In brief: The auto-entrepreneur in Morocco does not charge VAT: as a service provider or manufacturer, they are exempt without right to deduction as an individual whose turnover does not exceed 500,000 MAD (art. 91-II-3° of the CGI); as a trader, they are outside the scope of compulsorily taxable transactions below 2,000,000 MAD (art. 89-I-2°-b). They do not file VAT returns and cannot deduct VAT on their purchases. The ceilings of the status (500,000 MAD for commercial/industrial/artisanal activities, 200,000 MAD for services) belong to income tax; registration under the standard VAT regime depends on the VAT-specific thresholds.
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The auto-entrepreneur does not charge VAT: exemption or non-liability depending on the activity
The auto-entrepreneur regime (art. 42 bis and 42 ter of the General Tax Code) is an income tax regime. As regards VAT, the CGI contains no rule specific to the auto-entrepreneur: ordinary law applies, with two situations depending on the nature of the activity.
- Service providers and manufacturers: the auto-entrepreneur is an individual whose annual turnover is necessarily equal to or below 500,000 MAD. Their sales and services are therefore exempt without right to deduction under article 91-II-3° of the CGI. The transaction is within the scope of VAT, but relieved of the tax.
- Traders reselling goods in their original state: traders only become compulsorily taxable from a taxable turnover of 2,000,000 MAD (art. 89-I-2°-b). The auto-entrepreneur trader, capped at 500,000 MAD, is therefore outside the scope of compulsorily taxable transactions.
In both cases, the practical consequence is the same: the auto-entrepreneur does not charge VAT, does not file VAT returns and cannot deduct the VAT borne on their purchases. To determine the VAT regime applicable to a specific transaction, use the VAT qualification tool.
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Turnover thresholds
The auto-entrepreneur status is governed by annual turnover ceilings. As long as the auto-entrepreneur respects these thresholds, they do not charge VAT:
| Type of activity | Annual turnover threshold |
|---|---|
| Commercial, industrial and artisanal activities | 500,000 MAD |
| Services | 200,000 MAD |
These thresholds are assessed on the basis of annual turnover collected. An auto-entrepreneur carrying out both a commercial and a service activity simultaneously must respect both thresholds for each category.
These thresholds should not be confused with that of article 91-II-3° of the CGI, which provides for an exemption without right to deduction for individual manufacturers and service providers whose annual turnover is equal to or below 500,000 MAD, including, since 1 January 2023, individuals practising the regulated professions referred to in article 89-I-12° (lawyers, architects, engineers, consultants, experts, certified accountants, veterinarians, etc.). The latter provision concerns operators who are within the scope of VAT but below the effective registration threshold.
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Practical consequences of out-of-scope status
No VAT invoicing
The auto-entrepreneur does not show VAT on their invoices. Their invoices are issued in gross amounts, with no excl. VAT/incl. VAT distinction, since there is simply no applicable VAT. The mention “VAT not applicable — out-of-scope activity” or equivalent may be added for clarity.
No right to deduction
The auto-entrepreneur cannot deduct the VAT borne on their purchases of goods, services or investments. The VAT paid to their suppliers constitutes a definitive cost, included in their expenses. This means the price inclusive of VAT is the actual price for the auto-entrepreneur.
No VAT return
The auto-entrepreneur is not subject to any filing obligation in VAT matters: neither monthly nor quarterly returns on the SIMPL portal. Their tax obligations are limited to declaring their turnover for income tax purposes (single professional contribution).
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Impact on taxable clients
The auto-entrepreneur’s out-of-scope status has a direct impact on their clients who are liable for VAT. When a taxable business purchases goods or services from an auto-entrepreneur:
- No deductible VAT: since the auto-entrepreneur’s invoice does not show VAT, the taxable client cannot recover any VAT on this purchase. The invoiced amount constitutes a net expense.
- No VAT withholding: the withholding at source under article 117-IV/V only covers taxable suppliers; it therefore does not apply to payments made to an auto-entrepreneur.
- Optional reverse charge (art. 125 quinquies): since 1 July 2024, the taxable client may, if they wish, declare VAT on their purchases of goods and services from suppliers who are out of scope or exempt without right to deduction (excluding land and agricultural products), and then deduct it on the same return. The transaction is cash-neutral, except in a tax credit situation. This mechanism is detailed in our article on the VAT reverse charge in Morocco.
For businesses with a large volume of purchases, this absence of right to deduction can represent a real additional cost compared to a taxable supplier. This is one of the reasons why some auto-entrepreneurs choose to opt voluntarily for registration.
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Exceeding the thresholds: exit from the AE regime and VAT thresholds
When turnover exceeds the ceilings of the auto-entrepreneur regime (500,000 MAD for commerce, industry and crafts; 200,000 MAD for services), the operator loses the benefit of this income tax regime and switches to an ordinary-law regime (single professional contribution, simplified or actual net income), or chooses to set up a company.
This exit from the AE regime does not, by itself, trigger VAT registration. The VAT thresholds are separate:
- Individual service providers and manufacturers: the exemption without right to deduction of article 91-II-3° applies as long as annual turnover is equal to or below 500,000 MAD. Above that, the operator becomes a taxable person: they must collect VAT at the applicable rate (20% or 10%), file their returns on the SIMPL portal and keep regular accounts with compliant invoices. They can then only cease to be a taxable person if they achieve turnover equal to or below 500,000 MAD for three consecutive years.
- Traders reselling goods in their original state: compulsory registration only applies from a taxable turnover of 2,000,000 MAD for the previous year (art. 89-I-2°-b).
- Setting up a company: an SARL or SAS providing services or manufacturing is a taxable person from its first transaction, the exemption of article 91-II-3° being reserved for individuals.
- Right to deduction: in return, the taxable operator deducts the VAT borne on their purchases of goods, services and investments under the conditions provided for by the CGI.
An auto-entrepreneur who observes that their turnover is going to exceed these thresholds would do well to anticipate the transition with a chartered accountant.
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Voluntary option for VAT registration (art. 90 of the CGI)
Article 90 of the General Tax Code allows certain exempt or out-of-scope persons to opt voluntarily for VAT registration. An auto-entrepreneur may find it advantageous to exercise this option in several scenarios:
Why opt in?
- Clientele mainly composed of taxable persons: if the auto-entrepreneur’s clients are businesses liable for VAT, they prefer taxable suppliers who allow them to recover VAT. The option makes the auto-entrepreneur more competitive.
- Significant investments to make: the option allows deduction of VAT on purchases of equipment, supplies or materials. For an auto-entrepreneur who needs to invest (professional vehicle, IT equipment, premises fitting), the VAT saving can be significant.
- Taxable suppliers: if most purchases are from taxable suppliers (who charge VAT), the option allows recovery of this VAT which would otherwise be a definitive cost.
Conditions and modalities
For more details on the option modalities, see our detailed article on voluntary VAT registration (art. 90). In summary:
- The application is filed with the local tax office (by registered letter or in person).
- The option takes effect 30 days after the filing date.
- It is maintained for a minimum period of 3 consecutive years.
- The option may be global or partial (one activity, one client, one transaction).
- In case of renunciation, adjustments are mandatory (repayment of VAT deducted on non-depreciated fixed assets, stock adjustment).
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Reference texts: General Tax Code 2026 (PDF) — Circular Note No. 717 — VAT (Volume 2) — Circular Note No. 730 (FL 2020)
— TOOLS
VAT Qualification Morocco 2026 — Free tool: Determine in just a few clicks whether your transaction is outside scope, exempt or taxable, and at what rate. Compliant with the 2026 CGI.
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FAQ
Does an auto-entrepreneur charge VAT?
No. An auto-entrepreneur providing services or manufacturing is an individual whose turnover does not exceed 500,000 MAD: their transactions are exempt without right to deduction (article 91-II-3° of the CGI). An auto-entrepreneur trading as a reseller of goods in their original state is outside the scope of compulsorily taxable transactions below 2,000,000 MAD (article 89-I-2°-b). In both cases, their invoices do not show VAT.
What happens if I exceed the turnover threshold?
Exceeding the ceilings of the status (500,000 MAD or 200,000 MAD) triggers the loss of the auto-entrepreneur income tax regime, but not automatically VAT registration. An individual service provider or manufacturer remains exempt without right to deduction as long as their annual turnover does not exceed 500,000 MAD (article 91-II-3°); above that, they become a taxable person: they must register, collect VAT at the applicable rate (20% or 10%), file VAT returns and keep regular accounts, and in return acquire the right to deduct the VAT borne on their purchases. A trader reselling goods in their original state only becomes a taxable person from 2,000,000 MAD of turnover (article 89-I-2°-b).
Can I voluntarily opt for VAT registration?
Yes. Article 90 of the CGI allows voluntary registration, even if the operator is out of scope. The option is advantageous when the clientele is mainly composed of taxable persons (who wish to recover VAT) or when the auto-entrepreneur makes significant investments. The option is valid for a minimum of 3 years. For more details, see our article on voluntary VAT registration (art. 90).
Can taxable clients recover VAT on my invoices?
No. Since the auto-entrepreneur is out of scope and does not charge VAT, their taxable clients have no deductible VAT on these purchases. The amount invoiced by the auto-entrepreneur constitutes a net expense for the client. This is a point to anticipate in the business relationship, as it can make the auto-entrepreneur less competitive compared to taxable suppliers who allow VAT recovery.
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