In brief: VAT on services in Morocco applies at the standard 20% rate under Article 89 of the CGI. Reduced rates apply to hotel services (10%) and banking operations (10%). Non-resident service providers are subject to a reverse charge mechanism.
In Morocco, the standard rate is 20%. It applies to most goods and services. There is also a reduced rate of 10% applicable to certain specific services (accommodation, catering, banking operations). The former 14% and 7% rates have been eliminated since the 2024 reform.
Tax Treatment of VAT on Services
Article 89 of the General Tax Code lists services among taxable transactions.
The concept of services is very broad. It encompasses all transactions carried out for consideration that do not constitute supplies of movable or immovable property.
VAT on services applies to all operations and activities falling under contracts for work or service contracts. These operations give rise to the collection of various forms of remuneration (profit-sharing, royalties, etc.). The concept of services also includes the rental of assets, which must be understood in its broadest sense:
rental of equipment, machinery, vehicles, staff, stands, event venues or conference rooms, etc.
Circular 717 - Volume 2 provides further details on these services. This article aims to review the basic concepts regarding VAT on services.
—
Which Transactions Are Subject to VAT on Services?
Installation or Fitting Operations
An installation operation involves placing movable objects in a movable assembly. In this case, both the supply of said goods and the fitting service are subject to VAT on services. The installation operation is subject to VAT on services.
Circular 717 cites several examples:
- First, the installation of unsealed objects or appliances that can be sold without fitting;
- Second, the installation of furniture whose sealing is simply intended to ensure stability
- Third, the installation of machines and equipment in factories
The installation operation has the character of a service provision.
This distinction is important. VAT on services is calculated at a rate of 20%. Conversely, the item being installed may be exempt or subject to a reduced rate.
Repair
Repair involves restoring an object to its original condition without altering its characteristics. It is therefore distinct from transformation and renovation operations.
Specifically,
- transformation results in a modification of the original characteristics of an object;
- renovation involves restoring an item where the pre-tax value of new components used
In summary, repair has the character of a service since the item retains its status as a used item. Conversely, renovation is treated rather as a sale of a new item.
Contract Processing Work
Contract processing work involves:
- First, adapting an object to the needs it is intended to serve
- Second, transforming a material, product, or object belonging to a third party.
The processor is considered a service provider and taxed accordingly on the commission received.
Conversely, an industrialist who purchases raw materials and transforms them is considered a seller of said product.
—
VAT on Services - Special Case of Hotel and Restaurant Services
Accommodation and on-premises food sales are services.
However, they benefit from a reduced VAT rate of 10%.
It is therefore important to define these two concepts to determine the applicable VAT on services.
Accommodation involves the provision of lodging. The service providers offering this service are:
- First, tourist hotels,
- Second, tourist residences,
- Third, inns, guest houses,
- Generally, boarding houses, furnished rooms, motels, holiday villages, lodges, etc.
Restaurants (or the sale of food or beverages for on-premises consumption) correspond to consumption that takes place in:
- First, restaurants,
- Second, pastry shops set up for on-premises consumption,
- Third, beverage establishments,
- Fourth, dining cars,
- Generally, all buffets, stands, fairs, exhibitions, etc.
In the absence of specific arrangements (tables, chairs, etc.) allowing the customer to consume on the premises, the sales transaction is treated as a simple sale of goods (retail sale).
—
Other Transactions Subject to VAT on Services
Rentals
These are rentals of furnished or equipped premises, including the intangible elements of a going concern.
Banking and Credit Operations
Banking, credit, and other related operations carried out by credit institutions are subject to VAT at the rate of 10%.
Other Operations
Services also include:
- transport,
- warehousing,
- brokerage,
- rental of goods or services,
- assignments and licensing of patents, rights, or trademarks
- …
Electronic Filing
VAT in Morocco is paid on the SIMPL VAT portal.
Frequently Asked Questions
What VAT rate applies to services in Morocco?
Most services in Morocco are subject to VAT at the standard rate of 20%. Certain categories benefit from the reduced rate of 10%: restaurant and hotel services, banking operations, and urban/road transport services. The applicable rate depends on the specific nature of the service provided.
How does VAT apply to services provided by non-residents in Morocco?
When a foreign service provider renders a service used or exploited in Morocco, the Moroccan client must self-assess VAT through the reverse charge mechanism. The client declares and pays the VAT on behalf of the non-resident provider, with a withholding rate of 75% or 100% depending on whether the provider presents a valid tax compliance certificate.
When does VAT become due on services in Morocco?
For services, VAT becomes due upon collection of the price (regime of encaissement). This means that VAT is declared and paid based on the amounts actually received, not on the date the invoice is issued. However, taxpayers may opt for the accrual regime (regime of debits).
Are professional and consulting services subject to VAT in Morocco?
Yes, all liberal and professional activities, including consulting, legal, accounting, engineering, and IT services, are subject to VAT in Morocco. Chartered accountants, lawyers, architects, and other professionals must register for VAT and charge the applicable rate on their fees.
Upcoming Changes
The reform initiated by the 2024 Finance Law has been completed in 2026, establishing two main rates: a standard rate of 20% and a reduced rate of 10%. This reform has simplified the VAT system while making it fairer and more transparent, by eliminating the former 7% and 14% rates. Pharmaceutical products are now exempt with the right to deduction (art. 92), and school supplies are exempt without the right to deduction (art. 91).
General Operation of VAT
VAT in Morocco operates on the principle of fractional payment. Taxable persons collect VAT on their sales and can recover VAT on their purchases. The VAT due is the difference between the VAT collected and the recoverable VAT. Businesses act as tax collectors on behalf of the State, and they must periodically declare this difference to the tax administration.
Filing Requirements
Taxpayers must file VAT returns on either a monthly or quarterly basis, depending on their turnover or other specific criteria. Taxable transactions must be declared in their entirety.
VAT on Services Provided by Non-Residents
When a foreign service provider renders a service that is used or exploited in Morocco, the transaction is subject to Moroccan VAT under the territoriality rules set out in Article 88 of the General Tax Code. In such cases, the Moroccan client is required to self-assess the VAT through a reverse charge mechanism. The client must declare and pay the VAT to the tax authorities on behalf of the non-resident provider.
Since the 2024 Finance Law (maintained in 2026), the withholding rate on VAT for services rendered by non-residents is set at 75% of the tax amount when the foreign provider presents a valid tax compliance certificate, and 100% in the absence of such a certificate. This mechanism ensures that the Moroccan State collects VAT on services consumed within its territory, regardless of the provider’s location.
Obligations of the Moroccan Client
The Moroccan client receiving services from a non-resident must:
- Self-assess and declare VAT on behalf of the foreign provider
- Remit the withheld VAT to the Treasury within the prescribed deadlines
- Retain all invoices and supporting documents
This guide was prepared by Upsilon Consulting, a chartered accounting firm in Casablanca with recognized expertise in Moroccan VAT compliance.
Tools
Morocco VAT Qualification 2026 — Free Tool: Determine in a few clicks whether your transaction is out of scope, exempt, or taxable, and at which rate.
READ ALSO
