Establishing a branch of a foreign company in Morocco is governed by Article 37 of the Moroccan Commercial Code. Indeed, this code provides that any branch of a foreign company in Morocco must be registered in the commercial register.
Thus, foreign companies wishing to operate in Morocco have two choices:
- Establish a subsidiary under Moroccan law (in the form of a limited liability company, for example);
- Open a branch of a foreign company in Morocco.
Note that in both cases, the representative entities in Morocco are qualified as permanent establishments.
Definition of a branch of a foreign company and reason behind opening one
A branch is an establishment that is an integral part of a group while having a certain autonomy. Thus, the branch is a secondary presence in a different geographical area (usually in another country).
The objective behind opening a branch office is to develop the business. A foreign branch office allows a company to:
- improve relations with local customers;
- carry out specific contracts in a short period of time;
- manage the company’s assets in the country in question.
The branch office does not have a separate legal personality. In fact, its personality is a direct emanation of its parent company. Legally speaking, a company and its branches are one and the same.
The absence of a separate personality has its advantages. In fact, a branch of a foreign company can substitute itself to its parent company in:
- Performing and fulfilling of contractual obligations (e.g., under a contract);
- Making and receiving payments ;
- Benefiting from the customer and market references of its parent company.
Comparison between a Branch and a Subsidiary
The subsidiary is generally preferred in cases of long-term presence. The following table lists some of the differences between a subsidiary and a branch of a foreign company:
|Branch of a foreign company||Foreign Subsidiary|
|Existence of a separate personality||No, the branch contracts and acts in the name and on behalf of its parent company without distinction between their personalities.||Yes, it is a legally distinct person.|
|Autonomy and management||The branch is financially dependent on its parent company. Their funds are totally merged.
It must, however, have a manager.
|The subsidiary is autonomous in management and financial terms.|
|Taxation in Morocco||Subject to the Corporate tax (for the part of the profits made in Morocco).||Subject to corporate income tax|
In terms of accounting, the branch has only tax obligations. It must fill in tax returns and have separate accounting. No shareholders meetings are needed.
The steps to create a branch of a foreign company are as follows:
- Application for a negative certificate with the name of the branch in Morocco.
- Draft the minutes of the management bodies of the parent company for the creation of the branch. These minutes must indicate
- the name of the branch,
- its headquarters
- as well as its legal representative in Morocco
- Provide an address for fiscal domiciliation in Morocco (can be done in the form of domiciliation)
- Register the minutes of branch opening with the tax authorities.
- Deposit them at the clerk office of the trade court.
- Fulfill legal publicity formalities: legal gazette and official bulletin.
The documents necessary to create a branch of a foreign company in Morocco are:
- Certified copies of the parent company’s articles of association in French (or translated into French by a sworn translator).
- The extract from the trade register of the parent company is sealed and signed by the issuing authority.
- Copy of the passports of the legal representative(s) of the parent company
- Copy of the passports of the manager(s) of the branch in Morocco
- A copy of the power of attorney to the person in charge of the formalities
We can help
Upsilon Consulting can take care of all the formalities for opening your branch office in Morocco. Please contact us.
Once the branch is created, our firm can also take care of your accounting, taxes, and social declarations. In general, all the compliance of your branch with the laws in force.