In brief: A branch in Morocco is the permanent establishment of a foreign company, with no separate legal personality, governed by Article 37 of the Moroccan Commercial Code. It is subject to corporate income tax (IS) on Moroccan-source income (rates of 20% or 35% since 2026) and to a 11.25% withholding tax in 2026 on profit remittances to the parent company. Setup time: 2 to 4 weeks. Material cost advantage compared to a Moroccan subsidiary (LLC).
A branch in Morocco is the option chosen by foreign companies that want to operate in Morocco without incorporating a Moroccan-law entity. Legally, it remains a direct extension of its parent company; for tax purposes, it is treated as a permanent establishment subject to Moroccan corporate tax.
This guide, written by the chartered accountants at Upsilon Consulting, covers the legal definition, the complete 2026 tax regime, the branch vs. subsidiary comparison and the FAQs for choosing the right setup for your Morocco market entry.
Last updated: April 2026 — incorporates the definitive corporate tax rates from the 2026 Finance Law and the 11.25% withholding tax on profit remittances.
Legal Definition of a Branch in Morocco
A branch in Morocco is defined as a permanent establishment carrying out a stable commercial activity, without a legal personality distinct from the company it depends on. Its legal basis is found in Article 37 of the Moroccan Commercial Code, which requires every branch of a foreign company to register with the local commercial register.
Three fundamental legal characteristics:
- No separate legal personality: the branch is legally the same entity as the parent company;
- Full contractual capacity: it can sign, perform and invoice on behalf of the parent company;
- Unlimited parent company liability: the parent company is liable for all of the branch’s debts and commitments.
Unlike a Moroccan LLC, a branch has no share capital and no separate articles of association. It does not hold general meetings and is not required to appoint a statutory auditor.
Source: Article 37 of the Commercial Code (Law 15-95), analyzed by Salaheddine Yatim, Chartered Accountant — Upsilon Consulting.
Branch, Subsidiary or Liaison Office: which to choose?
Three legal vehicles allow a foreign company to operate in Morocco:
- The branch: a direct extension of the foreign company, subject to corporate tax and to the withholding tax on remittances;
- The subsidiary (LLC or PLC under Moroccan law): a separate entity, limited liability, subject to Moroccan company law;
- The liaison office: a non-commercial structure, prohibited from invoicing, used only for prospecting.
For an in-depth comparison and a step-by-step guide, see How to Open a Branch of a Foreign Company in Morocco.
Tax Regime of a Branch in Morocco in 2026
The branch qualifies as a permanent establishment within the meaning of Article 5 of the General Tax Code (CGI). Accordingly, it is taxable in Morocco on Moroccan-source profits only.
Corporate Income Tax (IS)
Since 1 January 2026, the definitive IS rates apply to the branch as to any company subject to corporate tax in Morocco:
| Net taxable profit | Corporate Tax Rate 2026 |
|---|---|
| Less than MAD 100 million | 20% |
| Equal to or greater than MAD 100 million | 35% |
| Credit institutions, insurance, Bank Al-Maghrib | 40% |
The branch files its tax return within 3 months of the end of the fiscal year, in accordance with Article 20 of the CGI. For details, see Corporate Income Tax Calculation in Morocco.
Withholding Tax on Profit Remittances
Net profits after IS, when remitted by the branch to its foreign parent company, are treated as dividends paid to a non-resident and subject to a withholding tax (WHT):
- 2026 rate: 11.25%;
- 2027 onwards: 10% (2023 Finance Law);
- Possible reduction under the relevant bilateral tax treaty between Morocco and the parent company’s country of residence.
VAT, Professional Tax and Reporting Obligations
The branch is subject to the standard VAT regime (20% standard rate, reduced rates of 7%, 10%, 14%). It also pays the professional tax (former “patente”) and the communal services tax, and must keep CGNC-compliant accounting records separate from those of the parent company.
Branch tax bullet summary 2026:
- Corporate tax: 20% (NTP < MAD 100M), 35% above (Art. 19-I CGI)
- WHT on remittances: 11.25% in 2026 → 10% in 2027
- VAT: standard regime (20% standard rate)
- Tax return: within 3 months of fiscal year-end
- Accounting: separate, CGNC-compliant
Source: Articles 5, 19-I and 158 of the 2026 CGI, analyzed by Salaheddine Yatim, Chartered Accountant — Upsilon Consulting.
Differences between a Branch and a Subsidiary in Morocco
The choice between a branch and a subsidiary depends on the duration of presence, the desired level of autonomy and the level of risk acceptable to the parent company.
| Comparison Point | Branch | Subsidiary (LLC/PLC) |
|---|---|---|
| Legal personality | None — extension of the parent company | Yes — separate entity |
| Share capital | None | Variable (free for LLC, MAD 300,000 min. for PLC) |
| Liability | Unlimited for the parent company | Limited to capital contributions |
| Taxation | IS on Moroccan-source income + 11.25% WHT on remittances | IS + WHT on dividends (11.25%) |
| Accounting obligations | Accounting + tax filings | Accounting + AGM + accounts publication |
| Statutory auditor | Not mandatory | Mandatory for PLC and LLC > MAD 50M turnover |
| Setup time | 2 to 4 weeks | 7 to 15 working days (DirectEntrepreneur) |
| Closure | Decision of the parent company | Dissolution procedure |
When to choose the branch: limited-term project, specific public tender, market test phase, engineering or construction operation.
When to choose the subsidiary: long-term presence, significant local hiring, commercial partnerships, local fundraising.
Legal Status of the Branch Manager
The branch must appoint a legal representative in Morocco, named in the incorporation minutes. This representative has local powers but remains under the supervision of the parent company’s management bodies.
- The manager is generally seconded by the parent company and remains attached to its home-country social regime;
- Employees hired in Morocco are fully governed by the Moroccan Labour Code (Law 65-99);
- CNSS affiliation is mandatory from the first locally hired employee.
How to set up a branch in Morocco
The creation of a branch in Morocco follows a specific procedure, simpler than that of a Moroccan LLC since there is no capital to release and no articles of association to draft. It does, however, require the legalization and apostille of documents from the parent company.
For the step-by-step procedure (sample minutes, OMPIC negative certificate, commercial register filing, Official Bulletin publication, ICE, CNSS affiliation and exchange office reporting), see our dedicated guide: How to Open a Branch of a Foreign Company in Morocco.
Frequently Asked Questions
What is the difference between a branch and a subsidiary in Morocco?
The branch has no legal personality of its own: it is a legal extension of the parent company, whose liability is unlimited. The subsidiary is a legally distinct entity, incorporated as a Moroccan-law company (LLC, PLC, simplified joint stock company), with liability limited to shareholder contributions. The subsidiary must appoint a statutory auditor above certain thresholds, unlike the branch.
What is the tax regime of a Moroccan branch in 2026?
The branch is subject to corporate tax (IS) at the rate of 20% on net taxable profit below MAD 100 million, or 35% above (Article 19-I CGI). Profit remittances to the parent company are subject to a withholding tax of 11.25% in 2026 (10% from 2027), reducible under bilateral tax treaties. The branch is also liable for VAT, professional tax and communal services tax.
Does a Moroccan branch need its own bank account?
Yes. A branch must open a bank account in Morocco in its own name. All transactions related to Moroccan operations must go through this local account. This is also necessary for tax compliance, payroll payments and meeting Moroccan banking and tax authority requirements.
Can a Moroccan branch carry out activities different from those of its parent company?
No. Being legally the same entity as its parent company, the branch can only carry out activities within the corporate purpose of the parent company. Any extension of activity in Morocco requires either a prior amendment to the parent company’s articles or the creation of a separate subsidiary.
Does the branch have to publish its annual accounts?
No. The branch is not required to publish its accounts with the commercial register, unlike Moroccan LLCs and PLCs. It must, however, file a tax return package with the DGI within 3 months of fiscal year-end and keep separate accounting records compliant with the CGNC.
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