The main sources of real estate legislation are as follows (non-exhaustive list):

• the Code of Obligations and Contracts dated 12 August 1913 regulating the general rules of contract law;
• Law No 40-24 dated 6 September 2024 amending and supplementing Article 573 of the Code of Obligations and Contracts;
• Law No 39-08 dated 22 November 2011 forming the Real Property Code;
• Law No 14-07 dated 22 November 2011 amending and supplementing the Dahir of 12 August 1913 on land titling;
• Law No 107-12 dated 3 February 2016 amending Law No 44-00 on off-plan sales;
• Law No 18-00 dated 3 October 2002 regulating the co-ownership rules applicable to erected buildings;
• Law No 12-90 dated 17 June 1992 on urban planning;
• Decree No 2-18-475 of 12 June 2019 setting out the procedures and terms for granting renovation, regularisation and demolition permits;
• Law No 25-90 dated 17 June 1992 on allotments, housing groups and subdivisions;
• Law No 67-12 dated 19 November 2013 governing contractual relations between landlords and tenants of premises for residential or professional use;
• Law No 49-16 dated 18 July 2016 relating to the leases of buildings or premises rented for commercial, industrial or artisanal use;
• Law No 12-03 dated 12 May 2003 on environmental impact assessments;
• Law No 07-03relating to the revision of rent for residential, professional, commercial, industrial or craft premises;
• Law No 47-18 dated 21 February 2019 on Regional Investment Centres;
• Law No 70-14 dated 24 August 2016 introducing the Organismes de Placement Collectif Immobilier (OPCI) investment vehicle dedicated to real estate (similar to a real estate investment trust (REIT));
• Law No 62-19 dated14 July 2021enacting special provisions relating to the acquisition by joint stock companies or limited liability partnerships of agricultural property or property intended for agricultural use outside urban areas;
• Law No 95-17 dated 24 May 2022 on arbitration and conventional mediation;
• Law No 102-21 dated 10 February 2023 on industrial areas;
• Law No 69-21 dated 25 May 2023 on payment terms;
• Law No 61-00 dated 15 August 2002 establishing the status of tourist establishments;
• Law No 01-07 dated 19 June 2008 enacting specific measures relating to tourist property residences and amending and supplementing Law No 61-00 establishing the status of tourist establishments;
• Law No 80-14 dated 4 August 2015 on tourist establishments and other forms of tourist accommodation;
• Decree No 2-22-431 dated 8 March 2023 on public procurement;
• Decree No 2-16-375 dated 18 July 2016 defining the LAnd Registry rights;
• Law No 5-96 dated 13 February 1997 on general partnerships, limited partnerships, partnerships limited by shares, simplified joint stock companies, limited liability companies and joint ventures;
• Law No 17-95 dated 30 August 1996 on public limited companies;
• Law No 19-20 dated 14 July 2021 amending and supplementing Law No 17-95 and Law No 5-96;
• 2025 edition of the General Tax Code;
• Foreign Exchange Instruction dated 2 January 2024;
• Law No 17-19on the Insurance Code; and
• Law No 21-18 dated 17 April 2009 on securities over movable assets.

In 2024, Morocco’s real estate market remained resilient despite global challenges, supported by government initiatives and tourism. Quarterly reports by Bank Al-Maghrib and ANCFCC showed a slight 0.4% year-on-year decline in the real estate asset price index (IPAI), with sectoral variations. Land prices rose by 3.4%, reflecting investor interest, while residential and commercial property prices fell by 0.5% and 0.9%, creating buyer opportunities. Despite a 13.1% drop in transactions, land sales increased, signalling confidence in urban development.

Tourism drove demand, with Morocco welcoming 17.4 million visitors in 2024, a 20% increase from 2023. Despite the 2023 earthquake, prime destinations like Marrakech and Agadir remained strong, particularly for luxury and short-term rentals. Major transactions and developments shaped the market, including preparations for the 2025 Africa Cup of Nations and the 2030 FIFA World Cup, driving investments in sports and hospitality infrastructure, exemplified by the FIFA Africa Bureau headquarters in Rabat.

Land prices in Casablanca rose by 5%, reflecting strong demand for prime locations despite slight apartment price corrections. While construction costs and inflation posed challenges, government initiatives such as the Direct Housing Assistance Programme, launched in January 2024, improved financing access. The market demonstrated adaptability and long-term growth potential, driven by strategic policies, infrastructure projects and a thriving tourism sector.

Some key proposals include:

• a law regulating the profession of real estate broker;
• a draft law on new towns that aims to promote the production and supply of housing and to regulate the procedures for approving and creating new towns;
• a draft Law No 023-12 on housing co-operatives that aims to promote solidarity and participatory housing in particular by encouraging the creation of housing co-operatives (ie, companies that manage housing for homeowners);
• a draft law on construction operations that aims to regulate building quality, define involved parties and their tasks, and set conditions for site management;
• a draft bill that proposes to amend Law No 07-03 to extend rent revision periods from three to five years for professional, commercial, industrial and craft premises (while keeping three years for residential leases) and to cap revisions at three per lease term; and
• a draft decree for Law No 107-12, amending Law No 44-00 on off-plan sales, that clarifies key terms, defines guarantee procedures and allows substituting the instalment refund guarantee with a completion guarantee.

Land Tenure

Categories of Moroccan land tenure can be summarised as follows:

• State ownership:
1. public domain of the Moroccan State; and
2. private domain of the Moroccan State.
• Collective ownership:
1. collective lands – lands owned by local communities/tribes;
2. habous lands – lands belonging to religious institutions (such as mosques, schools, etc); and
3. guich lands – lands owned by military communities.
• Individual ownership:
1. registered private land – characterised by the registration/publication process and the probative effect of being recorded in the Land Registry held by the National Agency for Real Estate Conservation, Property Registries and Cartography; and
2. non-registered private lands – includes all lands that have not been registered and, as such, do not benefit from the legal effects of the registration.

Among non-registered lands, melk assets under moulkia rights should be notes. This right is based on peaceful, uninterrupted possession for ten years (against third parties) or 40 years (against family). Ownership is proven by a moulkiya document issued by traditional notaries (adouls).

Rights in Rem (Droit Réels)

Law No 39-08 forming the Moroccan Real Property Code lists Moroccan rights in rem as follows.

• Main rights in rem (that can be defined as autonomous rights not depending on any other rights):
1. freehold;
2. easements and encumbrances;
3. usufruct right;
4. right of use;
5. surface right;
6. emphyteusis right;
7. right of habous;
8. right of zina;
9. right of houa; and
10. customary rights properly constituted before the coming into force of the Real Property Code.
• Ancillary rights in rem (which can be defined as rights depending on a personal right):

1. privileged liens;
2. mortgages; and
3. antichresis.

Besides the general rules of contract law related to sale and purchase agreements, the transfer of private registered property is governed by specific legislation, such as:

• Law No 39-08 forming the Real Property Code;
• Law No 14-07 amending and supplementing the Dahir of 12 August 1913 on land titling; and
• Law No 107-12 amending Law No 44-00 on off-plan sales.

Furthermore, specific laws apply to the transfer of certain types of real estate (land belonging to the private state domain, collective lands, individual property of unregistered land (moulkiya), agricultural land, etc).

No specific provisions apply to the industrial, office or retail sectors.

Under Moroccan law, ownership of registered land transfers only when the notarised deed of sale is officially registered with the Land Registry. This process ensures the buyer’s rights are enforceable against third parties and nullifies any prior claims not recorded on the title deed. Additionally, Land Registry records are publicly accessible for a nominal fee of MAD100, providing transparency in property transactions. Title insurance is rarely used in Morocco, as the registration system itself offers legal certainty and protection.

With respect to legal matters, real estate due diligence generally includes the following:

• title and encumbrances: to confirm the seller’s valid and full ownership and ensure the title is free and clear from any liens or encumbrances such as mortgages, preventative seizure, etc;
• construction matters: reviewing building permits, permit to inhabit or compliance certificate, guarantees and related insurance coverage;
• third-party rights: assessing any rights held by third parties that may affect the property;
• rental situation: verifying the rental status of the property;
• contracts relating to the property: examining any existing contracts tied to the property;
• corporate matters: comprehensive corporate due diligence, which must be conducted if the asset is acquired through a share deal; and
• litigation: reviewing documentation related to any ongoing litigation.

Buyers conduct due diligence by systematically reviewing key areas, often with legal, financial and technical experts, to identify any hidden risks or liabilities related to the property.

The following guarantees are mandated by statutory law for the seller, and may be extended or limited by the parties:

• a guarantee of eviction: protects the buyer against any restriction on the use of the property, whether imposed by the seller or by any third parties claiming rights over the property; and
• a guarantee against hidden defects: claims must be made within two years of delivery and, in all cases, within five years from the conclusion of the deed of sale (unless otherwise agreed).

The seller’s warranties in a share deal cover standard representations, including the company’s existence, share capital, ownership, corporate matters, financial standing, accounts accuracy, operations, key contracts, employment, litigation and tax matters.

There is not typically a cap on the seller’s liability for a breach of its representations and warranties.

Representation and warranty insurance is not a common practice in Morocco.

When considering the purchase of real estate in Morocco, investors should consider the following:

• the general principles of contract law, including provisions governing the sale and purchase of real estate;
• tax regulation and structuring aspects;
• foreign exchange control regulations, especially the rules applicable to the transfer abroad of revenue generated from investments made in foreign currencies in Morocco;
• registration and publicity formalities;
• construction, urban planning and zoning regulations;
• environmental regulations;
• legal requirements for tourism, hospitality or other industry-specific activities;
• regulations applicable to the contemplated business activity to be conducted from/within the building; and
• regional and local practice or customs.

Moroccan environmental law follows the “polluter pays” principle in Article 2 of Law No 11-03, holding polluters liable for damages and remediation. If pollution is found, the property owner must prove a previous owner or tenant caused it to avoid liability.

Zoning and planning regulations must be reviewed before launching a construction project or applying for a building permit. Local plans and regulations are publicly accessible for a nominal fee from the urban agency through a note de renseignement, which specifies applicable land uses, footfall limits, maximum building height and other restrictions. While no agreement with public authorities is generally needed for private developments, exceptions apply. For specific real estate projects – mainly in tourism, industry, artisanal sectors or social housing – developers can request and obtain special authorisation from the relevant authorities to deviate from urban regulations.

Under Law No 7-81, the Moroccan state may expropriate land for public necessity or temporary use through an administrative and judicial procedure. In such cases, the owner must receive compensation based on the actual damage directly caused, determined by the property’s value on the expropriation decision date.

Asset Deals

For asset deals, the following taxes and fees apply:

• notary public fees, which are typically around 1% of the purchase price and usually paid by the purchaser;
• registration duties with the tax administration, which arepaid by the purchaser within 30 days of the execution date of the purchase agreement and calculated as follows:
1. 5% of the purchase price (for bare land or buildings intended for demolition); or
2. 4% of the purchase price for constructed buildings (regardless of their use, ie, housing, commercial, industrial, etc); and       
• registration fees with the Land Registry, amounting to 1.5% of the purchase price, which are required to register the deed of sale and update the Land Register, and also paid by the purchaser within three months from the deed of sale execution date (once the deed is duly registered with the tax administration).

Share Deals

If a target company in a share deal qualifies as a “real estate company”, the share transfer is subject to a 6% registration duty, calculated on the purchase price and payable to the tax administration. A real estate company is defined as one whose gross assets consist of at least 50% real estate assets (including shares in other real estate companies), assessed at the start of the financial year in which the sale occurs. Properties used for the company’s own commercial, industrial or other activities are excluded from this threshold, but ongoing constructions are included.

If the target is not a real estate company, the share purchase agreement must still be registered with the tax authorities but is exempt from registration duties. However, late registration may incur penalties of up to MAD100,000.

The purchase of shares in a real estate company does not incur notary public fees, as the deed does not require authentication, nor does it require Land Registry registration fees, as property ownership remains unchanged.

Apart from some industries – including agriculture, fishing, audiovisual media, banking and insurance – there are generally no limitations on foreign investors buying real estate (either directly or indirectly through the purchase of a company holding real estate assets).

However, specific regulations apply to agricultural land, distinguishing between purchase for agricultural and non-agricultural uses.

Agricultural Use

Before the reform under Law No 62-19, Law No 1-73-645 of 23 April 1975 prohibited foreign individuals, legal entities, and companies with non-Moroccan shareholders from purchasing agricultural land outside urban areas for agricultural use.

Law No 62-19 now allows joint stock companies and limited liability partnerships, regardless of foreign ownership, to acquire such land. However, this is subject to prior approval by the unified regional investment commission and the signing of a specific sale and purchase agreement, for which the official template has yet to be published.

Non-Agricultural Use

In accordance with the provisions of Decree No 2-04-683 of 6 January 2005 on the regional commission responsible for certain land transactions, foreign natural and legal persons may purchase rural agricultural land with a view to carrying out an investment or other economic project of a non-agricultural nature. This is subject, however, to requesting and being granted a certificate of non-agricultural use.

Real estate investors in Morocco typically finance the acquisition of commercial properties through a combination of equity, including internal shareholder financing, and bank loans.

Lenders often request the following securities:

• a mortgage over the real estate asset;
• a pledge over the business;
• a pledge over receivables;
• a bank account pledge;
• a delegation of insurance proceeds;
• assignment of receivables (especially rents when the asset is leased); and
• a pledge of shares.

Enforcing a security in Morocco for a foreign lender involves transferring enforcement proceeds abroad, which typically requires spot authorisation from the Foreign Exchange Office, as the General Instruction on Foreign Exchange does not explicitly permit this operation.

For loan repayments, the General Instruction allows foreign financing under specific conditions, enabling a Moroccan borrower to repay a foreign lender.

Additionally, creating the beneficiary’s administrative file at the Land Registry can be complex. It requires collecting corporate and administrative documents in original, certified or apostilled form and may sometimes involve an exequatur procedure, leading to potential delays.

The following tax registration obligations and Land Registry fees are applicable upon the registration of a mortgage (which is mandatory).

• Registration duties (payable to the tax authorities): These are calculated on the total amount secured, but the taxable basis also includes – in addition to the amount secured in the principal – the expected expenses (or 6% of the principal if no estimation is made) and the interest (capped at the value of the interest paid over two years). The amount of the taxable basis thus determined is subject to registration duties at a rate of 1.5% and is payable within 30 days following execution of the mortgage.
• Land Registry fees: These depend on the value of the mortgage, as follows:
1. lower than MAD250,000 – 0.5%;
2. between MAD250,000 and MAD5 million – 1.5%; and
3. above MAD5 million – 0.5%.

A fixed duty (per property) of MAD100 also applies.

No stamp duties apply to credit or security agreements (subject to exceptions).

The enforcement of a security requires no specific fee.

In addition to corporate authorisations, a Moroccan entity must ensure that the following rules are complied with when granting any security.

• Financial assistance rule: Article 280 of Law No 17-95 on joint stock companies prohibits a target company from providing financial assistance – through advances, loans or security – for a third party to subscribe to or purchase its own shares. This restriction applies when the assistance is given in view of the acquisition or during the transaction. In theory, this prohibition does not apply to limited liability companies, as Law No 5-96 governing them contains no similar provisions.
• Corporate benefit rule: Any company decision must serve its best interest.
• Corporate purpose rule: Any security granted by a Moroccan entity for a third party must align with the entity’s corporate purpose.

In addition, the creation of movable and immovable securities will require (as the case may be) the completion of registration formalities with the National Register of Securities over movable assets or with the competent Land Registry.

The secured lenders should have no difficulties collecting on a mortgage as long as the following criteria are met:

• the mortgage is duly registered in the local Land Registry;
• it is a first-ranking mortgage; and
• the borrower is not undergoing insolvency proceedings.

It usually takes between six and 12 months to successfully enforce a mortgage.

Under Section 169 of Law No 39-08, debt priority is determined by the registration date, with same-day registrations having equal rank. Priority remains valid until officially withdrawn.

To subordinate an existing mortgage to a new one, creditors must enter into a subordination or intercreditor agreement, which defines rank exchange and enforcement rights.

In principle, and provided that they did not cause the damage themselves, the holder of security over real estate cannot be held liable for environmental damage.

A security interest granted by a borrower remains valid under Moroccan law, even in case of insolvency.

However, creditors cannot enforce security interests during insolvency proceedings. Non-privileged creditors are barred from initiating or continuing individual claims against the debtor.

Additionally, under Article 714 of the Commercial Code, if a security is deemed harmful to the bankruptcy estate, the court may annul securities granted within six months before the debtor’s bankruptcy declaration.

Loans granted by Moroccan licensed banks and loans granted by a direct shareholder to its subsidiary are exempted from registration duties, but other loans (eg, those granted by foreign banks not licensed in Morocco) are subject to 1.5% registration duties (calculated on the principal amount of the loan).

Law No 12-90 on urban planning sets out the general rules applicable to strategic planning and zoning.

Urban Development Master Plans and zoning plans are used to establish strategic plans and zoning schemes. Each municipality prepares development plans, which categorise the land into distinct use zones and assign a different building density ratio to each zone.

In practice, public law regulates a landowner’s ability to build a new building or refurbish an existing one through an administrative authorisation that must be obtained prior to beginning any construction work.

Overall responsibility for regulating the development and designated use of individual parcels of real estate lies largely with local authorities, including the urban agencies and the Regional Investment Centres responsible for issuing building permits.

A variety of authorisations and permits are necessary for the construction of a real estate project:

• Law No 12-03 relating to environmental impact assessment sets out a list of projects which must be subject to an environmental impact assessment and an environmental acceptability decision from the Ministry of Energy, Mines and Environment in order to be authorised.
• Law No 49-17 on environmental assessment was recently published in the Official Gazette and will take effect once its implementation regulations are issued. It requires all projects with potential environmental impacts to undergo an environmental impact assessment. For projects existing before the law’s enforcement without prior assessments, an environmental evaluation will be conducted.
• Regarding construction of hazardous facilities, authorisation must be obtained from the relevant authorities (or a declaration has to be filed, depending on the nature/class of the facilities) prior to beginning construction work.
• A building permit must be obtained in order to carry out construction work. Generally speaking, the permit is issued once all the authorisations and visas required by specific laws and regulations have been obtained.
• After completing permitted construction, the architect must declare it, and the owner must obtain either a permit to inhabit for residential buildings or a compliance certificate for non-residential buildings. These permits confirm compliance with the initial building permit and are required before the building can be used.
• Repair works on existing buildings do not require a building permit but do require a separate permit issued after assessment by the local planning authority.
• By Order No 338-20 of 21 January 2020, a dematerialised procedure was set up for the submission and processing of applications for town planning authorisation, via an online platform known as Rokhas.

As an administrative act, any decision taken by the authorities must be justified and may be appealed before the relevant authority and/or the administrative courts. A lawsuit may also be filed by third parties with a specific interest that deserves protection before the administrative authority or before the court, by asking for the decision to be annulled.

There is generally no need to enter into agreements with local or government authorities or agencies, or utility suppliers, in order to facilitate a development project.

Failure to comply with the applicable building and planning regulations may result in:

• closure of the site in the absence of a valid building permit;
• the obligation to modify the building to bring it into compliance with the regulations in force; or
• the obligation to demolish the construction work.

In all cases, the offender is liable to a fine ranging from MAD1,000 to MAD100,000.

Furthermore, anyone who continues operating a project despite being notified of the site’s closure may face imprisonment for a period of 15 days to three months.

Real estate assets may be purchased by either natural individuals or legal entities. Companies usually possess substantial or valuable assets, with the most popular corporate forms including:

• the joint stock company (société anonyme – SA) governed by Law No 17-95 (as amended);
• the simplified joint stock company (société par actions simplifiée – SAS) governed by Law No 5-96 (as amended);
• the limited liability company (société à responsabilité limitée – SARL) governed by Law No 5-96 (as amended); and
• the real estate civil company (société civile immobilière – SCI) governed by the Moroccan Obligations and Contracts Code.

The types of companies mentioned in 5.1 Types of Entities Available to Investors to Hold Real Estate Assets are generally subject to corporate income tax (CIT) in Morocco, except for “transparent” property companies as defined by the tax code. These are real estate companies divided into nominative shares, where members directly benefit from rights to the property, by either occupying a unit or freely disposing of a portion of the property.

The finance bill for 2023 introduced changes to CIT rates, aiming for a standard flat rate of 20% for most companies starting from financial years beginning in or after January 2026. However, exceptions apply: companies with profits exceeding MAD100 million will be subject to a 35% CIT rate, while licensed banks and insurance companies will continue to pay a CIT rate of 40%.

The following rates are applicable (or will be applicable) apply to the net income (including rental income) as outlined below:

• under MAD300,000 – 17.5% in 2025 and 20% in 2026 (and beyond);
• between MAD300,000 and MAD1 million – 20% in 2025 (and beyond);
• between MAD1 million and MAD100 million – 22.75% in 2025 and 20% in 2026 (and beyond); and
• over MAD100 million – 34% in 2025 and 35% in 2026 (and beyond).

Joint Stock Company (SA)

A joint stock company (société anonyme, or SA) is a form of limited liability company in which each shareholder’s liability is, in principle, limited to the amount of their contributions to the company. An SA requires a minimum of five shareholders.

Unless the company’s articles of association impose specific restrictions – such as a temporary lock-up period or a prior approval clause for share transfers – shares in an SA are generally freely transferable.

Simplified Joint Stock Company (SAS)

A simplified joint stock company (société par actions simplifiée, or SAS) is a flexible corporate structure well-suited for companies with high growth potential. Unlike an SA, an SAS’s shares cannot be listed on the stock exchange.

An SAS can be formed by one or more shareholders, which may be either individuals or legal entities. Shareholder liability is limited to the amount of their respective contributions. The shares are generally freely transferable unless restrictions are included in the company’s articles of association. If a lock-up clause is established, Moroccan law provides that the lock-up period cannot exceed ten years.

Limited Liability Company (SARL) and Sole Shareholder Limited Liability Company (SARLAU)

The Moroccan equivalent of a limited liability company is the société à responsabilité limitée (SARL). This type of company can be formed with a single shareholder, in which case it is referred to as a sole shareholder limited liability company (SARLAU), or with up to 50 shareholders. Each shareholder’s liability is limited to their individual share contributions.

The SARL is a popular choice for small and medium-sized enterprises due to its simplified management structure and fewer regulatory requirements compared to an SA. However, unlike an SA, an SARL cannot be listed on a stock exchange and is not permitted to issue preference shares or securities that are convertible into shares (such as convertible bonds).

Real Estate Civil Company (SCI)

A real estate civil company (société civile immobilière, or SCI) is a civil company whose purpose is to hold real estate assets. As a civil company, an SCI is not permitted to engage in commercial or trading activities. The shareholders are indefinitely liable for the company debts, in proportion to the shares they hold in the share capital.

Decree No 2-23-100, effective 22 October 2024, implements Law No 31-18 to regulate SCI in Morocco, curb disguised commercial activities and enhance transparency. It imposes strict requirements on (i) formalising SCI constitution via a new Real Estate Civil Companies register, (ii) controlling SCI activities, and (iii) ensuring manager and partner accountability. Existing SCIs have one year to comply, with sanctions for non-compliance.

REITs are commonly available in Morocco.

There are two different forms of OPCI:

• a real estate investment trust (fonds de placement immobilier – FPI) organised in the form of a co-ownership without legal personality; and
• a real estate investment company (société de placement immobilier – SPI) organised as a joint stock company.

In both cases, their purpose is the construction or acquisition of buildings exclusively for rental purposes, which they hold directly or indirectly, as well as all operations necessary for their use or resale.

Furthermore, OPCIs can be classified into two categories:

• publicly open OPCIs, in which any investor may participate; and
• OPCIs with simplified operational rules (OPCI-RFA), reserved for qualified investors.

OPCIs are open to foreign investors, with assets allowed in free zones or abroad, denominated in foreign currency or under foreign laws, subject to foreign exchange regulations. However, the OPCI management company must be based in Morocco.

Investors can benefit from a number of advantages by investing in OPCIs:

• easy access to the real estate market;
• liquid investment in real estate via OPCIs;
• optimising net income through the OPCI’s rental assets;
• professional property management; and
• an attractive tax regime aiming at a certain neutrality of the vehicle.

The creation of an OPCI is subject to a number of conditions, including but not limited to:

• management by a management company (société de gestion), which itself is subject to certain conditions;
• obtaining (i) the authorisation of the Moroccan market regulator (Autorité Marocaine du Marché des Capitaux – AMMC), and (ii) the AMMC’s approval of the OPCI’s information document;
• having a minimum share capital (SPI)/minimum initial contribution (FPI) of MAD50 million; and
• compliance with applicable rules governing the asset mix of the OPCI.

SA

A joint stock company requires a minimum share capital of MAD300,000, or MAD3 million if its shares are traded on the stock exchange. Contributions can be made in cash or in kind. Contributions in kind are subject to a specific valuation process conducted by an independent appraiser.

SAS

The minimum share capital requirement for a simplified joint stock company is not specified by Moroccan legislation.

SARL

A limited liability company is not required to have a minimum share capital. Contributions must be provided in kind or in cash, it being specified that contributions in kind must undergo specific valuation process conducted by an independent appraiser.

SCI

A minimum share capital of MAD1 is required for a real estate civil company. Contributions can be made in cash or in kind, or may consist of technical skills.

SA

An SA may have either (i) a board of directors, or (ii) a management board and a supervisory board. The CEO is responsible for the day-to-day management of the SA and has the broadest powers and authority to represent the company before third parties.

SAS

An SAS is primarily governed by the provisions set forth in its articles of association, which provide substantial flexibility in determining its governance structure. As such, the governance of an SAS is largely free and customisable, allowing shareholders to tailor management and operational procedures according to their specific needs and preferences.

SARL

An SARL is managed by at least one manager, who must be an individual and who has the broadest power and authority to represent the company before third parties, except for matters legally restricted to shareholders.

SCI

An SCI is managed by at least one manager, who must be a shareholder of the company (if the articles of association of the company do not specify this point, all the shareholders have the powers and authority to manage the company).

SA

An SA must appoint at least one statutory auditor (two if the company is listed), and is required to file its accounts annually. These accounts must be certified by the statutory auditors who file them with the tax authorities, to which are added the statutory auditors’ fees for the certification of the annual accounts. Then, these certified financial statements are closed by the board of directors and approved by the shareholders’ meeting before being filed with the trade registry (costs of MAD50).

SAS

In an SAS, there is no legal obligation to appoint statutory auditors unless the company’s annual turnover (excluding VAT) exceeds an amount set by decree (it being specified that this decree has not yet been promulgated). An SAS is also required to file its annual accounts, duly approved by its president, with the local tax authorities and the trade registry.

SARL

An SARL must appoint statutory auditors only if its annual turnover exceeds MAD50 million. An SARL’s annual accounts must also be filed, after being duly approved by its shareholder(s), with the local tax authorities and the trade registry.

SCI

There is no requirement to appoint a statutory auditor in an SCI, nor to file annual accounts.

In Morocco, individuals, companies or organisations can occupy property temporarily without purchasing it through lease agreements, usufruct, commodat (free lease), or authorisation for temporary occupation of private state land.

Moroccan law supplements general lease rules with specific regulations for commercial, professional and residential leases. Law No 67-12 governs residential and professional leases, mainly for independent professionals not engaged in trade or industry. Commercial leases are regulated by Law No 49-16, which outlines their scope of application.

A commercial lease must be granted by the landlord in accordance with Law No 49-16 for:

• premises or buildings in which a business is operated;
• premises or buildings regarded as an accessory to the main premises in which a business is operated;
• premises consisting of undeveloped lands that will be developed and used to operate a business;
• premises or buildings used for commercial, industrial and handicraft purposes and as part of the private state domain; and
• premises and buildings used as private schools, clinics or pharmaceutical laboratories.

Pursuant to Law No 49-16, some premises may not be subject to a commercial lease arrangement, including:

• premises or buildings that are part of the public state domain;
• premises or buildings that form part of the private state domain but are used for the public interest;
• premises or buildings incorporated in a habous;
• premises or buildings rented following a court order;
• premises or buildings located in a shopping mall; and
• premises or buildings located in a dedicated zone gathering companies operating information technology, industrial or offshore activities.

A key feature of commercial leases is the tenant’s right to renewal. If the landlord terminates the lease before the agreed term, the tenant can claim eviction compensation, calculated based on the business’s value.

Rents and lease terms are generally freely negotiable under the principle of party autonomy and contractual freedom.

Duration

Moroccan law does not regulate commercial lease durations, allowing parties to set any term. Tenants can freely transfer and renew leases. If leases are not renewed, tenants are entitled to eviction compensation based on business value. To claim renewal, a tenant must occupy the premises for two consecutive years or pay key money.

For leases exceeding ten years, the tax administration applies the following registration duties at a rate of 6% on the following tax basis:

• For leases between ten and 20 years: Total rent for the specified period plus charges.
• For leases of 20+ years or unlimited duration: 20 times the annual rent plus charges.

For standard leases, a fixed MAD200 registration fee applies.

Work and Repairs

The parties are free to allocate the various types of work and repairs. However, in general, ordinary repairs and maintenance are borne by the tenant, and the landlord bears the cost of structural and major repairs, as well as repairs resulting from wear and tear, force majeure and construction defects.

Frequency of Rent Payments

The parties are free to negotiate the frequency of rent payments. Rent for commercial premises is usually payable monthly or quarterly in advance.

Moroccan regulations allow tenants and owners to set rent, revision terms and adjustment rates freely. However, Law No 07-03 limits rent increases for residential, professional, commercial, industrial and craft leases.

• No rent increase within the first three years of the lease or since the last judicial/contractual review.
• Increase caps: 8% for residential leases, 10% for others.

If no revision terms are agreed upon, either party may request judicial review based on these limits.

Law No 07-03 provides that a rent increase may only apply every three years following the signing of the lease agreement or the date of the previous judicial or contractual rent review, provided that any such increase is limited as follows:

• for residential leases – an 8% increase in the current rent; or
• for other leases – a 10% increase in the current rent.

VAT is payable at 20% on rent in the following cases (otherwise it is generally out of scope of Moroccan VAT):

• Taxable rental transactions:
1. rental of furnished premises;
2. rental of equipped premises for business purposes;
3. rental of non-equipped premises for business purposes when they were acquired within the scope of VAT; and
4. rental of non-equipped premises for business purposes in which an intangible asset of the business is included; and
5. rental of premises in commercial complexes (“shopping malls”).
• Rental transactions not subject to Moroccan VAT:
1. non equipped premises which were purchased out of scope of VAT.

If VAT is not applicable, the landlord can opt to pay 20% VAT, enabling VAT deduction on rental-related expenses. This requires a formal request and may apply – globally or partially – to a specific real estate project, building, premises or apartment.

Under Moroccan law, tenants do not incur additional costs at the start of a lease, except for a registration duty of MAD200 payable to the tax administration. Lease registration with tax authorities is mandatory within 30 days of execution.

While the tax code does not specify who must pay this fee, it is generally market practice for the tenant to bear the cost.

The tenants generally bear the maintenance and repair costs for common areas by way of service charges, in proportion to the area of the premises occupied by each tenant relative to the total area of the property.

Parties are free to determine which of them will pay the operating fees (eg, electricity, water, telecommunications and other utilities), but the utility costs are generally borne by each tenant according to their specific needs and usage.

Property tax responsibility depends on lease terms, but general rules apply. For individuals, the taxe d’habitation applies to buildings used as a main home or by relatives. It is levied on the owner (or usufructuary) or, if absent, on the possessor or occupant. The taxable rental value is determined by comparison and reduced by 75% for the main home, with a 2% increase every five years. The tax rate ranges from 0% to 30%, with 30% applying if the rental value exceeds MAD40,000. Companies and professionals renting premises are subject to business tax (taxe professionnelle) and municipal tax (taxe des services communaux), as detailed in 8.3 Municipal Taxes.

In Morocco, landlords and tenants typically subscribe to various insurance policies to safeguard their interests under a lease agreement.

For landlords, typical policies include the following:

• Assurance propriétaire non occupant: This type of property insurance covers the landlord’s property against risks such as fire, theft and natural disasters. It is designed for landlords who do not reside in the property themselves.
• Responsabilité civile propriétaire: Liability insurance for landlords protects them in case a tenant or visitor is injured on the property and files a claim for damages. It covers legal expenses and compensation for bodily injury or property damage.
• Assurance loyers impayés: This insurance protects landlords against the risk of rental income loss due to tenant non-payment of rent. It typically covers unpaid rent and legal expenses associated with eviction proceedings.

For tenants, typical policies include the following:

• Assurance multirisque: Renter’s insurance provides coverage for the tenant’s personal belongings inside the rental property and includes liability coverage for damages caused to third parties.
• Assurance dommages aux biens: Insurance that tenants can purchase to cover damage to the landlord’s property caused by the tenant. It may include coverage for accidental damage, such as broken windows or damaged appliances.

The parties generally provide that the leased premises are rented for a specific purpose, with any change being subject to the landlord’s prior consent. In addition, the use of the leased premises may be restricted by legal or regulatory provisions, such as town planning and zoning regulations.

In the context of commercial leases, a judge may grant permission to the tenant (even after a refusal by the landlord) to carry out one or more activities that are ancillary or related to the initial business activity, as long as they are not in conflict with the purpose, characteristics and location of the building and they are not likely to affect its security.

Law No 49-16 provides no specific provisions regarding works initiated by the tenant.

In any case, the parties are free to agree on the preferred work regime for the tenant, and it is generally provided that the tenant may not alter or improve the premises without the landlord’s prior consent, especially if the work is substantial and affects the structure of the building.

Specific regulations apply to financial leases (credit bail), lease agreements for the use of agricultural land, temporary occupation authorisations for publicly owned land, etc.

The Moroccan Commercial Code governs insolvency proceedings but lacks specific provisions for leases when the lessee is insolvent. If insolvency does not lead to liquidation, a court-appointed administrator may maintain the lease if it is essential to the tenant’s business. Under Article 588 of the Code, a lease cannot be terminated solely due to judicial reorganisation proceedings.

A tenant has no right to remain in occupation of a property after the expiry or termination of a lease. Therefore, if the premises are not vacated on the due date, the landlord can obtain a court order to regain possession of the premises. The lease may also contain other penalty clauses if the property remains in use after the expiry of the lease without due cause.

Under Law No 49-16, tenants cannot be deprived of the right to assign their leasehold interest, whether with or without their business. However, they and the assignee must notify the landlord, as the assignment is not binding until notice is given. The tenant remains liable for prior commitments. Unless the lease states otherwise, subleasing is allowed, but the tenant must notify the landlord, with the sublease taking effect from the notification date.

Law No 49-16 permits landlords to seek judicial termination if the lease includes a termination clause and the tenant fails to pay at least three months’ rent despite a 15-day prior notice. Landlords may also refuse lease renewal without eviction compensation in cases such as unauthorised alterations, non-payment, unauthorised subleasing, or misuse of the premises.

It is market practice for the tenant to pay the registration fee, even though the tax code states that the party to whom the lease is beneficial must pay the registration fee. However, the lease may provide otherwise.

As mentioned in 6.19 Right to Terminate a Lease, Law No 49-16 allows the landlord to apply to the court for early termination of the lease and eviction of the tenant in certain cases. In practice, however, this is a rather time-consuming and difficult process.

Third parties are not entitled to seek the termination of a valid lease agreement. This being said, Law No 49-16 states that any public authority may terminate the lease if this is in the public interest, in which case the landlord is not required to pay eviction compensation to the tenant.

Article 264 of the Code of Obligations and Contracts defines contractual damages as compensation for actual loss and lost profit directly resulting from a breach, excluding indirect and consequential damages. It is common to specify indemnification obligations in contracts, including leases.

Parties may choose between two types of pricing mechanism (sometimes combined) for construction projects:

• quantity construction contracts, by which the contractor performs construction work for a price based on the quantities actually used for the work; or
• lump-sum price construction contracts, in which the contractor carries out the work for a fixed and non-revisable price agreed upon at the time of signing.

Different types of contractual arrangement can be adopted by the owner:

• separate contracts with the design team and the construction contractor, in which case responsibility for the design will be assumed by the design team, while the contractor will be in charge of the work; or
• a single design and construction contract with a contractor, under which the contractor responsible for the work will also be responsible for the design.

A Moroccan architect is mandatory for building permit applications. They draft design plans, prepare the application, oversee construction, assist in project handover, and issue the final statement to obtain the compliance certificate or permit to inhabit.

In a private construction contract, the following mechanisms are typically used to manage construction risks (and are freely negotiated by the parties):

• Representations and warranties of the contractor regarding the feasibility of the project, the contractor’s knowledge of the technical, environmental and legal framework applicable to the project and its ability to carry out the work under the conditions provided for in the contract.
• Holdbacks, whereby the owner retains payment of a certain amount (usually up to 10% of the contract price) to guarantee the remediation of any defects arising on the date when the work is provisionally accepted.
• A performance bond to secure the payment of any penalties that may be imposed on the contractor for a delay or breach of contract, which is normally returned to the contractor or waived following the final acceptance of the work.
• A penalty for breach/liquidated damages.
• Insurance policies covering professional construction activities and the coverage of certain assets.

Delay provisions help mitigate schedule-related risks in construction projects, except in cases of force majeure, unforeseen events or owner-attributable delays. Penalties are typically capped at a percentage of the contract price. Under Article 264 of the Code of Obligations and Contracts, judges can assess and reduce contractual penalties.

Owners typically ask contractors for security to ensure timely completion and accurate performance of the work. A completion guarantee/performance bond as well as holdbacks (often replaced by a bank guarantee) are frequently provided by the contractor to the client (see 7.3 Management of Construction Risk). Also, it is standard practice for clients to require an advance payment bond, payable on first demand, to ensure that any advance payments made by the client prior to the commencement of work are repaid.

There are no specific provisions in Moroccan law regarding the ability of contractors and/or designers to pledge or otherwise encumber property in the event of non-payment by the client. Only the client is entitled to use the property as security, as the property is generally owned by the client.

Construction contracts typically outline conditions precedent for handover. Upon completion, a provisional handover is conducted, even if minor defects remain, which the contractor must fix during the usual one-year warranty period. After this period, final handover occurs. The owner must then obtain a permit to inhabit for residential buildings or a compliance certificate for non-residential buildings. Using a building without this permit may result in fines and criminal liability.

Real estate sales and purchases generally do not require payment of VAT (ie, when a property is second hand rather than a new building).

Pursuant to Article 89-I-4° of the tax code, VAT is payable on real estate work, subdivision/allotment operations and real estate development transactions (the sale of plots in a real estate development project is subject to VAT at a rate of 20%).

The acquisition of large real estate portfolios has the same tax consequences as the purchase of a single real estate asset: if the transaction involves the direct purchase of real estate, it is subject to registration fees and property registration (see 2.10 Taxes Applicable to a Transaction).

However, in order to minimise the tax cost, it might be possible to acquire shares in a company that does not qualify as a real estate company (ie, that does not have gross assets composed of at least 50% real estate properties/other real estate companies). In that case, the transaction would be free of registration duties and no property registration fee would be payable (see 2.10 Taxes Applicable to a Transaction).

When renting out commercial or industrial premises, tenants are liable for two main local taxes: business tax and tax on municipal services.

Business Tax

Pursuant to Article 6-II-1° of Law No 47-06on local taxation, all newly created professional activities benefit from a total exemption of business tax for the first five years after starting their activity. Business premises benefit from this exemption.

The taxable basis for business tax is the gross yearly rental value of all the assets available to the company (including assets purchased and rented). Newly incorporated companies benefit from a five-year business tax exemption, regardless of their legal purpose.

For hotel/housing activities, the taxable basis is determined by multiplying the construction/building cost by the following proportional rates:

• 2% if the construction cost is lower than MAD3 million;
• 1.5% if the construction cost is equal to or higher than MAD3 million and less than MAD6 million;
• 1.25% the construction cost is equal to or higher than MAD6 million and less than MAD12 million; and
• 1% if the construction cost is equal to or exceeds MAD12 million.

Companies that do not own the premises they occupy must also include the amount of rent paid to the owner for all types of leases (real estate, leasing, etc) in the taxable basis.

The applicable rate is based on the nature of the activity and ranges from 10% to 30%, applicable on the annual rental value of assets used for the activity.

Tax on Municipal Services

The taxable basis for the tax on municipal services is determined with reference to the rules applicable to business tax. In principle, the municipal tax services taxable basis is identical to the business tax taxable basis (the taxable basis is reported in the same return for both taxes).

There is no exemption for the start of the activity regarding this tax (ie, it is payable as from the first year of activity).

The tax rate for the municipal services tax differs according to the geographical location of the activity, as follows:

• 10.5% for properties located within the scope of urban municipalities, delineated centres and summer, winter and spa resorts; and
• 6.5% for properties located in outlying areas of urban municipalities.

Companies that do not use the properties they own are not liable for the business and municipal taxes on such properties; instead, the tenant is subject to the taxes relating to these properties.

The applicable regime is based on the distinction between companies and individuals.

Companies

According to the tax code, foreign investors owning property in Morocco are subject to corporate income tax on revenues deriving from that property (depending on the provisions of any double taxation treaty that may govern taxation, but generally capital gains on real estate are taxed in the country where the property is located).

The corporate income tax rates detailed in 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity apply for 2024, 2025 and 2026 before reaching a flat rate of 20%, depending on the taxable income (ie, mainly the capital gain generated by the sale of a real estate property located in Morocco and made by a foreign investor).

Individuals

The real estate rental income of individuals is subject to income tax base on the general progressive rates which marginal rate is 37% (for yearly income exceeding MAD180,000), after taking into account a 40% rebate of the taxable basis.

If the lessee is a business (company or not), it is required to withhold the income tax on a monthly or quarterly basis based on the following proportional rates:

• lower than MAD40,000 – withholding tax exemption (which does not mean a tax exemption for the owner);
• between MAD40,000 and MAD120,000 – 10%; and
• more than MAD120,000 – 15%.

The owner must report rental income and pay any tax due, factoring in amounts withheld by the lessee. They may opt for a 20% flat tax instead of progressive rates (up to 37%) with a 40% rebate on the taxable base.

Capital gains on real estate are taxed at 20%. If a capital loss occurs (sale price lower than purchase price), a minimum tax of 3% of the sale price applies. The sale of a primary residence held for over five years is tax-exempt unless the price exceeds MAD4 million, in which case a 3% minimum tax applies to the excess amount.

Exemption

The following is exempt from personal income tax: capital gains made by anyone who, during the calendar year, transfers buildings with a total sale price up to MAD140,000.

Double Tax Treaties

Morocco’s double tax treaties generally stipulate that income and capital gains from immovable property are taxable only in the country where the property is located. Consequently, rental income and capital gains earned by foreign investors on Moroccan property are subject to Moroccan income or corporate tax.

Without a tax treaty, taxation in Morocco applies, potentially leading to double taxation. In both cases, rental income and capital gains from Moroccan properties are generally taxed under standard conditions.

Legal entities subject to corporate income tax can deduct amortisation on real estate, excluding land value, based on authorised rates set by industry practices and tax administration guidelines. The recommended tax deduction rates are 4% for residential and commercial buildings and 5% for permanently constructed industrial buildings.

Furthermore, the main new innovation in real estate ownership is the setting-up of Moroccan REITs (OPCIs), which enjoy the following tax incentives:

• Regarding the OPCIs’ upfront capital investment:
1. a deferral from the tax on capital gains (either individual or corporate income tax) on in-kind contributions of real estate properties for all OPCIs created;
2. taxes on capital gains are paid on the sale of all or part of the OPCI shares;
3. an exemption from registration duties to the tax administration; and
4. 1.5% for registration fees with the Land Registry remain payable.
• Regarding the taxation of the OPCIs:
1. an exemption from corporate income tax; and
2. an exemption from taxes on dividend and interests.
• Regarding the taxation of shareholders:
1. corporate income tax at the standard rate;
2. taxes on dividends received by individuals at a rate of 13.75% (from 2023, the rates will change each year until 2026, when the rate will be 10%);
3. taxes on dividends received by non-residents at a rate of 13.75% (from 2023, the rates will change each year until 2026, when the rate will be 10%);
4. capital gains tax for individuals at a rate of 20%;
5. capital gains tax for companies at the standard rate; and
6. an exemption from registration duties to the tax administration.

An OPCI may obtain a total exemption from corporate income tax (rental income, capital gain, dividend) if it meets the following conditions:

• assessment is made by an auditor;
• it holds the assets for a minimum of ten years from the date of contribution; and
• it distributes:
1. at least 85% of the result of the fiscal year relating to the leasing of buildings built for residential or professional use;
2. 100% of the dividends and shares received;
3. 100% of the fixed investment revenues received; and
4. a minimum of 60% of the capital gains on the sale of securities.