For a foreign company, setting up in Morocco starts with a question of structure. Two options dominate: incorporating a subsidiary, a Moroccan company owned by the parent, or opening a branch, a local establishment of the foreign company.
Both allow you to trade locally. But they do not commit the parent company in the same way.
Two different approaches
The subsidiary: a fully-fledged Moroccan company
A subsidiary is a company governed by Moroccan law (usually an SARL, SARL AU, SA or SAS) in which the parent holds all or part of the capital.
- It has its own legal personality: it signs its own contracts, employs its own staff and is liable for its own debts.
- The parent’s liability is, in principle, limited to its contributions.
- It has its own management bodies, appointed under its articles of association.
The branch: an extension of the parent company
A branch has no separate legal personality. It is an establishment of the foreign company, entered in the Moroccan trade register and run by a representative appointed by the parent.
- The branch’s commitments are the parent’s: the foreign company is liable for its debts.
- It has no share capital of its own, but an allocation of funds provided by the parent.
- Major decisions remain with the parent company.
Comparison criteria
| Criterion | Subsidiary | Branch |
|---|---|---|
| Legal personality | Yes, a Moroccan company | No, an establishment of the foreign company |
| Liability | In principle limited to the parent’s contributions | Directly commits the parent |
| Set-up | Articles, capital, management bodies | Parent company decision and foreign corporate documents |
| Accounting | Full accounts under the CGNC (Moroccan GAAP) | Accounts for the Moroccan activity under the CGNC |
| Credibility with partners | Local company, often reassuring for banks and clients | Direct link to the foreign group |
| Flexibility | Can open its capital to Moroccan partners | No local shareholders possible |
Formalities: what changes
For a subsidiary, the steps are those of any company formation in Morocco: negative certificate, articles of association, registered office, capital deposit where required, registration, tax identifiers and CNSS registration. We cover them in our article on the key steps to set up a company in Morocco.
For a branch, the file relies on documents from the parent company: articles of association, proof of registration in its home country, the decision to open the branch and appoint its representative. These documents generally need to be legalised or apostilled and translated, so allow time for this.
Tax: common ground and one key difference
Subsidiaries and branches are both subject to corporate income tax on profits made in Morocco, and to VAT on their transactions. Their routine filing obligations are the same.
The difference mainly arises when profits are sent back to the parent:
- a subsidiary pays dividends, which are subject to withholding tax;
- profits transferred by a branch are, in principle, treated in the same way as dividends.
The rate actually applicable depends on the rules in force and on any tax treaty between Morocco and the parent company’s country. This deserves careful review before choosing, especially where significant flows are expected.
Foreign exchange rules: securing the return of funds
Whichever option you choose, an investment made in foreign currency in compliance with Moroccan exchange control rules gives the right to transfer income and repatriate the proceeds of a sale. The investment must, however, be properly financed and documented from the outset.
How to choose?
A branch often suits a targeted presence: a construction project, a specific contract, a market test, when the parent wants to keep control of every decision.
A subsidiary is generally preferred for a long-term presence: it ring-fences risks, reassures local partners and makes it possible to bring in Moroccan investors.
The right choice depends on the project’s duration, the level of risk, the expected financial flows and the applicable tax treaties. A case-by-case review avoids having to restructure a few years later.
Ascensu supports foreign investors in choosing and setting up their structure in Morocco, then in managing its accounting, tax and payroll day to day.
Official sources
This article is provided for general information, as at its publication date. It is not personalised advice: the rules change and every situation must be reviewed on its own facts.