Selling a property in Morocco as a non-resident

Definition

What this covers

Individuals who do not have their tax domicile in Morocco are liable there to income tax on all their Moroccan-source income and gains art. 23-I-2° GTC. The gain recorded or realised on the sale of a property located in Morocco, or on the transfer of rights in rem over such a property, falls within that category art. 61-II GTC. The seller's place of residence therefore has no effect on the principle of taxation.

Tax domicile in Morocco follows from three alternative criteria : a permanent home, the centre of economic interests, or a stay of more than 183 days in any 365-day period art. 23-II GTC. The code also reserves the case of persons to whom a double taxation treaty allocates the taxing right in Morocco art. 23-I-3° GTC.

Scope

Who is concerned

• Moroccans living abroad who sell a property kept in Morocco.
• Foreign nationals owning a property or a right in rem in Morocco.
• Heirs established outside Morocco who sell a property received by inheritance, the acquisition price being the market value at the date of death art. 65 GTC.
• Co-owners in an undivided estate combining residents and non-residents : each one's liability is found in article 23-I, which covers separately a person domiciled in Morocco (1°) and a person who is not (2°). In respect of property capital gains, the code contains no rule specific to a mixed undivided estate ; it deals with undivided ownership only through division with a balancing payment art. 61-II.
• Persons subject to expropriation or whose ownership has been transferred by a final court decision, even where they reside outside Morocco.

Non-resident status opens no exemption of its own. Only those of article 63 apply : the threshold of MAD 140,000 of disposals in the calendar year, the main residence, social housing, undivided rights in agricultural property between co-heirs, transfers for no consideration within the family circle the text lists and transfers of the same property passing to associations recognised as being of public benefit and registered in the name of individuals art. 63-III.

Applicable rules

An ordinary regime, with an exemption designed for Moroccans abroad

The net gain is the difference between the sale price less the costs of sale and the acquisition price plus the acquisition costs, the latter assessed on a flat-rate basis at 15 % of the acquisition price unless a higher amount is evidenced, the whole revalued by the coefficient for the year of acquisition art. 65 GTC. The rate is 20 % art. 73-II-F-6° GTC, subject to a minimum charge of 3 % of the sale price due even where there is no gain, and to a minimum of 3 % on the part of the price exceeding MAD 4,000,000 where the sale concerns an otherwise exempt main residence art. 144-II GTC.

The main residence exemption requires the property to have been used as such for at least five years at the date of sale. The code expressly treats as equivalent "the dwelling that Moroccans resident abroad keep as their home in Morocco or that occupied free of charge by their spouse, their ascendants or descendants in the direct line in the first degree" art. 63-II-B GTC. That characterisation holds only "so long as it has not been let or put to professional use". The exemption may not apply more than once during the five years concerned ; a maximum period of one year from the date the dwelling becomes vacant is allowed in which to complete the sale ; and the land is covered only up to 5 times the covered area.

A seller who has neither sought a prior notice nor drawn up their return on the basis of a computation certificate art. 234 quinquies GTC pays provisionally the difference between the tax declared and 5 % of the sale price art. 173-I GTC, the transactions exempt under article 63 (II and III) being excluded. That payment is refunded automatically : the balance after deducting any additional tax assessed, or in full if the administration does not commence an adjustment art. 241 bis-II-C.

Deadlines and limitation

The timetable

1. Within 30 days of the sale

   Delivery, against a receipt, of the return to the collector of the tax administration, where applicable together with payment of the tax art. 83-I and 173-I.

2. Within 30 days of receipt of the funds

   Variant applicable to expropriation, unlawful seizure and judicial transfer : the period runs from receipt of the amount awarded.

3. Within 60 days of the instrument

   Period specific to a contribution placed under the regime of article 161 bis-II art. 83-II ; any other contribution remains within the thirty-day period art. 83-I.

4. 90 days after filing

   Maximum period allowed to the administration to notify an adjusted base and its grounds art. 224.

5. 30 days after the notification

   The taxpayer's period to reply. Failing that, the assessment is established and may then be contested only under the conditions of article 235.

These periods are neither extended nor suspended by the seller's distance : the code provides no accommodation on account of residence abroad.

Documents and supporting evidence

The elements of the file

The file rests on the following elements :

• The documents of title to the property : instrument of acquisition, land title or instrument establishing title, inheritance and undivided ownership elements.
• Evidence of the acquisition costs and of investment expenditure : the code expressly requires the return to be accompanied by it art. 83-I.
• The elements establishing entitlement to the exemption : use of the dwelling kept in Morocco, or occupation free of charge by the spouse, an ascendant or a descendant in the first degree, together with the duration of that situation.
• Elements identifying the seller : tax identifier, components of the price and of the costs of sale, and documents relating to residence where a treaty is relied on.

This list is indicative ; the exact composition of the file depends on the situation.

Points to watch

What can cause a file to fail