Repatriation of funds

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.

moneyman

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.

moneyman

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.