Repatriation of funds

[globalinvest]

Is it true that if you don't invest your funds through a bank in morocco, then you cannot repatriate the funds during a resale? What are the rules for repatriaton of funds....?

If I buy a property today for £50k, and sell it for £100k in 5 years, how would the finances work...any ideas?

Thanks.

 

[imported_Prolan]

Is it true that if you don't invest your funds through a bank in morocco, then you cannot repatriate the funds during a resale? What are the rules for repatriaton of funds....?

If I buy a property today for £50k, and sell it for £100k in 5 years, how would the finances work...any ideas?

Thanks.

Hi Moneyman,

From my research it seems that you got it right. All profits can be repatriated on the condition that investment can be traced back by the exchange commission. This can be achieved only by investing through funds deposited in a Moroccan bank account.

Hope this helps even if it probably confirms what you didn't want to hear.

Kind regards,
Prolan

 

[moroccobound]

All profit, less 20% capital gains tax on the 'offical' selling price can be repatriated if the Notaire files the appropriate papers with the foreign exchange authorities. It should be noted that not all money brought into Morocco can be repatriated.

 

[Lee Filkins]

Moroccobound: Can you please give us an example as to what type of funds that you consider will not be allowed to be repatriated ????????????

Does that mean that I have to leave these funds for my six moroccan wives and two camels ????

 

[imported_Prolan]

Hi moneyman,

I didn't notice the 5 year span in your post and moroccobound is correct in drawing your attention to tax matters. If you hang onto your property for more than 10 years ==> there is no capital gains (TPI tax) in Morocco.

If you hang onto it for more than 5 years: the capital gains tax is 10%. For any capital gain on property held less than 5 years the tax is 20%.

Inheritence tax for family members is 0% should you leave the property to one of your family members.

Tax on rental income: first three years excempt. After that you pay tax on 60% of the rental income at a rate of between 22% and 44% depending on exact location.

Please take these as guidelines only and consult a tax advisor to assess your personal circumstances.

To return to the topic of repatriating your funds: the general rule is to never part with cash...always leave a trace either via a cheque or a bank transfer. As long as your funds can be traced by the exchange commission there shouldn't be issues in repatriating the funds.

Hope this helps.

 

[imported_Prolan]

Hi Camel,

Even worse....the money will probably go in the King's pocket...and he certainly doesn't need it. Kidding.

The money will still be yours to enjoy but only in Morocco.

So again I cannot say it enough...make sure your funds can be traced back (no cash) by the exchange commission (your notary will inform the commission when he takes some money from you). Please also be aware that not all sales go through notaries, some people buy and sell through Aduls ==> (registrars) and I don't know if those transactions are communicated to the exchange commission.

Anyway I would avoid any purchases unless it goes through the Notary.

Regards,
Prolan

 

[Lee Filkins]

Prolon: You are not far wrong where the money will go. Yes he does not need it. But greed has no boundries.

What on earth are you suppose to enjoy that kind of money, once converted into Dirhams ????????????? Any sugguestions. Its for that reason that I was offering an honourable solution of taking up wives and keep the animal loving feternity happy as well.

 

[Beluga]

You must open an bankaccount in Morocco in dirhams converibel . In this way all the transfer of money past to the office of change in Casablanca. When you buy a property , the notaire inform the office of change . When you sell you property , the notaire hold the money untill you can prouve that you pay the 20% taxe between the buy price and the sell price. After this you transfer all the money to Europe. The 20% taxe on the profit is a maximum , if you prooof that you don't have profit anyway you will pay a minimum of 3% because the administration knows that you don't give the right figures.

 

[Shawaz]

This thread has got me very concerned... I am seriously considering buying in the country at the moment but am yet to decide on location and type of property I will purchase. I was under the impression that I could just pay for part of my property from the UK and the rest from Morocco once I’d opened a bank account. If in the future, I sold my property, I was hoping to pay the relevant tax due and then repatriate any profits either back to the UK or put them into another investment back into Morocco or another country.

I have since spoken to a Moroccan solicitor this morning and have been informed that the only way to guarantee the repatriation of funds is to purchase the property through a bank account in Morocco, which will show a trace of all the transfers. Somehow, I’m not too convinced with this answer as I have also read in a few places that the government allows 100% repatriation of funds to UK buyers. I’m about to make some further enquires, especially with the Moroccan Embassy and will post my findings on the forum sometime soon.

 

[globalinvest]

So again I cannot say it enough...make sure your funds can be traced back (no cash) by the exchange commission (your notary will inform the commission when he takes some money from you). Please also be aware that not all sales go through notaries, some people buy and sell through Aduls ==> (registrars) and I don't know if those transactions are communicated to the exchange commission.

Anyway I would avoid any purchases unless it goes through the Notary.

Prolan,

This is quite concerning like Shawaz said....let me get this straight again. There are two ways you can buy property:

a) Off-plan through the developer
b) Resales

The first route is straightforward and I presume you would open an account in morocco anyway before commencing any transactions (barring any reservation fees...)

The second route is my concern. There are a number of investors in the UK who have already bought off-plan and are putting their properties on the resale market. If I was to purchase one of these properties, I will be transferring money to the UK as a start because these investors have already paid their deposit, so they will be looking to get that money back at least.

May be following on, I will be put on a developer payment structure and then I will start paying direct to the developer. So you see, in this situation, there is no choice but to split the payment - part in UK and part in Morocco.

What does one do in such a situation?

 

[moroccobound]

It is quite simple. Most, but not all purchases have two elements, offical and black money (which is often up to 30% of the purchase price).
When one brings money into the country, the foreign currency goes into bank account, often for non residents it is a dirham convertable bank account. When one purchases a property the offical amount should then should be transfered from the bank account the money was deposited into to the Notary's account. This is the only money that is registered with the foreign exchange office. Often extra money is brought into the country for, decoration, building, living and black money, etc. None of this is not registered. This does not mean that you are stuck with dirhams when you leave the country.

Also as long as you are willing to pay the appropriate tax, you can take whatever money you want out of the country. The only way to repatriate the black money when you come to sell is to request this portion to be paid to you outside of Morocco if you are planning on leaving the country or to be paid to you in cash if you are going to purchase another Moroccan property. The goverment does guarantee your right to repatriate your funds, but only the declared funds, this is where the confusion often lies for novices. The problem is simple, once you know your way around the sysem which you will do in a very short period.

 

[globalinvest]

Hi moroccobound,

Are you saying that if I bought a property on resale from another investor and I was paying £30k to him and £70k (as stage payments) to the developer, the £30k is considered black money????

Please forgive my ignorance and bear with me as I'm new to this and just like to understand this in a little more detail. May be its best with an example.

Original price of the property: £70,000
On resale market: £90,000

If buying this property, money to be paid to the original investor: £20k profit + £20k deposit already paid to developer.

Balance payment of £50k (original amount balance) in stage payments to developer.

Now, my £20k profit to the investor will not be accounted for since that is paid in the UK.
The deposit of £20k will have been accounted for by the original investor as paid to the developer.
My balance of £50k to the developer in stage payments will be accounted for.

So all in all, my "traceability" of funds is limited to: £50k even though I am buying for £90k.

Sorry for the detailed post, but I'd like to understand this from an example point of view.

Thanks in advance for your help.

 

[moroccobound]

Moneyman

You got it!

It makes no difference to you what the seller is selling the property for and what if any profit he made on it. That is between him and the tax authorities. What is important to you (for repatriation purposes) is the amount of money you 'officially' pay for the property, ie. what is stated on the Compromise de Vente, not what you 'actually' paid for it. I assume in your example that on paper at least, you would be paying officially only £50,000 for the property. In this example, try to get the seller to sell you the property for £70 'officially' and then do a seperate contract with him where he returns the £20,000 to you. Now you are only out £20,000 for repatriation purposes, although he may not want to do this because he will be paying tax on an extra £20,000.

I am not sure on what condtions the seller is selling you the property, ie. is all the money going to be paid to him in Morocco or does he want some of it in the UK, if so you are right, this amount is not taken into consideration as payment for the property and it will be sold to you 'officially' at the lower price. What is important for the buyer is to show more money on the Compromise de Vente and for the seller, it is to show less money. Negotiations often fail becasue of this particular point.

What is important for you to remember is that when you come to sell, you do the exact opposite in trying to get the Compromis de Vente to show a lower amount than you actually receive.

 

[globalinvest]

This has been one hell of an education!!

Firstly, I don't think the seller will negotiate on the separate contract etc as it means more hassle for him and as you said, more tax!

I have not yet decided to purchase this property, but if I do, all his money will be paid in the UK itself and the balance will be paid to the developer in morocco through stage payments / finance. So basd on the above example, officially I would have only paid 50k for the property and when it comes to reselling say, I sell it for 120k (im buying it for 90k).

That means, I am having to pay tax on 70k!!!!! which seems really really unfair....even if i was to show a lower figure on the CdV, it would be 100k....still tax on 50k when I have only really made a profit of 30k. Somehow, this just doesn't make sense...

So lets look at this the other way around, as if from my viewpoint. In the above example, under the current regulations, what would I need to do to make this transaction "work" for me?

 

[moroccobound]

Moneyman

If it was so impossible to buy here and then resell, there would not be as many foreigners doing it. I would try to have as much money 'offical' when buying and as much money as 'unoffical' when selling. Any good estate agent will be able to show you how this is done.

There are still many opportunities here, but you can't rely on anyone other than yourself. You MUST do the ground work yourself and rely on your own instincts and knowledge.

I wish you luck and enjoy whatever property you buy.