocco is paid annually but for the first 5 years owners have full exemption, after that period tax is based on the property` s annual rental value, there is a 75% discount if the home is your permanent or vacation home residence, there is also Property Rental Tax to pay investors who have purchased for this reason will be liable to pay 13.50% on the rental value of the property.
Taxes sur les profits Immobiliers (TPI) 'Capital Gains Tax'
This is based on 20% of the difference between the purchase price and the sales price with a minimum of 3% of the sale price, although when a property is sold more than 10 years after purchase then it is exempt from Capital Gains Tax.
If the property is owned for more than 5 years but less than 10 years the TPI tax is 10% of any capital gain over 1 million Dirhams, this is based on the property being a primary residence and the tax is to be paid within 2 months of the sale of a property.
With regard to taking the proceeds out of the country, foreign investors are allowed to sell at any time and enjoy free repatriation of capital and profit, as long as the money used to purchase the property comes from overseas.
Inheritance Tax
This tax is 0% for family members but expert advice should always be obtained prior to implementing any inheritance tax planning strategies, the most important advice is to make a Moroccan will!
UK-Morocco Double Taxation Treaty
There is a double tax treaty between the UK and Morocco that ensures investors do not suffer Capital Gains Tax in both countries.
Fiscalitè des collectivites locales (Refuse Collection Tax)
There is a 5 year exemption from the Rubbish collection tax but after this period it is levied at 10% of the property’s annual rental value.
Tax Reductions In Morocco
Foreign investors in real-estate businesses enjoy a convertibility system, which facilitates:
The transfer of income produced by these investments
The transfer of the product of a sale or a transfer of the investment
Investors in real-estate also have tax exemptions from and tax reductions in the following taxes:
Exemptions from:
Urban Tax for new constructions for 5 years
TPI (tax on profits from property) for the first sale of local authority housing
The "patente" for 5 years starting from the beginning of a fiscal year of a professional activity, an industry or a business
The tax that all undeveloped sites are subjected to, if the plot of land is subjected to the "taxe d'édilité" and is worked by companies which are in business or if the plot of land has been bought less than 5 years before
Tax on construction deals for local authority housing
Reductions in:
"Droit d`enregistrement": 2.5% reduced rate for the acquisition of premises for professional use or of plots of land
"T.V.A": 14% reduced rate for renovations, repairs or building works
Vision 2010 and the Plan Azur
On January 10th 2001 at the National Meeting on Tourism in Marrakech King Mohamed VI announced the launch of a new tourism policy for Morocco. He had recognised that the country had been underachieving in the tourism sector; it’s unbeatable combination of climate, culture and stunning natural scenery should have placed it at the forefront of world travel destinations.
The King announced a new sustainable, integrated tourism policy known as “Vision 2010” the aim of which was to boost visitor numbers from 2 million to 10 million a year (7 million of which are international visitors). A total of 9 million euros was designated for the launch of the new sea tourist resorts and infrastructure, creating 600,000 new jobs and resulting in tourism contributing 20% to the GDP of the country.
In order to achieve the goals of the Vision 2010 programme it was recognised that certain areas of the country should be granted special status and with this in mind six “Plan Azur” areas were identified. These six “Blue Zones” were all established on stretches of the coastline recognised for their outstanding natural beauty and untapped tourist potential. Each area would be given a designated theme such as culture, sustainability, or sport to act as a coherent strategy for development.
Property in these areas benefit from a number of tax advantages attractive to the overseas property purchaser. Property buyers benefit from the exemption from tax on rental income for five years, no inheritance tax and no capital gains if the property is sold after 10 years. Inheritance tax can also be greatly reduced if the property is left to a direct family member.
So far the programme has been progressing with impressive efficiency and many of the new motorways, airport expansion programmes and marketing initiatives are well advanced. Indeed, it is a measure of its progress already achieved that the respected London agency Superbrands identified Morocco as the second most desirable brand in the overseas travel market.
The Six Plan Azur Areas
Saidia – The first to be launched and was awarded to the Spanish developer FADESA. Construction work here is underway with the Marina and many apartments and villas close to completion. It is the only Plan Azur area situated on the Mediterranean coast. Villas, apartments and penthouses are available for sale in Saidia now.
Larache – Situated on the Atlantic coast near to the town of Larache this development will feature a marina and golf course with health, well being and sports as its main focus. The project developer is a respected Belgian construction company who will shortly be announcing details of the property types available.
Mogador – Near to the popular and fashionable destination of Essaouira the main feature of this Belgian backed development will be two signature Gary Player golf courses, the resort will also feature hotels, riads and villas all laid out around the spectacular courses. The facilities and location will make this the ideal beach resort of the large affluent Marrakech market.
Mazagan – Situated on the Atlantic coast, south of Casablanca, (near the business and financial axis of Casablanca-Rabat) this resort will feature a world class casino, two golf courses set along 15km of prime beachfront. The main developer is a South Africa company who were responsible for the world famous Sun City Resort.
Taghazout – Awarded to a major American real estate development company, this development near to the long-established resort of Agadir on the Atlantic coast of Morocco. This area has the advantage of an established international airport only 40km away in Agadir. Taghazout will offer a diverse range of leisure and sports pursuits, in particular two golf courses for a total of 27 holes, a Medina with local arts and crafts, a luxury Spa, a private clinic (Argano-Therapy) and a research facility dedicated to research and exploiting the products of the argan tree. (Note: Argan oil is a little darker than olive oil, with a reddish tinge. It can be used for cooking and is claimed to have various medicinal properties, such as lowering cholesterol levels, stimulating circulation and strengthening the body’s natural defences. Internationally, there is some interest in its possible cosmetic uses.)
Plage Blanche – Yet to be awarded or launched, although it is looking increasingly likely that an English developer, together with FADESA will be awarded the zone. This area, the province of Guelmim, in the mountainous south of Morocco is famous for its stunning landscapes and golden beaches.
Getting there
Morocco’s Casablanca International Airport receives airlines from many world destinations and it is the country’s premier Airport.
Tangier International Airport which has one terminal that handles both international and domestic flights, largely serviced by major international and Moroccan airlines.
Marrakech International Airport which has two terminals serving central Morocco.
Morocco’s national airline is Royal Air Maroc (AT), website www.royalairmaroc.com). Other airlines serving Morocco are Ryanair, EasyJet, Air France, Alitalia, British Airways, KLM, Lufthansa, Swss Airlines. Direct flights from all major European cities are fast and frequent.
