The Roche et Mameri Exygene group, made up of three firms in France and Morocco, specializes in financial services to businesses. Mr. Karim Mameri, chartered accountant partner, and Mr. Hakim Essadiq, managing partner of the Morocco network, recently published an in-depth study of the furnished rental market, which is undergoing rapid change, through its two main categories, Short Rental Duration (LCD) and Long Term Rental (LLD). The study highlights the legal and fiscal frameworks surrounding these activities, while exposing the challenges and opportunities they represent for owners, whether individuals, individuals or legal entities.
Two models with very distinct characteristics
Short-term rental: flexibility and profitability
Short-Term Rentals concern stays of less than one month, mainly intended for leisure or business travelers. This type of rental is governed by specific texts, in particular Law No. 61-00 for classified tourist establishments, Law No. 80-14 and its implementing decree of 2023, for so-called “alternative” accommodation. This last category includes unclassified properties such as villas, apartments or riads, often offered on digital platforms such as Airbnb.
LCD offers great flexibility thanks to dynamic price management tools allowing prices to be quickly adapted according to demand and seasonality. It attracts many owners with its high yields, particularly in tourist areas with high demand. An average occupancy of only twenty nights per month can exceed the income of an LLD over the same period. In addition, owners have their property available at certain times of the year, a significant advantage.
However, managing the LCD is demanding. It requires daily attention for the management of reservations, the reception of tenants, the maintenance of the premises, and compliance with regulatory standards. Many owners delegate these responsibilities to concierge agencies, which incurs fees that can reach a third of annual gross revenue. At the same time, the risks of joint civil and criminal liability in the event of breach of rules or behavior of tenants pose a significant challenge.
Long-term rental: stability and simplicity
Long-Term Rental is based on a formal lease contract, often for a period of one year or more. It guarantees financial stability thanks to regular income and reduced management fees. This type of rental is governed by the Code of Obligations and Contracts (COC), which requires a written lease mentioning the essential terms: duration, rent, notice, inventory, among others.
The LLD attracts owners looking for regular income without the constraints of intense operational management. In fact, the wear and tear on the furniture is less significant, and interactions with tenants are less frequent. However, it is often perceived as less lucrative in the short term, particularly in areas where demand for LCD is high. In addition, certain tenants, benefiting from the stability offered by the LLD, may contest or delay payments, sometimes making management more complex.
Taxation: distinct regimes and major implications
LCD taxation
In tax matters, income from Short-Term Rentals is considered a commercial activity. Individuals operating property are subject to Income Tax (IR), while legal entities must pay Corporation Tax (IS). Regarding VAT, classified establishments benefit from a reduced rate of 10%, while alternative unclassified accommodation is subject to the standard rate of 20%. In addition, owners of LCD properties must collect a tourist tax for each night, without collecting the tourist promotion tax, which is reserved for classified tourist establishments.
Managing tax and social obligations constitutes an additional burden. Owners are required to declare their rental income and, when they employ staff, to register them with Social Security. These formalities reinforce the compliance of the activity, but they also involve additional costs for operators.
Taxation of the LLD
For LLD, rental income is classified as property income. They benefit from a flat-rate reduction of 40% on gross rents, making this tax regime relatively simple and advantageous. The costs linked to the maintenance of the property and any repairs are also lower compared to the LCD, due to limited wear and tear on the furniture and equipment.
Comparative advantages and challenges
According to the study by Cabinet Roche and Mameri, the choice between Short-Term Rental and Long-Term Rental depends on the priorities and capabilities of the owners. The LLD appeals with its simplicity and stability, particularly popular with investors looking for regular and long-term income. On the other hand, LCD, although more demanding in terms of management, often offers higher returns. However, it exposes owners to high operating costs, increased wear and tear on property and additional civil and criminal liabilities.
Towards more structured regulation
The study highlights the need for clear and strict regulation to govern the furnished rental sector, in particular for LCD. Balanced regulation could include tax incentives similar to the Non-Professional Furnished Rental (LMNP) model in France. This approach would aim to encourage full reporting of income while offering attractive tax benefits.
This regulatory framework would also improve the quality of services offered to tenants, combat the phenomenon of “cold beds” in tourist areas and promote optimal use of the real estate stock. By promoting the formalization of jobs linked to the maintenance and management of property, Morocco could strengthen its tourist accommodation offer while increasing its tax revenue.
In conclusion, although Short-Term Rental and Long-Term Rental meet distinct needs, their harmonious development will depend on a clear and rigorous regulatory approach. By structuring these sectors coherently, Morocco could not only meet the growing demand of travelers, but also strengthen its competitiveness on the international tourism scene.
Selim Benabdelkhalek (with study by Cabinet Roche and Mameri)
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