Long-term rental and company tax in Morocco: expenses, VAT, what to know

One reason companies choose long-term rental is accounting: a monthly rate is booked as an expense, while a purchase is booked as an asset and depreciated. But Moroccan rules frame that treatment, especially for passenger vehicles. Here are the general principles. They do not replace your accountant's advice, who knows your regime and your activity.

The rate is an operating expense

Long-term rental rates are expenses deductible from taxable income, as long as the vehicle is used for the company's activity. Every month, tripn'Go issues an invoice with the rate excluding VAT and the VAT. That invoice is what supports the expense.

The passenger vehicle cap

Morocco's general tax code limits the deductibility of depreciation on passenger vehicles to a capped acquisition value, set at 300,000 dirhams including VAT, depreciated over five years. The same logic applies to rented or leased vehicles: the share of the rate corresponding to depreciation above that cap is not deductible. For the models in tripn'Go's table, from the Picanto to the Tucson, the purchase price is well below the cap, and the question only arises in practice for high-end vehicles. The cap does not apply to vans.

VAT on the rate

Vehicle rental rates are subject to VAT at the standard rate. Whether the tenant can recover that VAT depends on the type of vehicle and the activity: as a general rule, VAT on passenger vehicles and on their rental is not recoverable, except for companies whose business it is, such as rental companies, driving schools or passenger transport. For a van used in operations, recovery is possible. Your accountant will confirm your case.

What it looks like in practice

• •A rate of 4,720 dirhams excluding VAT for a Dacia Duster over 36 months, invoiced every month with VAT
• •A monthly expense booked as invoices come in, with no asset and no depreciation schedule
• •No vehicle on the balance sheet, so no gain or loss on disposal to handle at the end of the contract
• •VAT recoverable or not depending on the vehicle type and your activity

The benefit in kind for the employee

If the vehicle is provided to an employee for personal use on top of business use, that provision is a taxable benefit in kind for the employee, under specific valuation rules. That is a matter for payroll, not for the rental company, but it is better to anticipate it when choosing the model.

In short: long-term rental simplifies accounting and cash flow, and the rate is deductible within the limits set for passenger vehicles. VAT and benefit-in-kind questions depend on your situation. A ten-minute conversation with your accountant, quote in hand, is enough to settle them.